US Pharmaceutical Industry Research Articles

Inventory and financial performance in the pharmaceutical industry: what transpired over the last two decades?

PurposeThe objective of this study is to explore the structural attributes of the pharmaceutical industry before the onset of the COVID-19 pandemic by examining the relationship between inventory and firm performance and developing a taxonomy of pharmaceutical firms based on the earns-turns matrix.Design/methodology/approachThis study examines the inventory–firm performance linkage, considering both total inventory and its discrete inventory components in pharmaceutical firms. In addition, this research develops a new taxonomy of pharmaceutical firms based on the earns-turns matrix. A large panel dataset of firms in the US pharmaceutical industry was collected for the period 2000–2019.FindingsThe results reveal that strategic groups identified based on this taxonomy show different levels of profitability and inventory turns in the earns-turns matrix. Most pharmaceutical firms moved from the low-right to the top-left section in the earns-turns matrix, indicating that these firms have generally pursued profitability rather than effective inventory management.Research limitations/implicationsThis study explores the structural attributes of the pharmaceutical industry using the earns-turns matrix. This two-dimensional analysis may not, however, capture the full complexity of inventory–firm performance dynamics.Practical implicationsThe mapping of strategic groups on the earns-turns matrix provides a useful tool for visual representations of the dynamics of strategic groups in terms of financial performance and inventory management performance. Practitioners can use the earns-turns matrix to benchmark their firm's position against their competitors.Originality/valueThis study broadens the scope of operations management research by introducing the earns-turns matrix as an empirical validation tool for operational and strategic management theories. This study emphasizes the effectiveness of the earns-turns matrix in analyzing strategic groups of pharmaceutical firms.

Sick with “shareholder value”: US pharma’s financialized business model during the pandemic

US-based pharmaceutical companies claim that they need high drug prices to provide sufficient profits to fund investments in innovation. This argument is consistent with the corporate-finance principle of retaining profits and reinvesting in productive capabilities that is central to our “theory of innovative enterprise” (TIE). The problem is that, for decades, resource allocation at the largest US-based pharmaceutical companies, known as “Big Pharma,” has embraced the agency-theory argument that a company should be run to “maximize shareholder value” (MSV). We use TIE to expose MSV as an ideology of “predatory value extraction” (PVE), which legitimizes price gouging, downsizing the labor force, and tax dodging. In the body of the article, we document that the largest US-based pharmaceutical companies have become highly financialized, using all their profits, and often more, to distribute cash dividends and stock buybacks to shareholders. We then show the extent to which stock-based remuneration incentivizes senior pharmaceutical executives to engage in this financialized behavior. As cases in point, we consider the financialization of the two US-based companies, Pfizer and Moderna, that were centrally involved in the delivery of COVID-19 mRNA vaccines during the SARS-CoV-2 pandemic. We conclude our analysis by placing PVE in the US pharmaceutical industry in the broader context of the US healthcare system and the US economy.

Quantitative Analysis for Chinese and US-listed Pharmaceutical Companies by the LightGBM Algorithm.

This article aims to quantitatively analyze the growth trend of listed pharmaceutical companies in the US and China by a machine learning algorithm. In the last two decades, the global pharmaceutical industry has faced the dilemma of low research & development (R&D) success rate. The US is the world's largest pharmaceutical market, while China is the largest emerging market. To collect data from the database and apply machine learning to build the model. LightGBM algorithm was used to build the model and identify the factor important to the performance of pharmaceutical companies. The prediction accuracy for US companies was 80.3%, while it was 64.9% for Chinese companies. The feature importance shows that the net profit growth rate and debt liability ratio are significant in financial indicators. The results indicated that the US may continue to dominate the global pharmaceutical industry, while several Chinese pharmaceutical companies rose sharply after 2015 with the narrowing gap between the Chinese and US pharmaceutical industries. In summary, our research quantitatively analyzed the growth trend of listed pharmaceutical companies in the US and China by a machine learning algorithm, which provide a novel perspective for the global pharmaceutical industry. According to the R&D capability and profitability, 141 US-listed and 129 China-listed pharmaceutical companies were divided into four levels to evaluate the growth trend of pharmaceutical firms.

