Abstract
In this chapter, we focus attention on the process of innovation and discovery in one of the most dynamic and research-intensive industries in the American economy—the ethical drug industry. A pharmaceutical innovation is the first application of a pharmaceutical discovery. The distinction between an innovation and a discovery is important in the ethical pharmaceutical industry because the medical benefits of a pharmaceutical discovery cannot be fully realized until the drug is actually produced and distributed to the medical profession.1 Fortunately, it is not too difficult to identify the innovator—the firm that was first to introduce a certain new drug to the market. What is more difficult is to trace an innovation back to its sources.
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Notes
The history of penicillin is ample proof that a major medical advance has little medical or economic significance until it is actually applied. The benefits of Fleming’s 1929 discovery were not realized until the widespread use of penicillin during World War II. The history of penicillin has been recorded in considerable detail in several sources. For a condensed description, see J. Jewkes, D. Sawers, and R. Stillerman, The Sources of Invention (New York: W. W. Norton, 1970), pp. 23–25 and 338–339.
More extensive accounts are provided in L. J. Ludovici, Fleming-Discoverer of Penicillin (London: Andrew Dates, Ltd., 1952);
Ruth Fox, “A Science Milestone-Sir Alexander Fleming and the Story of Penicillin,” Science Digest (September 1953);
Alexander Fleming, Penicillin-Its Practical Application, second ed. (London, 1946).
See J. Enos, “Invention and Innovation in the Petroleum Refining Industry,” in The Rate and Direction of Inventive Activity (Princeton, N.J.: Princeton University Press, 1962).
The American Medical Association Commission on the Cost of Medical Care, The Cost of Medical Care, Vol. III, (Chicago: American Medical Association, 1964).
For example, see Joseph Schumpeter, Business Cycles (New York: McGraw-Hill, 1939).
For further discussion of these views, see John Kenneth Galbraith, American Capitalism (Boston: Houghton Mifflin, 1952);
A. Kaplan, Big Enterprise in a Competitive System (Washington, D.C.: The Brookings Institution, 1954);
Edwin Mansfield, The Economics of Technological Change (New York: W. W. Norton, 1968).
E. Mason, “Schumpeter on Monopoly and the Large Firm,” Review of Economics and Statistics (May, 1951).
Primary sources of sales data were F-D-C Reports; J. F. Bohmfalk, “Markets for Pharmaceuticals,” Chemical and Engineering News (November 30, 1963), p. 5012;
Arthur D. Little, Inc., “The Technology Behind Investment” (Cambridge, Mass., 1952).
Sales data was also obtained from the following unpublished MBA theses written at the University of Pennsylvania: B. L. Brussock, “An Investment Analysis of the Ethical Drug Industry, 1946–1955” (1957);
J. J. Hughes, Jr., “The Pharmaceutical Industry, 1953–1957” (1959)
P. Capen, “An Economic Analysis of the Pharmaceutical Industry” (1959).
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© 1971 W. W. Norton & Company, Inc.
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Mansfield, E., Rapoport, J., Schnee, J., Wagner, S., Hamburger, M. (1971). Innovation and Discovery in the Ethical Pharmaceutical Industry. In: Research and Innovation in the Modern Corporation. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-01639-6_8
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DOI: https://doi.org/10.1007/978-1-349-01639-6_8
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-01641-9
Online ISBN: 978-1-349-01639-6
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