Innovation in the pharmaceutical industry and determinants of firm performance
Context: Investment in R&D and successful innovation, particularly involving the identification of new molecules, underpins effective and strong performance by a number of large international pharmaceutical firms. The process of creation and diffusion of new knowledge, impact of barriers to the adoption of new technology and the role of innovation in explaining firm performance is extremely important for understanding firm and industry level dynamics. Using a cross section or a panel of countries, an examination of intellectual property protection and enforcement of IP protection mechanisms combined with an analysis of the determinants of innovation and firm performance would enable an effective analysis of determinants of firm performance within the pharmaceuticals sector and the interplay between key variables of interest.
Research Questions: Research questions could include the following aspects:
- What are the determinants of firm performance (revenues and/ or profits and so on) within the pharmaceutical sector, both at national and international levels?
- What is the role of innovation in terms of explaining firm performance?
- What impact does an IP regime have both on innovative activity and firm performance?
Methodology: There are a number of possible ways to analyse these issues:
Basic analysis could begin with an investigation of the various definitions of innovation, as used in the pharmaceuticals sector, and though the development of a suitable taxonomy that would enable relevant empirical work. Once a suitable set of counties is identified for further examination, a suitable international data set would be constructed making use of appropriate covariates for use for further analysis for which data would be collated systematically using robust data sources. Ideally, panel data econometric methods would be very effective for such a study, provided a suitable balanced panel can be obtained and/ or constructed. If a panel is not available, then cross sectional methods and other alternative methods such as survival analysis, choice models and nonparametric methods could be considered for effective analysis of data available for this research.
Luis M Cabral. (2000) Introduction to Industrial Organization, MIT Press.
Iain M. Cockburn and Rebecca M. Henderson. (2001) Scale and scope in drug development: Unpacking the advantages of size in pharmaceutical research, Journal of Health Economics, 20(6), pp. 1033-1057.
William S. Comanor and F.M. Scherer. (2013) Mergers and innovation in the pharmaceutical industry, Journal of Health Economics, 32(1), pp. 106-113.
O. Gassman, G. Reepmeyer and M. von Zedtwitz. (2008) Leading Pharmaceutical Innovation: Trends and Drivers for Growth in the Pharmaceutical Industry, 2nd Ed., Springer.
Joseph A DiMasi, Ronald W Hansen and Henry G Grabowski. (2003) The price of innovation: New estimates of drug development costs, Journal of Health Economics 22(2), pp. 151-185.
Supervisor(s): Dr Abhijit Sharma, Dr Nick Papageorgiadis and / or Dr Chengang Wang
Innovating entrepreneurs in the NHS
Context: In April 2012 a discontinuous, government-driven change in rules was introduced in the UK National Health Service (hereafter NHS). A key premise of the change is clinical leadership, who enjoy the trust of patents is viewed as the main means of bringing decision-making as close as possible to patients. Another important plank of the new regime revolves around the concept of innovation. Within the policy context, innovation is defined as ‘an idea, service or product, new to the NHS, which significantly improves the quality of health and care wherever it is applied’ (NHS, 2012, 9). Innovation is viewed as important for the NHS because it can transform patent outcome, improve simultaneously quality and productivity and advance economic growth (NHS, 2012). Thus, it is argued that the NHS ‘should align organisational, financial and personal incentives and investment to reward and encourage innovation’ (NHS, 2012, 13).
The combined effect of these policy-driven changes in the rules of the NHS is the need for clinicians and other health professionals not only to perform resource allocation processes but act more or less as Schumpeterian entrepreneurs: bringing about a different use of resources in that ‘they are withdrawn from their traditional employ and subjected to new combinations’ (Schumpeter, 1928, p. 380). This type of entrepreneurship necessitates the existence of intrinsic motivation, an ability to leverage resources to new combinations, and create upheaval. However, there is precious little understanding of how the attributes of clinicians and other health professionals fit (or not as the case may be) to those needed in order to drive innovative change.
- What are the implications of government-driven change in the rules for the institutional reality, particularly in terms of incongruities and contradictions between rules and norms, confronting entrepreneurs in the NHS?
- How do entrepreneurs respond/adapt to their institutional environment in the process of introducing innovation in the NHS?
- What is the political dimension in the process of entrepreneur-led innovation in the NHS?
- What are the implications of Schumpeterian entrepreneurship and innovation in the processes of institutional change in the NHS?
Methodology: An interpretivist approach is advanced on account of the importance placed on the experience that entrepreneurs in the NHS have of institutional incongruities and contradictions – as opposed to more objective & externally observed evaluation of institutional incongruity and contradiction - & the context specific processes of introducing innovation. An interpretivist perspective is also commonly used by researchers exploring different aspects of public or institutional entrepreneurship in a health service context. Thus, the bulk of published research is based on a similar perspective that is translated into a case study method for data collection.
Currie, G., Humphreys, M., Ucbasaran D. and McManus, S. (2008), “Entrepreneurial leadership in the English public sector: Paradox or possibility?”, Public Administration, 86(4), 987-1008
Doolin, B. (2002) ‘Enterprise Discourse, Professional Identity and the Organizational Control of Hospital Clinicians’. Organization Studies, 23(3): 369-390.
NHS (2012) Innovation, Health and Wealth.
Supervisor: Prof Christos Kalantaridis