Performance Feedback and Risk‐Taking: A Configurational Approach

AbstractBased on the notion that organizations are complex systems, this study combines the configurational perspective with the performance feedback theory to explore constellations of multi‐level causal conditions that explain variations in firm risk‐taking behaviour. Using the fuzzy set methodology as our analytic approach, we derive multiple configurations based on a dataset of 1753 observations belonging to 402 firms from the US pharmaceutical industry. Our findings espouse equifinality and the differential importance of factors denoting a firm's ability, motivation and opportunity space in determining low and high levels of risk‐taking. Across historical and social aspirations, our results disclose significant differences and similarities in constellations of causal conditions leading to high and low levels of risk‐taking, respectively. Our findings contribute to the behavioural theory of the firm and have important implications for managerial practice.

Microalgae-based circular supply chain configurations using Industry 4.0 technologies for pharmaceuticals

Renewable feedstocks and Industry 4.0 technologies in supply chains could operationalise circular economy and promote sustainable development. This study explores potential supply network configurations utilising microalgae feedstocks, whose bioactive morphology provides promising commercial opportunities, supported by continuous manufacturing technologies. Specifically, continuous microalgae cultivation photobioreactors and acoustic-based extractors, which leverage data, sensing, computation, and intelligent interconnection, enable centralised and decentralised network configurations. First, a value chain mapping approach was applied to the US pharmaceutical industry to illuminate how emerging microalgae platform technologies could stimulate the reconfiguration of medicine supply networks. Second, supply network modelling and scenario analysis allowed to explore supply chain configuration options for breast cancer pharmaceuticals in Texas. This research reveals that microalgae-based pharmaceutical supply networks using Industry 4.0 technologies could facilitate distributed manufacturing capabilities. The findings provide a foundation for galvanising future efforts toward exploiting renewable feedstocks and smart technologies for designing circular manufacturing networks.

Amgen launches Humira competitor

After years of legal jousting by the companies involved, the first drug has launched to challenge AbbVie’s Humira as a biological treatment for inflammatory disease. Amgen’s Amjevita is the first in a string of nine biosimilars —closely related versions of a biologic drug that function comparably—from several firms that are becoming available in the coming year. Drug developers are watching closely: Amjevita’s sales performance in the next few months will indicate the market’s appetite for biosimilars across the US pharmaceutical industry, experts say. “This is probably the most important biosimilar launch in the past couple of years, and probably for the next few years,” says Andrew Mulcahy, a senior economist at the nonprofit research organization RAND Corporation. “This is the drug to watch.” Biosimilars are the biologic equivalent of generic versions of small-molecule drugs. One difference is that, like the original biologics, biosimilars are costly to develop and challenging to

Patent Laws in Light of New Realities in the US Pharmaceutical Industry

Patent Laws in Light of New Realities in the US Pharmaceutical Industry

Competitive Analysis of CRM Strategies Using Analytic Hierarchy Process

In the era of increasing need for customer-centric marketing, the growth of technology such as the Web-based customer relationship management (CRM) has enabled pharmaceutical firms to develop new capabilities to sustain competitive advantage with superior marketing strategies, which include formulating unique, direct relationships with customers. To compete by integrating the online technologies across all aspects of a firm's operations, translates into the need for developing new skills as traditional ways of competing become insufficient. Towards this end, pharmaceutical firms have seized the opportunity to institute relationships with customers (physicians and patients) with the use of the Web. Our research focused on developing a technique that would allow for benchmarking Webbased CRM strategies of firms in any industry. We used the US pharmaceutical industry as a setting to demonstrate how our technique can be used to avoid the typical blind spots of competitor analysis. We used a method called Analytic Hierarchy Process (AHP) to analyze seven firms, selected by executives from the pharmaceutical industry, to compare their Web-based CRM strategies. Results suggest that three of the seven firms were far ahead in the adoption of the Web related to the CRM. One had more focused efforts in patient relationship where as another had a very high focus on physician relationship. The proposed technique can be utilized for competitive analysis in any industry. Implications and future research directions have been discussed.

