Template-type: ReDIF-Paper 1.0
Author-Name: Mahlich, Jörg C.
Author-Email: joerg.mahlich@wko.at
Author-Workplace-Name: Wirtschaftskammer Österreich
Author-Name: Roediger-Schluga, Thomas 
Author-Email: thomas.roediger@arcs.ac.at
Author-Workplace-Name: ARC Systems Research
Title: The Determinants of Pharmaceutical R&D Expenditures: Evidence from Japan
Abstract: During the past 20 years, the world pharmaceutical industry has
	 experienced a dramatic increase in R&D intensity. We apply and extend a
	 model developed by Grabowski and Vernon (2000) with a pooled data sample
	 of the 15 publicly listed Japanese drug firms for the period 1987 to
	 1998. As in the reference paper, we find expected returns to be an
	 important determinant of R&D spending in the Japanese drug industry,
	 albeit considerably smaller than in the U.S., which is particularly
	 obvious in the case of returns from newly introduced drugs. However, our
	 results are sensitive to econometric model specification, in particular
	 to controlling for serial correlation and to a dynamic specification of
	 the baseline model. Likewise, estimates on financial constraints are
	 sensitive to model specification, indicating that Japanese drug firms
	 face small or no financial constraints. Our results are consistent with
	 the general literature on R&D investment behaviour, yet raise some
	 methodological questions with regard to the original study.
Classification-JEL: L65, O31, O33
Keywords: R&D, investment, panel data estimation, pharmaceuticals, Japan
Series: UNU-MERIT Working Papers
Creation-Date: 2006
Number: 015
File-URL: http://www.merit.unu.edu/publications/wppdf/2006/wp2006-015.pdf
File-Format: application/pdf
File-Size: 275 Kb
Handle: RePEc:unm:unumer:2006015