Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/89747 
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper No. 4567
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Our study puts special attention to the fact that R&D cooperations in the pharmaceutical industry are formed at different stages throughout the drug development process. We study if the timing to engage in R&D cooperations in the pharmaceutical industry has different impacts on the technology and product markets. Using a comprehensive dataset on the pharmaceutical industry, and estimating a heterogeneous treatment effects model (Heckman et al., 2006) our results show that R&D cooperations formed at the early stages increase the number of R&D projects and the number of drugs launched on the product market. Most interestingly, late stage R&D cooperations significantly reduce the number of drugs launched on the market, even though they increased firms’ activity in the technology markets. This result highlights the fact that firms re-optimize their drug development portfolio to avoid wasteful duplication and cannibalizing the sales of the jointly developed drug in R&D cooperations. Our study show that firms cooperating in late stage collaborations re-optimize their individual drug development portfolios, which significantly reduces the number of drugs offered on the market.
Subjects: 
drug development
dynamics
co-development
pharmaceutical industry
product variety
product market competition
Research and Development cooperation
JEL: 
L24
L25
L65
D22
Document Type: 
Working Paper
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