One Lab, Two Firms, Many Possibilities: ...
Type de document :
Compte-rendu et recension critique d'ouvrage
Titre :
One Lab, Two Firms, Many Possibilities: on R&D outsourcing in the biopharmaceutical industry
Auteur(s) :
Billette De Villemeur, Etienne [Auteur]
Lille économie management - UMR 9221 [LEM]
Versaevel, Bruno [Auteur]
Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne [GATE Lyon Saint-Étienne]
EMLyon Business School [EM]
Lille économie management - UMR 9221 [LEM]
Versaevel, Bruno [Auteur]
Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne [GATE Lyon Saint-Étienne]
EMLyon Business School [EM]
Titre de la revue :
Journal of Health Economics
Pagination :
260-283
Éditeur :
Elsevier
Date de publication :
2019-05
ISSN :
0167-6296
Mot(s)-clé(s) en anglais :
Research Development Biotechnology Pharmaceuticals Externalities
Discipline(s) HAL :
Sciences de l'Homme et Société/Economies et finances
Résumé en anglais : [en]
We draw from documented characteristics of the biopharmaceutical industry to construct a model where two firms can choose to outsource R&D to an external unit, and/or engage in internal R&D, before competing in a final ...
Lire la suite >We draw from documented characteristics of the biopharmaceutical industry to construct a model where two firms can choose to outsource R&D to an external unit, and/or engage in internal R&D, before competing in a final market. We investigate the distribution of profits among market participants, and the incentives to coordinate outsourcing activities or to integrate R&D and production. Consistent with the empirical evidence, we find that the sign and magnitude of an aggregate measure of direct (inter-firm) and indirect (through the external unit) technological externalities drives the distribution of industry profits, with higher returns to the external unit when involved in development (clinical trials) than in early-stage research (drug discovery). In the latter case, the delinkage of investment incentives from industry value, together with the ability of firms to transfer risks to the external unit, imply a vulnerability of early-stage investors’ returns to negative shocks, and the likely abandonment of projects with economic and medical value. We also find that competition in the equity market makes a buyout by one of the two firms more profitable to a research biotech than to a clinical services unit, and can stimulate early-stage investments. However, this long-term incentive can be minimal, notably if the superior efficiency of outsourced operations originates from economies of scope that can hardly be exploited when a firm takes control of the external unit exclusively for itself. R&D outsourcing thus does not always qualify as a relevant pathway to address the declining productivity in innovation that has characterized the industry over several decades.Lire moins >
Lire la suite >We draw from documented characteristics of the biopharmaceutical industry to construct a model where two firms can choose to outsource R&D to an external unit, and/or engage in internal R&D, before competing in a final market. We investigate the distribution of profits among market participants, and the incentives to coordinate outsourcing activities or to integrate R&D and production. Consistent with the empirical evidence, we find that the sign and magnitude of an aggregate measure of direct (inter-firm) and indirect (through the external unit) technological externalities drives the distribution of industry profits, with higher returns to the external unit when involved in development (clinical trials) than in early-stage research (drug discovery). In the latter case, the delinkage of investment incentives from industry value, together with the ability of firms to transfer risks to the external unit, imply a vulnerability of early-stage investors’ returns to negative shocks, and the likely abandonment of projects with economic and medical value. We also find that competition in the equity market makes a buyout by one of the two firms more profitable to a research biotech than to a clinical services unit, and can stimulate early-stage investments. However, this long-term incentive can be minimal, notably if the superior efficiency of outsourced operations originates from economies of scope that can hardly be exploited when a firm takes control of the external unit exclusively for itself. R&D outsourcing thus does not always qualify as a relevant pathway to address the declining productivity in innovation that has characterized the industry over several decades.Lire moins >
Langue :
Anglais
Vulgarisation :
Non
Collections :
Source :