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Pharmaceutical Leadership of Countries: Role of Accumulative Effect Of R&D Expenditures and Effect of Imports Continuity

33
Rubric: Economy, Economic Theory
DOI: 10.20542/0131-2227-2021-65-11-49-59
S. Balashova, balashova_sa@pfur.ru
Peoples’ Friendship University of Russia (RUDN University), 6, Miklukho-Maklaya Str., Moscow, 117198, Russian Federation.
N. Volgina, volgina_na@pfur.ru
Peoples’ Friendship University of Russia (RUDN University), 6, Miklukho-Maklaya Str., Moscow, 117198, Russian Federation.
PDF (RUS)

Received 15.02.2021.

Acknowledgements. The article was prepared with the support of the RFFI as part of the research project “Comparative analysis of the benefits and risks of embedding national companies in global value chains: on the example of the Russian pharmaceutical industry. Belarus and Kazakhstan” (no. 20-014-00011/20).



Abstract

The pharmaceutical industry is one of the key sectors of the world modern economy, both in terms of its innovativeness and in terms of its contribution to GDP. Many countries and companies strive to achieve pharmaceutical leadership in the global market, by which we mean the volume of foreign sales (we distinguish between country and corporate pharmaceutical leadership). The aim of this article is to identify a number of factors that (to one degree or another) determine the leadership of countries in the global pharmaceutical industry or in the global pharmaceutical market. We hypothesize that the volume of national pharmaceutical exports depends on domestic R&D expenditures carried out by national companies, as well as on the volume of national pharmaceutical imports, that is, on the degree or depth of participation of pharmaceutical companies in the internationally fragmented pharmaceutical chain. Based on the conducted econometric analysis, the authors come to the conclusion that both R&D expenditures and participation in fragmented production have a significant impact on the volume of national pharmaceutical exports. At the same time, in the latter case, the effect of the continuous growth of imports of previous periods for the growth of exports of subsequent periods gets special significance. In the case of R&D expenditures, a special role is played by the cumulative effect of these costs, rather than individual, albeit large investments in pharmaceuticals. When modelling the volumes of pharmaceutical exports, the countries “outpacing” the market were identified, that is, countries with the rates of national pharmaceutical exports exceeding the world ones. Among them were both countries where the headquarters of Big Pharma are located, and countries where there are no major pharmaceutical companies leading. This conclusion means that countries that do not have the headquarters of Big Pharma companies on their territory, which include, in particular, Russia, Kazakhstan and Belarus, also have certain potential windows of opportunity to take a leading position in the global pharmaceutical market.


Keywords

pharmaceutical leadership, Big Pharma, R&D, fragmentation of production, exports, imports


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For citation:
Balashova S., Volgina N. Pharmaceutical Leadership of Countries: Role of Accumulative Effect Of R&D Expenditures and Effect of Imports Continuity. World Eсonomy and International Relations, 2021, vol. 65, No 11, pp. 49-59. https://doi.org/10.20542/0131-2227-2021-65-11-49-59

Contents World Eсonomy and International Relations. 2021, vol. 65, No 11

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