eprintid: 3571
rev_number: 6
eprint_status: archive
userid: 69
dir: disk0/00/00/35/71
datestamp: 2016-10-06 14:19:46
lastmod: 2016-10-06 14:19:46
status_changed: 2016-10-06 14:19:46
type: article
metadata_visibility: show
creators_name: Magazzini, Laura
creators_name: Pammolli, Fabio
creators_name: Riccaboni, Massimo
creators_id: 
creators_id: f.pammolli@imtlucca.it
creators_id: massimo.riccaboni@imtlucca.it
title: Real Options and Incremental Search in Pharmaceutical R&D Project Portfolio Management
ispublished: pub
subjects: HD28
subjects: RM
divisions: EIC
full_text_status: none
note: SCOPUS ID: 2-s2.0-84929774441
abstract: 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.
date: 2015
date_type: published
publication: Creativity and Innovation Management
volume: 25
number: 2
publisher: Wiley
pagerange: 292-302
id_number: doi:10.1111/caim.12119
refereed: TRUE
issn: 09631690
official_url: http://doi.org/10.1111/caim.12119
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citation:   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)