| Abstract: |
Recent empirical contributions emphasize the importance of (potential) market
size for the development of new pharmaceuticals. At the same time many
scholars point out the importance of of scientific advances for the industry’s
R&D activities. Against this background I analyze the relationship between
(potential) market size, technological opportunities, and the number of new
pharmaceuticals in the United States. Technological opportunities are
operationalized as growth rates of the relevant knowledge stock as proposed by
Andersen (1999, 1998). I analyze a unique dataset by using an “entry stock”
Poisson quasi-maximum likelihood estimator. The results reveal a rather robust
and significantly positive response of the number of new pharmaceuticals,
i.e., new molecular entities or new drug approvals, to market size and
technological opportunities. |