IDEAS home Printed from https://ideas.repec.org/p/hrv/hksfac/5347067.html
   My bibliography  Save this paper

Mergers and Innovation in the Pharmaceutical Market

Author

Listed:
  • Scherer, Frederic Michael
  • Comanor, William S.

Abstract

The U.S. pharmaceutical industry has experienced in recent years two dramatic changes: stagnation in the growth of new molecular entities approved for marketing, and a wave of mergers linking inter alia some of the largest companies. This paper explores possible links between these two phenomena and proposes alternative approach to merger policy. It points to the high degree of uncertainty encountered in the discovery and development of new pharmaceutical entities and shows how optimal strategies entail the pursue of parallel research and development paths. Uncertainties afflict both success rates and financial gains contingent upon success. A new model simulating optimal strategies given prevalent market uncertainties is presented. Parallelism can be sustained both within individual companies’ R&D programs and across competing companies. The paper points to data showing little parallelism of programs within companies and argues that inter-company mergers jeopardize desirable parallelism across companies.

Suggested Citation

  • Scherer, Frederic Michael & Comanor, William S., 2011. "Mergers and Innovation in the Pharmaceutical Market," Scholarly Articles 5347067, Harvard Kennedy School of Government.
    • Handle: RePEc:hrv:hksfac:5347067
    as

    Download full text from publisher

    File URL: http://dash.harvard.edu/bitstream/handle/1/5347067/RWP11-043_Scherer.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bottausci, Chiara & Robson, Keith & Dambrin, Claire, 2024. "Technological mediation, mediating morality and moral imaginaries of design: Performance measurement systems in the pharmaceutical industry," Accounting, Organizations and Society, Elsevier, vol. 112(C).
    2. Unsal, Omer & Rayfield, Blake, 2019. "Institutional investors and medical innovation," The Quarterly Review of Economics and Finance, Elsevier, vol. 74(C), pages 190-205.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hrv:hksfac:5347067. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Office for Scholarly Communication (email available below). General contact details of provider: https://edirc.repec.org/data/ksharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.