Cardiff University | Prifysgol Caerdydd ORCA
Online Research @ Cardiff 
WelshClear Cookie - decide language by browser settings

Measuring the efficiency of large pharmaceutical companies: an industry analysis

Gascón, Fernando, Lozano, Jesús, Ponte Blanco, Borja and de la Fuente, David 2017. Measuring the efficiency of large pharmaceutical companies: an industry analysis. The European Journal of Health Economics 18 (5) , pp. 587-608. 10.1007/s10198-016-0812-3

[thumbnail of Accepted Article.pdf]
Preview
PDF - Accepted Post-Print Version
Download (1MB) | Preview

Abstract

This paper evaluates the relative efficiency of a sample of 37 large pharmaceutical laboratories in the period 2008-2013 using a Data Envelopment Analysis (DEA) approach. We describe in detail the procedure followed to select and construct relevant inputs and outputs that characterize the production and innovation activity of these pharmaceutical firms. Models are estimated with financial information from Datastream, including R&D investment, and the number of new drugs authorized by the European Medicines Agency (EMA) and the US Food and Drug Administration (FDA) considering the time effect. The relative performances of these firms –taking into consideration the strategic importance of R&D– suggest that the pharmaceutical industry is a highly competitive sector given that there are many laboratories at the efficient frontier and many inefficient laboratories close to this border. Additionally, we use data from S&P Capital IQ to analyze 2,071 financial transactions announced by our sample of laboratories as an alternative way to gain access to new drugs, and we link these transactions with R&D investment and DEA efficiency. We find that efficient laboratories make on average more financial transactions, and the relative size of each transaction is larger. However, pharmaceutical companies that simultaneously are more efficient and invest more internally in R&D announce smaller transactions relative to total assets.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Uncontrolled Keywords: Pharmaceutical laboratoriesNew chemical entitiesBusiness performanceR&DMarket for technologyNon-parametric efficiencyDEA
Publisher: Springer
ISSN: 1618-7598
Date of First Compliant Deposit: 7 February 2017
Date of Acceptance: 14 June 2016
Last Modified: 06 Nov 2023 23:36
URI: https://orca.cardiff.ac.uk/id/eprint/98146

Citation Data

Cited 18 times in Scopus. View in Scopus. Powered By Scopus® Data

Actions (repository staff only)

Edit Item Edit Item

Downloads

Downloads per month over past year

View more statistics