Scale effect in blockbuster research and development: The differences between production in Japanese Firms and in US/EU Firms

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Abstract

The purpose of this study is to empirically analyze the differences between blockbuster (big sales new drugs) production in Japanese firms and in US/EU firms. Many previous studies used the NCEs (New Chemical Entities) or patents as a measure of the performance of pharmaceutical R&D. But most of the profit of the pharmaceutical companies is gained by small number of new drugs with big sales, called blockbusters. Thus, we focus on blockbuster research and development in this study. The pharmaceutical R&D can be divided into the research and the development processes. The research process is the process to seek a NCE candidate protected by the patent. On the other hand, the development process makes up one of the NCEs into a new drug. For this reason, we analyze not only the differences in research process but also the differences in development process. The estimation results for Japanese firms are summarized as follows: The research process shows decreasing returns to R&D investment scale, but the development process shows increasing returns. On the other hand, the estimation results for US/EU firms, larger than Japanese firms in their operating scale, are summarized as follows: The research process shows decreasing returns to R&D investment scale, but the development process shows constant returns. From these estimation results, we find important differences between blockbuster production in Japanese firms and in US/EU firms. US/EU firms are lager than Japanese firms, but the blockbuster production in development process of US/EU firms is low. While the blockbuster production in research process of US/EU firms is similar to Japanese firms.

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APA

Miyashige, T., & Fujii, A. (2013). Scale effect in blockbuster research and development: The differences between production in Japanese Firms and in US/EU Firms. In Proceedings - 20th International Congress on Modelling and Simulation, MODSIM 2013 (pp. 1270–1276). Modelling and Simulation Society of Australia and New Zealand Inc. (MSSANZ). https://doi.org/10.36334/modsim.2013.f4.miyashige

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