Research Productivity in the Japanese Pharmaceutical Industry Economies of Scale, Economies of Scope and Spillovers
Yosuke Okada, Senior Researcher, Pharmaceutical Industry Policy Institute
Akihiro Kawahara*, Senior Researcher, Pharmaceutical Industry Policy Institute
(No.15: February 2004)
We examine the relationship between firm size and research productivity in the Japanese top ten pharmaceutical firms for the years 1981-1994. By using the number of successful patents as research performance measure, we find significant returns to scope in drug discovery research. These findings suggest that Japanese pharmaceutical firms are relatively small in terms of research scope, regardless of firm size. These findings suggest that Japanese pharmaceutical firms are relatively small in terms of research scope, regardless of firm size per se. The Japanese firms may be able to enlarge the scope of research without suffering from marginal productivity decline at the firm level. Concerning knowledge spillovers, we find a positive correlation between domestic competitors' research spending and individual firm's patenting. But we detect a negative correlation between research expenditures of large western pharmaceutical firms and the Japanese firms' patenting. This suggests that appropriation mechanism of patent may be very effective in drug discovery research, and may This suggests that the appropriation mechanism of patent may be very effective in drug discovery research, and may predominate over probable knowledge spillovers among pharmaceutical firms especially in globally patented drug discovery research.