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6 - Heterogeneity and firm growth in the pharmaceutical industry

Published online by Cambridge University Press:  22 September 2009

By
Elena Cefis ,
Matteo Ciccarelli  and
Luigi Orsenigo
Edited by
Mariana Mazzucato  and
Giovanni Dosi
Elena Cefis
Affiliation:
Utrecht University, Netherlands; Bergamo University, Italy
Matteo Ciccarelli
Affiliation:
European Central Bank, Frankfurt, Germany
Luigi Orsenigo
Affiliation:
Department of Engineering, University of Brescia; Centro di Ricerca sui Processi di Innovazione e Internazionalizzazione, Bocconi University, Milan, Italy
Mariana Mazzucato
Affiliation:
The Open University, Milton Keynes
Giovanni Dosi
Affiliation:
Sant'Anna School of Advanced Studies, Pisa
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Summary

Introduction

In this chapter we investigate some properties of the patterns of firm growth in the pharmaceutical industry. The issue of firm growth is interesting as such, but there are two particular (related) reasons why we believe it to be particularly intriguing in the case of pharmaceuticals.

First, surprisingly, very little detailed statistical evidence on the subject is actually available. Second, it is worth exploring how the peculiar underlying patterns of innovation and competition that characterize pharmaceuticals translate into firms' growth.

The main features of the structure of the pharmaceutical industry can be summarized as follows. It is a highly innovative, science-based, R&D- and marketing-intensive industry. However, the industry is characterized by quite low levels of concentration, both at the aggregate level and in the individual sub-markets, such as, for example, cardiovascular, diuretics, and tranquilizers. Similarly, the international pharmaceutical industry is characterized by a significant heterogeneity in terms of firm size, strategic orientations, and innovative capabilities. The “innovative core” of the industry has traditionally been composed of a relatively small group of large corporations (“big pharma”), which includes many of the early entrants from the turn of the twentieth century. These firms are located in the countries that have dominated the industry ever since its inception, namely Germany, Switzerland, the United Kingdom, and the United States. These firms maintained an innovation-oriented strategy over time, with both radical product innovations and incremental product and process innovations.

Type
Chapter
Information
Knowledge Accumulation and Industry Evolution
The Case of Pharma-Biotech
 , pp. 163 - 207
Publisher: Cambridge University Press
Print publication year: 2006

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