The dynamics of technological innovation: the case of the pharmaceutical industry

This is an empirical and historical study of the dynamics of technological innovation (TI) in the pharmaceutical industry from its establishment at the beginning of the 19th century to 1990. It is based on the identification and evaluation of the originality and commercial significance of 1736 product innovations (new medicines) commercialized between 1800 and 1990, and on company economic data for the period 1950-1990. The study is presented in the framework of established macroeconomic theory of technical change. Applying both empirical and historical evidence, the study: (a) identifies the technological, social and economic driving forces for TI; (b) examines the relation between originality and market performance of medicinal innovations; (c) studies the mechanisms of the diffusion of medicinal technologies that led to the formation of five successive generations of drugs (long waves); (d) describes the structural changes forced on the pharmaceutical industry by the introduction and development of each successive generation of drugs; (e) provides evidence of the concentration of the innovative segment of the pharmaceutical industry among few large companies, which sustained high levels of growth and R&D expenditures by means of inhouse innovation, technological and therapeutic market specialization, and mergers and acquisitions of companies within and outside the pharmaceutical industry; and (f) shows that the localization of the innovative segment of the pharmaceutical industry in the USA, UK, Germany, Switzerland and France was caused by the influence of national environments on the intensities of the driving forces for TI. (C) 2001 Elsevier Science B.V. All rights reserved.