3216A Windsor Road
Austin, TX 78703
Institutional Affiliation: University of Texas at Austin
Information about this author at RePEc
NBER Working Papers and Publications
|November 2004||Organizational Scope and Investment: Evidence from the Drug Development Strategies and Performance of Biopharmaceutical Firms|
with David Scharfstein: w10933
This paper compares the clinical trial strategies and performance of large, established ("mature") biopharmaceutical firms to those of smaller ("early stage") firms that have not yet successfully developed a drug. We study a sample of 235 cancer drug candidates that entered clinical trials during the period 1990-2002 and were sponsored by public firms. Early stage firms are more likely than mature firms to advance drug candidates from Phase I to Phase II clinical trials. However, early stage firms have much less promising clinical results in their Phase II trials and their Phase II drug candidates are also less likely to advance to Phase III and to receive Food and Drug Administration approval. This pattern is more pronounced for early stage firms with large cash reserves. The evidence poi...