Charted Territory: Evidence from Mapping the Cancer Genome and R&D Decisions in the Pharmaceutical Industry
This paper explores how publicly available scientific information shapes the quantity and profitability of private-sector research. I examine the impact of large-scale cancer genome mapping studies, which systematically map the genetic abnormalities in cancer, on research productivity in the pharmaceutical industry. Using a newly-constructed dataset from cancer genome mapping studies and clinical trials, I find that mapping information increases private-sector investment in clinical trials by nearly 50 percent. Considering the types of private-sector research investments, I find that cancer mapping significantly increases trials evaluating drugs previously approved or tested for one disease in an additional disease. Using trial results reported in abstracts submitted to a major cancer conference, I also find that cancer mapping information increases the profitability of firms' research decisions: when genetic information is known, firms are more likely terminate drug investments that are unlikely to be successful in the long run and to continue investment projects that are most likely to generate promising clinical results. This evidence suggests that publicly available, detailed scientific maps can increase and improve private research efforts.