relation: http://eprints.imtlucca.it/3571/
title: Real Options and Incremental Search in Pharmaceutical R&D Project Portfolio Management
creator: Magazzini, Laura
creator: Pammolli, Fabio
creator: Riccaboni, Massimo
subject: HD28 Management. Industrial Management
subject: RM Therapeutics. Pharmacology
description: This paper investigates the role of real options reasoning in R&D project portfolio management and investment decisions of pharmaceutical firms. We analyse a unique dataset that integrates information on initiation and termination of clinical trials at the level of specific medical indications. Consistent with existing literature, we find a positive relationship between market size and firm entry in clinical trials. We also show that the option value of R&D investments, as proxied by the scope of R&D projects, affects the selection of target markets. Moreover, high-risk research areas attract more entry, in line with the predictions of real options theory. However, we also find that more flexibility in project duration and delayed project discontinuation attract higher rates of entry. Departures from pure real options reasoning are motivated by the presence of incremental learning in pharmaceutical R&D.
publisher: Wiley
date: 2015
type: Article
type: PeerReviewed
identifier:   Magazzini, Laura and Pammolli, Fabio and Riccaboni, Massimo  Real Options and Incremental Search in Pharmaceutical R&D Project Portfolio Management.  Creativity and Innovation Management, 25 (2).  pp. 292-302.  ISSN 09631690      (2015)  
relation: http://doi.org/10.1111/caim.12119
relation: doi:10.1111/caim.12119