Counting chickens before the eggs hatch: Associating new product development portfolios with shareholder expectations in the pharmaceutical sector

Rajdeep Grewal, Anindita Chakravarty, Min Ding, John C. Liechty

Research output: Contribution to journalArticlepeer-review

25 Scopus citations

Abstract

Drug development is the lifeblood of pharmaceutical firms and a critical source of innovation in the healthcare industry. Pharmaceutical firms maintain their competitiveness by continuously developing and introducing new drugs, which requires an efficient new drug portfolio management process. However, the current literature does not elaborate on strategies pertaining to these new drug (product) portfolios (i.e., portfolios of drugs under development), nor does it provide the means with which to understand the future cash flow-generating potential of these portfolio strategies. To address this problem, we propose a set of generic descriptors of new drug portfolio strategies (i.e., portfolio breadth, portfolio depth, blockbuster strategy, and stages of the drug development process) and relate these descriptors to Tobin's q, a forward-looking measure of shareholder expectations. The results of a latent class regression analysis show that shareholder expectations of firms with broad new drug portfolios and potential blockbusters are positive. For most firms, shareholders focus on the final stage of the drug development process and deemphasize portfolio depth. In contrast, for a minority of mostly small firms, shareholders seem to value the earlier stages of the drug development process and stress portfolio depth.

Original languageEnglish (US)
Pages (from-to)261-272
Number of pages12
JournalInternational Journal of Research in Marketing
Volume25
Issue number4
DOIs
StatePublished - Dec 1 2008

All Science Journal Classification (ASJC) codes

  • Marketing

Fingerprint Dive into the research topics of 'Counting chickens before the eggs hatch: Associating new product development portfolios with shareholder expectations in the pharmaceutical sector'. Together they form a unique fingerprint.

Cite this