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Innovation and corporate growth in the evolution of the drug industry

Pammolli, Fabio and Bottazzi, Giulio and Dosi, Giovanni and Lippi, Marco and Riccaboni, Massimo Innovation and corporate growth in the evolution of the drug industry. International Journal of Industrial Organization, 19 (7). 1161 - 1187. ISSN 0167-7187 (2001)

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This work studies the processes of growth of the worlds top 150 pharmaceutical firms, on the grounds of an original database which also allows disaggregate analysis at the level of single therapeutical classes and chemical entities. Our findings show that the industry -- whose long-term evolution is driven by innovation, imitation and permanent creation of new markets -- displays (i) "fat tails" in the distribution of growth shocks, present at all levels of aggregation, with (relatively rare) big "spurs of growth", (ii) a significant autocorrelation of growth rates, (iii) a fall of variance of growth rates with size entirely dependent on corporate diversification patterns, in turn plausibly shaped by the "competence scope" of each firm, and (iv) different "lifecycles" of diverse types of products, and persistent forms of heterogeneity across firms in terms of innovative output, which, however, do not not seem to affect comparative growth performances.

Item Type: Article
Identification Number: 10.1016/S0167-7187(01)00068-6
Additional Information: JEL classification codes: L1; L6; O3
Uncontrolled Keywords: Innovation; Corporate growth; Drug industry; Evolution
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
R Medicine > RM Therapeutics. Pharmacology
Research Area: Economics and Institutional Change
Depositing User: Users 2 not found.
Date Deposited: 30 Jun 2011 14:25
Last Modified: 31 Aug 2011 14:40
URI: http://eprints.imtlucca.it/id/eprint/649

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