Innovation, R&D Productivity, and Global Market Share in the Pharmaceutical Industry

In this paper, we estimate two empirical models using a pooled, cross-section sample of international pharmaceutical firms for the period 1987 to 1989. The first model tests the relationship between R&D productivity and a vector of firm-specific characteristics. The second model tests the determinants of global market share. The empirical analysis reveals three findings. First, we find evidence that there are diminishing returns in the pharmaceutical R&D process. Second, we find that firm size has a positive effect on average R&D productivity and a positive impact on the marginal R&D productivity for plausible R&D staff sizes. And third, we find evidence that R&D productivity and the number of sales employees have a positive effect on the firm's global market share.