Francis Tapon

Research Collaborations by Multi-National Research Oriented Pharmaceutical Firms: 1988–1997

In this paper we survey collaborations on research by 22 of the top pharmaceutical companies in the world. In particular, we discuss the benefits and costs of collaborations on research and we review the existing literature on these issues. We present data for these major research-oriented pharmaceutical firms focusing on collaborations that deal with research, the technologies associated with these collaborations, and the firms that collaborate with these 22 multi-nationals.

A transaction costs analysis of innovations in the organization of pharmaceutical R & D

Abstract This paper uses transaction costs economics to analyze the increasing importance of vertical disintegration of R&D by large pharmaceutical and chemical firms. First, it discusses three characteristics of the research-based pharmaceutical industry. Then, it shows that market failures related to long-term joint-venture R&D contracts between firms and university laboratories are less significant than appears at first and may account for their striking increase over the past fifteen years.

Are You Paying Your Employees to Cheat? An Experimental Investigation

Abstract We compare, through a laboratory experiment using salient financial incentives, misrepresentations of performance under target-based compensation with those under both a linear piece-rate and a tournament-based bonus system. An anagram game was employed as the experimental task. Results show that productivity was similar and statistically indistinguishable under the three schemes. In contrast, whether one considers the number of overclaimed words, the number of work/pay periods in which overclaims occur, or the number of participants making an overclaim at least once, target-based compensation produced significantly more cheating than either of the other two systems. While earlier research has compared cheating under target-based compensation with cheating under non-performance-based compensation, which offers no financial incentive to cheat, this is the first study that compares cheating under target-based schemes to cheating under other performance-based schemes. The results suggest that cheating as a response to incentives can be mitigated without giving up performance pay altogether.

International correlations across stock markets and industries: trends and patterns 1988–2002

Data from eight major stock markets world-wide and five industries in each market are analysed. The correlations of return indices between countries and industries are studied with the hope of finding answers or confirming previous empirical answers to the following questions and the implications of these findings for investment strategy determined. (1) Do both the country-specific correlations and industry-specific correlations fluctuate significantly over time between 1988 and 2002? (2) Are the country-specific and industry-specific correlations positively related to stock market volatilities? It is concluded that: First, the correlations among national stock markets have been increasing between 1988 and 2002 and the correlations are not constant over the time period of this research. This indicates that the effect of globalization outweighs country-specific factors in determining the co-movements of the markets. Second, the correlations are positively related to volatility in the stock markets in this sample. Correlations rise in periods when conditional volatility of markets is large. Finally, in most cases, correlations between national stock markets are greater than those between the five industries chosen in these markets, indicating that investment diversification across industries provides greater risk reduction benefits than diversification across countries.

The optimal organization of research: evidence from eight case studies of pharmaceutical firms

Abstract In this paper we examine the results of interviews of scientists and executives in eight pharmaceutical companies on the issue of how best to organize the RD when the firm is playing catch up in an area of science where it is weak; and when governmental policies force firms to carry out R&D in particular locations.

Some empirical evidence on post-patent barriers to entry in the Canadian pharmaceutical industry.

In this paper we present some empirical evidence and comment upon the significance of being a pioneering drug in the Canadian pharmaceutical market. We analyse prices and market shares of 21 first entrant drugs in the Canadian pharmaceutical industry. The Canadian experience described in this paper is, we believe, of considerable relevance to U.S. policy makers. Canadian public policy, both federal and provincial, has already created the competitive environment that some U.S. policy makers seek. This paper documents the effect of such a system on the price of drugs and the market shares, hence the revenues, of patent-holders.

Drug discovery and development in four Canadian biotech companies

In this paper, we discuss the R&D process in the pharmaceutical/biotechnology industry from the viewpoint of four leading Canadian biotech startups. Based on a series of interviews with these firms, we outline the role of joint ventures and strategic alliances with university laboratories and with large established pharmaceutical firms in furthering these small firms’ ambition of themselves becoming large and established. We find that the evolution of this industry has made this goal much harder to reach and we discuss the creative ways in which these firms have adapted and thrived.

The Impact of Risk Aversion and Stress on the Incentive Effect of Performance Pay

We demonstrate that effectiveness of performance-contingent incentives is inversely related to individual risk-aversion levels through two mechanisms: 1) rational optimizing decisions about the amount of effort to supply when effort is positively correlated with risk exposure and 2) the possibly choke-inducing stress accompanying financial uncertainty. In two laboratory studies using real-effort tasks, we find a significant inverse relationship between productivity improvement under performance pay and risk-aversion levels. Moreover, we show that both mechanisms help explain this result. For about 25% of participants, performance actually deteriorates under performance pay, and the probability of such deterioration increases with risk aversion and stress.

Equity Portfolio Diversification: How Many Stocks are Enough? Evidence from Five Developed Markets

In this study of five developed markets we analyse the sizes of portfolios required for achieving most diversication benefits. Using daily data, we trace the year-to-year dynamic of these sizes between 1975 and 2011. We compute several widely-accepted measures of risk and use an extreme risk measure to account for black swan events. In addition to providing portfolio size recommendations for an average investor, we estimate confidence bands around central measures of risk and offer recommendations for attaining most diversification benefits 90 percent of the time instead of on average. We find that investors concerned with extreme risk can achieve diversification benefits with a relatively small number of stocks.

Discretionary Expenditures and Profit Risk Management: The Galbraith-Caves Hypothesis

I. Introduction, 303.—II. Model and comparative static properties, 306.—III. The influence of market power on equilibrium per unit discretionary expenditures, 312.—IV. Concluding remarks, 314.—Mathematical appendix, 315.