Basic science as a prescription for breakthrough inventions in the pharmaceutical industry

Abstract

This analysis contributes to the understanding of the role of basic science in generating breakthrough inventions in the pharmaceutical industry. Recognizing the within-firm heterogeneity of inventive activities, we look not only at the firm level, but also at the firm-technology level for characteristics determining breakthroughs. A key finding is that firms pursuing basic science are more likely to produce breakthrough inventions. At the same time, doing more basic science in science disciplines that are closely linked to a given technology domain does not increase the likelihood of BTs in that particular technology. The insignificance of basic science intensity at the technology level, coupled to the significance at the firm level, suggests that the breakthrough rewards from science capacity are not reaped in the technology areas immediately involved in basic science, but in other areas of the technology portfolio of the firm. Our findings are consistent with the view of science as a map to span processes of local search and the wider applicability of scientific insights.