The impact of healthcare legislation on the relationship between intangible investments and investor returns in the US pharmaceutical industry

The impact of healthcare legislation on the relationship between intangible investments and investor returns in the US pharmaceutical industry

The impact of healthcare legislation on the relationship between intangible investments and investor returns in the US pharmaceutical industry

The impact of healthcare legislation on the relationship between intangible investments and investor returns in the US pharmaceutical industry

Does regulatory approval speed impact product quality? Evidence from the US pharmaceutical industry (WITHDRAWN)

The trade-off between speed to market and product quality is a well-studied phenomenon in the new product development literature. However, there is little evidence of how supply chain stakeholders beyond the focal firm can impact the speed-quality trade-off. Moreover, the impact of speed to market on performance parameters outside the firm – such as consumer safety and surplus, or social welfare – is unclear. We address both these gaps in the literature by studying speed to market from a regulatory perspective and analyzing the impact of speed to market on safety-related construct. Rooted in the context of the US pharmaceutical drug industry, our study evaluates the impact of four expedited drug approval programs by the USFDA on the quality of the newly launched pharmaceutical drugs in the US. These programs are designed to provide speedier access to those novel drugs which address a large unmet clinical need for the patients. We operationalize product quality as the number of adverse events and show that drugs approved under expedited programs could result in as high as 131% more number of adverse events and 167% more number of serious adverse events. Our study makes important theoretical and practical contributions. Theoretically, this is the first study in the NPD literature that, to the best of our knowledge, examines the impact of regulatory speed on the product quality. Practically, our study highlights critical unintended consequences of expediting the drug approval process for the regulators.

Lecture No. 4 Cancer care in Asia from the perspective of latest developments in the US pharmaceutical industry.

Lecture No. 4 Cancer care in Asia from the perspective of latest developments in the US pharmaceutical industry.

Anne Case & Angus Deaton, Deaths of Despair and the Future of Capitalism

Anne Case and Angus Deaton in Deaths of Despair and the Future of Capitalism attribute much of the increase in white mortality in opioid overdose deaths to the US pharmaceutical industry and a failed US health care system. They extend human capital to health and economic progress outcomes unique to white US populations since the 1960s. Case and Deaton and Deaths of Despair add to this literature that links education, human capital, and white deaths of despair. Keywords. Monetary policy, Government, Good Government. JEL. B21, D00, D20, D40.

The more the merrier? Inventor team size, diversity, and innovation quality

Abstract Although teamwork shows stronger innovation ability than individuals and this advantage has been increasing over time, the negative effects of larger teams also appear as the number of inventor members increases. This study discusses the double-edged sword role of inventor teams in innovation quality at two extremes: the high quality and the low quality. We argue that, inventor team size influences innovation quality because diversity works in the evolutionary process of innovation, but different types of diversity play distinct moderating roles in these relationships. Using patent data from the US pharmaceutical industry, empirical results show that there is an inverted U-shape relationship between inventor team size and high-quality innovation, and a negative relationship between inventor team size and low-quality innovation. These relationships are moderated at different degree by technological and geographic diversity. Our findings contribute to existing literature of innovation and also provide meaningful implications for innovation management.

Philadelphia and the Delaware Valley: A Geographically Distributed and Expanding Life Science Ecosystem

Philadelphia has been considered by many to be the birthplace of the modern US pharmaceutical industry with Merck & Co. Inc.’s research division Merck Research Labs [originally called MSDRL] based in West Point and GSK’s primary US labs [originally SKF] now based in Collegeville. The City of Philadelphia is also home to two of the oldest medical schools in the US: Perelman School of Medicine at the University of Pennsylvania founded in 1765 and the Sydney Kimmel Medical College [formerly Jefferson Medical College] founded in 1824. The conjunction of those two touchpoints along with the other big pharma players, e.g., Johnson & Johnson/Janssen and emerging biotech entities in the wider Delaware Valley region is significant. Also noteworthy is the presence of other research intensive universities such as Drexel University, Temple University, Jefferson University and research institutes such as the Wistar Institute, Fox Chase Cancer Center [associated with Temple University School of Medicine], Lankenau Institute, Monell Chemical Senses Center and the Coriell Institute in Southern New Jersey.

Applications of Physiologically Based Biopharmaceutics Modeling (PBBM) to Support Drug Product Quality: A Workshop Summary Report.

This report summarizes the proceedings for Day 3 of the workshop titled "Current State and Future Expectations of Translational Modeling Strategies toSupportDrug Product Development, Manufacturing Changes and Controls". From a drug product quality perspective, patient-centric product development necessitates the development of clinically relevant drug product specifications (CRDPS). In this regard, Physiologically Based Biopharmaceutics modeling (PBBM) is a viable tool to establish links between in-vitro to in-vivo data, and support with establishing CRDPS. The theme of day 3 was practical applications of PBBM to support drug product quality. In this manuscript, case studies from US FDA, EMA and pharmaceutical industry on applications of PBBM in drug product quality are summarized which include 1) regulatory agency's perspectives on establishing the safe space and achieving study waivers, 2) model-informed risk assessment on the effects of acid reducing agents, bridging of dissolution methods, food effect, and formulation selection, and 3) understanding clinical formulation performance. Breakout session discussions focused on four topics - 1) terminologies related to physiologically based modeling in support of drug product quality, 2) regulatory harmonization on evidentiary standards, 3) CRDPS approaches and 4) bridging between biorelevant and quality control (QC) dissolution methods.

