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Variability of 15 countries including United States, Brazil, United Kingdom and Canada, with respect to the prices of new and old medicnes', particularly that of antidepressants, antihypertensives, and anyiepileptics, and to the rate they are marketed and diffused. It was found that the U.S. is relatively average, in terms of comparable prices of old and new drugs, and diffusion. The effects of promoting old and new drugs on market share of new drugs are analyzed.

Securities and Data Corp's information on 383 companies for 1988 to 2001 were analyzed in determining the implications of mergers and acquisitions (MAQs) in the biotechnology and pharmaceuitcal industries. It was observed that large companies use MAQs to prevent expected unproductivity caused by excess in capacity, while small firms employ MAQs to solve their financial problems. The effectiveness of MAQs as a solution to excess capacity and economic problems of biotechnology and pharmaceutical companies is evaluated.

The pharmaceutical industry is important because it is a major source of medical innovation. The U.S. research-based industry invests about 17 percent of sales in R and D, and R [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jhealeco.2004.09.006 Byline: Patricia M. Danzon (1), Sean Nicholson (1), Nuno Sousa Pereira (1)(2) Keywords: Pharmaceutical and biotechnology R&D; Alliances; Economics of scale and scope Abstract: Using data on over 900 firms for the period 1988-2000, we estimate the effect on phase-specific biotech and pharmaceutical R&D success rates of a firm's overall experience, its experience in the relevant therapeutic category, the diversification of its experience across categories, the industry's experience in the category, and alliances with large and small firms. We find that success probabilities vary substantially across therapeutic categories and are negatively correlated with mean sales by category, which is consistent with a model of dynamic, competitive entry. Returns to experience are statistically significant but economically small for the relatively straightforward phase 1 trials. We find evidence of large, positive and diminishing returns to a firm's overall experience (across all therapeutic categories) for the larger and more complex late-stage trials that focus on a drug's efficacy. There is some evidence that a drug is more likely to complete phase 3 if developed by firms whose experience is focused rather than broad (diseconomies of scope). There is evidence of positive knowledge spillovers across firms for phase 1. However, for phase 2 and phase 3 the estimated effects of industry-wide experience are negative, which may reflect either higher Food and Drug Administration (FDA) approval standards in crowded therapeutic categories or that firms in such categories must pursue more difficult targets. Products developed in an alliance tend to have a higher probability of success, at least for the more complex phase 2 and phase 3 trials, and particularly if the licensee is a large firm. Author Affiliation: (1) University of Pennsylvania, Health Care Management Department, The Wharton School, 3641 Locust Walk, Philadelphia, PA 19104, USA (2) Universidade do Porto, Portugal Article History: Received 1 March 2003; Revised 1 July 2004; Accepted 1 September 2004

Cross-national and domestic drug price differences are not as great as has been claimed. The prices charged to cash-paying retail customers are not boosted by discounts to large purchasers.