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Returns to research and development in the us pharmaceutical industry

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  • John R. Virts
  • J. Fred Weston

Abstract

Research concerning the pharmaceutical industry rate of return has concentrated on two policy issues: (1) possible resource misallocation and (2) the drug innovation environment. Accounting returns are suspect for policy purposes, requiring attention to the role of, and impact on, expectations of returns. This paper uses evidence about expectations and about resource flows into R&D consistent with those expectations to infer the level of economic returns. Our results provide evidence of a decline in expected returns, with exit of firms and resources. Regulation may be one of the major causes of the adverse shift in prospective returns from R&D investments.

Suggested Citation

  • John R. Virts & J. Fred Weston, 1980. "Returns to research and development in the us pharmaceutical industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 1(3), pages 103-111, September.
    • Handle: RePEc:wly:mgtdec:v:1:y:1980:i:3:p:103-111
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    File URL: http://hdl.handle.net/10.1002/mde.4090010302
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    Cited by:

    1. Luiz Andrade & Catherine Sermet & Sylvain Pichetti, 2016. "Entry time effects and follow-on drug competition," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 17(1), pages 45-60, January.

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