Market uncertainty, innovation of firms in alliance and alliance partner characteristics

PurposeWhile prior alliance literature has focused on how firms exploit alliance strategies to enhance performance and innovation, little is known about whether market uncertainty increases, decreases or has no effect on innovation outcomes of firms involved in alliances, and under what conditions these firms promote innovation in an uncertain market through alliances. Relatedly, innovation research has examined the impact of environmental uncertainty on innovation; however, this line of research does not answer the question in the alliance context.Design/methodology/approachUsing data of firms engaged in alliances in the US pharmaceutical and biotechnical industries between 1990 and 2015, the authors examine firms' alliance partner characteristics and innovation outputs in terms of innovation quantity and exploratory innovation.FindingsWe find that market uncertainty hampers innovation quantity and exploratory innovation of firms involved in alliances, because in this environment, relational risks and coordination challenges outweigh the benefits of knowledge sharing from partners. However, the authors find that alliance partners' characteristics such as a different industry and different country origins mitigate the negative effect of market uncertainty on these firms' innovation by offering new business opportunities and enhancing their learning capability.Originality/valueThis study contributes to the alliance literature by addressing a significant question of whether and how market uncertainty matters in the innovation output of firms involved in alliances and how these firms address the environmental challenges and promote innovation. The study also contributes to innovation research by delineating the nature of market uncertainty and its impact on innovation in an alliance context.

Strategic Alliances and Inventor Mobility - Evidence from US Pharmaceutical Industry

Attention on the same domain (e.g. industry, technology) often leads intensive competition between the firms; and such an attention also increases the likelihood of alliance formation, too. Particularly, in learning alliances, those ‘competitors turned collaborators’ often have a tension between to collaborate more to create new knowledge and compete within the alliance to misappropriate each other’s knowledge. While sustaining collaboration with good faith and trust would help to generate more technological innovation, poaching of the partner’s corporate scientists is often a result of such an effort of knowledge misappropriation. While the non-poaching mobiltiy is held stable, within-alliance compeittion increases poaching as the returns from learning-by-hiring exceeds those from the learning allaince. Integrating datasets of R&D alliances, corporate scientist mobility, and product market competition in the U.S. pharmaceutical industry from 1985 to 2008, we found that a firm’s competitive aggressiveness toward its alliance partner in the pre-alliance period positively affected the number of corporate scientists it poaches from its partner during the post-alliance period. This main effect is negatively moderated by the geographical and technological proximities between the paired partner firms and positively moderated by the firm specificity of the partner’s knowledge base.

Common Ownership in the US Pharmaceutical Industry: A Network Analysis

We investigate patterns in common ownership networks between firms that are active in the US pharmaceutical industry for the period 2004-2014. Our main findings are that “brand firms” — i.e. firms that have R&D capabilities and launch new drugs — exhibit relatively dense common ownership networks with each other that further increase significantly in density over time, whereas the network of “generic firms” — i.e. firms that primarily specialize in developing and launching generic drugs — is much sparser and stays that way over the span of our sample. Finally, when considering the common ownership links between brands firms, on the one hand, and generic firms, on the other, we find that brand firms have become more connected to generic firms over time. We discuss the potential antitrust implications of these findings.

Institutional investors and medical innovation

In this research paper, we investigate if institutional investors influence corporate innovation in the US pharmaceutical industry. We hand collect unique datasets from the Food and Drug Administration (FDA), including drug patents, drug approvals, medical device approvals, and Phase I-II-III drugs under clinical testing. We find that higher institutional ownership has a positive, causal effect on firm innovation. We document that institutional ownership increases the number of FDA approved products. Then, we examine the innovation quality and find that institutional ownership reduces the likelihood of both drug recalls and market withdrawals. Our results investigate possible underlying mechanisms through which institutional investors provide faster and more frequent innovation outcomes: Institutional holdings act as active monitors by providing insurance for firm executives against innovation failures. Our article sheds new lights on the real effects of institutional investors on pharmaceutical firms’ innovation.