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Title:Technology, competition and the time of entry: Diversification patterns in the development of new drugs PDF Logo
Authors:Plotnikova, Tatiana
Issue Date:2009
Series/Report no.:Jena economic research papers 2009,078
Abstract:This paper empirically investigates the determinants of R&D diversification strategies in the drug industry. It enriches the existing literature by proposing to look at diversification factors, which reflect market and technological proximity of an R&D project towards other projects within a firm's portfolio as well as R&D competition factors. Additionally, the characteristics of R&D in the market where a new potential product is developed affect future product choice. The analysis is performed for products-in-development data, merged with firms' patents, which allows us to separate project proximity in market niches from technological proximity. The results of empirical estimation support an idea that R&D diversification is governed by the economies of scope as well as the escape competition motive. Moreover, it is found that competition rather than spillovers in the niche where an R&D project is developed defines firms' decisions to diversify.
Subjects:diversification
technological diversity
relatedness
competition
R&D
JEL:O32
L25
L65
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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