Patent Quality and R&D Productivity in Pharmaceuticals : The Role of Inflation and International Collaboration

Lanjouw and Schankerman (2004) proposed that patent quality is a key driver of R&D productivity but did not find supportive evidence for pharmaceuticals. This study revisits this hypothesis using OECD data for the period 1980-2000. It extends the literature in three ways: it develops new R&D price deflators to account for R&D price inflation; it employs two complementary indicators of patent quality, and applies dynamic panel data estimation techniques. When corrections are made for cross-sectional dependence, two major findings emerge: international inventor collaboration is an important indicator of patent quality, and there is strong support for the maintained hypothesis