Determinants of technology cycle time in the U.S. pharmaceutical industry

The focus of this study is to examine different factors that influence a firm's technology cycle time. The U.S. pharmaceutical industry is analyzed from 1977–1991. Specifically, the sample includes 21 firms that (a) primarily produce brand ethical drugs, (b) are publicly-owned companies, and (c) have pharmaceutical sales account for a substantial portion of company sales. Our measure of faster technology cycle time is positively correlated to measures of the knowledge base level of firms, the breadth of firms’ knowledge bases, size, and age; it is negatively correlated to advertising expenditures and the percent of US. firm sales to total sales. However, the most notable finding is that technology cycle time is significantly faster for firms that predominantly generate new knowledge internally, and slower for firms that rely more on external sources of new knowledge.

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