Innovation and corporate growth in the evolution of the drug industry

This work studies the processes of growth of the worlds top 150 pharmaceuti cal firms, on the grounds of an original database which also allows disaggr egate analysis at the level of single therapeutical classes and chemical en tities. Our findings show that the industry whose long-term evolution is dr iven by innovation, imitation and permanent creation of new markets - displ ays (i) "fat tails" in the distribution of growth shocks, present at ail le vels of aggregation, with (relatively rare) big "spurs of growth", (ii) a s ignificant autocorrelation of growth rates, (iii) a fall of variance of gro wth rates with size entirely dependent on corporate diversification pattern s, in turn plausibly shaped by the "competence scope" of each firm, and (iv ) different "lifecycles" of diverse types of products, and persistent forms of heterogeneity across firms in terms of innovative output, which, howeve r, do not not seem to affect comparative growth performances. (C) 2001 Else vier Science B.V. All rights reserved.