Determinants of Vaccine R&D in the Pharmaceutical Sector

Abstract

The aim of this paper is to analyse the economic and financial assets that influence vaccine research investments by pharmaceutical companies. Starting from vaccine manufacturing process, the first part describes European Union (EU) and United States (US) regulatory systems and the relative Intellectual Property Rights (IPRs). Then, the main obstacles to vaccine research and the main strategies suitable to enhance it are discussed. The second part introduces an empirical analysis of 10 pharmaceutical companies’ corporate Research and Development (R&D) from the 2008-2015 period by using STATA 12, through a Fixed Effect estimation of two models. The three hypotheses considered regard the main assets that influence vaccine research and why, the relevance of properties acquisition as a substitute for R&D as whether regulatory framework does obstruct investments choices or not. The results confirm that liquidity and size have a positive impact on vaccine research, whereas leverage influences it negatively. In addition, more acquisitions lead to fewer R&D investments since companies find less expensive to acquire knowledge rather than investing on it. Finally, a Chow Test that considers 2010 as a breaking point, led to no structural breaks for panel data, which implies that the new European Regulatory Directive on pharmacovigilance has no influence on the pharmaceutical companies’ behaviour. Keywords: vaccines, health economics, research & development