Effect of research and development outsourcing on new drug approvals in the pharmaceutical industry

Abstract

Abstract Objectives This paper studies the relationship between the outsourcing of research and development activities in the pharmaceutical industry and the approval of new drug applications by the US Food and Drug Administration. Methods We controlled for the unobserved company-specific effect and other econometric issues. Unique company-level pharmaceutical outsourcing data were used for the period from 1995–2006. Key findings and conclusions Results show that contemporaneous, one and two periods lagged outsourcing are more helpful than early outsourcing in getting successful new drug applications. The study also shows the importance of the sales figures of a company in relation to its likelihood of introducing a new drug onto the market.