Big pharma and monopoly capitalism: A long-term view
Aug 16, 2021 15:59:15 GMT -5
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Post by lazyb767 on Aug 16, 2021 15:59:15 GMT -5
www.lem.sssup.it/WPLem/files/2021-26.pdf
In this paper we have attempted a comprehensive empirical analysis by matching com- plementary data sources on patenting activities in pharma. Notably, our paper rep- resents one the few efforts linking new products included in the Orange Book and approved by the Food and Drug Administration with their patents.
We analyse pharmaceutical patents along three main lines. First, we look at their quality by employing standard indicators in terms of backward and forward citations, citations to non patent literature, number of claims, breakthrough innovations. While pharma patents strongly rely on prior and scientific knowledge, the amount of break- through innovations is remarkably low and decreases over time. Second, we identify and characterize those patents receiving forms of government interest – as such a mark for quality – and find that OB patents are relatively few, decrease over time and con- centrate on a bunch of products. Third, we look at appropriability via extended patent families and we identify a declining pattern of new families vis-a`-vis the stock of ex- isting ones, coupling with an increasing family size, signalling therefore raising patent thickets and stronger barriers to imitations.
After documenting that the big explosion in patenting activities does not map into a corresponding explosion in innovative activities, we move to the firm-level analy- sis in order to understand the relationship between patenting activities, profitability and R&D expenses. We document that top patenting firms present converging profit margins over the period of interest while between-firm R&D margins look to be di- verging over time. Additionally, we find that R&D and profitability margins are quite correlated with the stock of owned patents for the top patenting firms while, when considering all companies, correlation in R&D margins reveals to be lower than the correlation in profitability.
Taking stock of the empirical evidence collected in this paper and considering the starting empirical question, whether IPRs are an institution promoting innovative ac- tivities, with reference to the pharmaceutical sector we can hardly support a positive answer. According to our analysis, IPRs encoded in patents represent legal barriers to protect intellectual monopolies rather than an incentive and a reward to innovative ef- forts. Patenting strategies look to be quite aggressive in defining extensive knowledge borders and ample space of possibility of infringements.
In this paper we have attempted a comprehensive empirical analysis by matching com- plementary data sources on patenting activities in pharma. Notably, our paper rep- resents one the few efforts linking new products included in the Orange Book and approved by the Food and Drug Administration with their patents.
We analyse pharmaceutical patents along three main lines. First, we look at their quality by employing standard indicators in terms of backward and forward citations, citations to non patent literature, number of claims, breakthrough innovations. While pharma patents strongly rely on prior and scientific knowledge, the amount of break- through innovations is remarkably low and decreases over time. Second, we identify and characterize those patents receiving forms of government interest – as such a mark for quality – and find that OB patents are relatively few, decrease over time and con- centrate on a bunch of products. Third, we look at appropriability via extended patent families and we identify a declining pattern of new families vis-a`-vis the stock of ex- isting ones, coupling with an increasing family size, signalling therefore raising patent thickets and stronger barriers to imitations.
After documenting that the big explosion in patenting activities does not map into a corresponding explosion in innovative activities, we move to the firm-level analy- sis in order to understand the relationship between patenting activities, profitability and R&D expenses. We document that top patenting firms present converging profit margins over the period of interest while between-firm R&D margins look to be di- verging over time. Additionally, we find that R&D and profitability margins are quite correlated with the stock of owned patents for the top patenting firms while, when considering all companies, correlation in R&D margins reveals to be lower than the correlation in profitability.
Taking stock of the empirical evidence collected in this paper and considering the starting empirical question, whether IPRs are an institution promoting innovative ac- tivities, with reference to the pharmaceutical sector we can hardly support a positive answer. According to our analysis, IPRs encoded in patents represent legal barriers to protect intellectual monopolies rather than an incentive and a reward to innovative ef- forts. Patenting strategies look to be quite aggressive in defining extensive knowledge borders and ample space of possibility of infringements.
