Innovation Is Essential For Economic Development

The utilization of prescription drugs has increased across all age groups in the US, with 50% of Americans taking at least one prescription drug (Rice & Unruh, 2016). This can be attributed to physician-induced demand, substitution of pharmaceuticals for other medical regimens, commercialization of the products, increase in the aging population and drug insurance coverage, and also the increase in chronic conditions. Lathan discusses the startling fact that the rate increase of prescription drugs purchased was considerably higher in contrast to the US population growth - 71% and 9% respectively (Rice & Unruh, 2016, p. 264).

The prices of prescription drugs in the United States are by far the highest in the world. [1] On average, Europeans pay 40% less than Americans for the same medications. [2] Consumers have been resorting to several ways, sometimes putting themselves in harm’s way, to alleviate the burden of high prescription drug costs. Some buy their medications online or cross the borders to neighboring countries so they would be able to afford buying their needed medications. Others have resorted to the illegal act of selling their unused medications in online forums just to recover part of their expenses. Many factors contribute to the increased drug prices in the United States including research and

In 2015, the pharmaceutical industry spent over 27 billion dollars on advertising. The two greatest components of this effort were promotional advertising and free medication sampling, which the pharmaceuticals invested 15.5 and 5.7 billion dollars respectively (“Persuading the Prescribers”). Promotional advertising involves direct contact with health professionals, the most common being extravagant lunch conferences held for physicians and their staff. On the other hand, sampling involves distributing free sample of medications to physicians, who then have a choice of providing these samples to patients. As a result of these methods, the industry has seen revenue around $400 billion with 90% of physicians having a relationship with a drug company (Campbell 2007). Moreover, the prices of prescriptions continue to rise; a copay of a generic drug is $11.72, preferred brand drug is $36.37 and a specialty drug is $58.37 (Coleman and Geneson 2014). Although the profits are immense in the numbers demonstrated above, it is no surprise when pharmaceutical drug companies elevate their prices even more. For instance, recently Turing Pharmaceuticals raised the price of their medication Daraprim from $13.50 to $750. Keep in mind, this medication is used for threatening parasitic infections, aids, and cancer with alternative options currently found to be inefficient (Pollack 2015). Another example of this practice involves cycloserine, a drug used to

U.S. based companies hold rights to most of the world’s rights on new medicines and holds thousands of new products currently being developed. As of 2012, the industry helps support almost 3.4 million jobs in the U.S. economy. It is also one of the most heavily R&D based industries in the world. In the United States, the environment for pharmaceuticals is much friendlier than other countries around the world in terms of pricing ability and regulations. Both the Pharmaceutical and Biotechnology industries have experienced significant growth in the past year with year-over-year increases of 13.02% and 34.69% respectively. It is an even more striking when looking at the past five years considering both have beat out the S&P 500 with pharmaceuticals increasing an additional 31.44% and the biotechnology sector besting an astonishing 269.3% more return than the

Annually, the US spends $300 billion dollars on pharmaceutical drugs. This is due to the over-diagnosing of certain conditions. Everyday, Americans are exposed to an enormous amount of advertisements for medications of all kinds. For example, 1 in 10 Americans are taking

People all over the world, continue to be tendered prescription medication, which in many cases further complicate health issues with its myriad of side effects. In fact, statistics have shown that approximately 100,000 people around the world die as a result of prescription drugs annually (Smith, 2012). On the contrary, according

The rise in costs of prescription medicines affects all sectors of the health care industry, including private insurers, public programs, and patients. Spending on prescription drugs continues to be an important health care concern, particularly in light of rising pharmaceutical costs, the aging population, and increased use of costly specialty drugs. In recent history, increases in prescription drug costs have outpaced other categories of health care spending, rising rapidly throughout the latter half of the 1990s and early 2000s. (Kaiseredu.org, 2012).

A lot of people, particularly the patients who need them, are beginning to wonder why American drug prices are so high. It makes sense why the pharmaceutical companies are selling at the prices they do: they are a business; and they want to, above all else, make a profit. But the real question is: what are all of the

This century has been full of innovation. New technologies, new products, new services, whole new industries have emerged. Yet the call for innovation in business has never been more intense. Why? Here is my list of the top ten reasons for why we need innovation. 10. For economic growth This is the most often cited reason for needing innovation. Innovation is the route to economic growth. Industries are maturing. Products are maturing. Innovation is the creation and transformation of new knowledge into new products, processes, or services that meet market needs. As such, innovation creates new businesses and is the fundamental source of growth in business and industry. 9. For

In the early 1970s the process of industrial innovation was commonly assumed as the “linear progression”, through development of technology in organizations, to marketplace, that became the “technology push model”. And in “mid 1960s- early 1970s period” appears 2ndgeneration of “Innovation model”, alluded to as "market pull innovation model”. In accordance with “simple sequential model”, the marketplace was new ideas as a source for controlling “R&D” that had a responsive role in innovation process. That is “demand pull” model. Individuals obtained this theory due to their restricted vision then. They considered science as the origin and cause of innovation. Consequently they believed that high investment leads to novel innovative product production (Balconi, Brusoni & Orsenigo 2010). Clearly, the one reason of innovation is scientific research. In the 20th century, several big companies, like “Ford, Philips, ICI and Western Electric”, put money on the research laboratory. They fed the quickly emerging markets for vehicles, industrial chemicals and electrical products for consumers with the “science and technology” assistance and structured efforts for “research and development” built steady innovation streams. The other main aspect is demand, where it can be easily understood. The needs of

Is Research & Development leading to innovation, and does innovation leads to economic growth? In order to understand the extent to which the contribution of R&D is determined by national culture, it is firstly crucial to understand the relations between R&D, innovation and economic growth. It is widely agreed among theorists that R&D is the main pillar of a competitive and growing economy. Indeed, through R&D, nations develop new products able to produce growth, create jobs and increase the national welfare (Markovich, 2012). Innovation is directly linked with R&D and all innovative breakthroughs have occurred because of massive efforts and expenses in the R&D. Developing innovative products helps businesses/nations to have an edge over their competitors. Studies have also shown that when the level of R&D increases, the capital stock of a nation also increases (Griffith, 2000). Therefore, R&D leads to innovation and innovation leads to economic growth.

Product innovation is the fuel for America’s growth. Two Harvard economists, John McArthur and Jeffery Sachs, described its importance as follows: “Innovation is no mere vanity plate on the nation’s economic engine. It trumps capital accumulation and allocation of resources as the most important contributor to growth.” Innovative initiatives are a high risk game; failures widely outnumber successes. While enthusiasm, conviction and creativity should flourish in the hearts and minds of the innovation team, judgments must remain totally, even brutally, objective. But unconscious and conscious marketing dishonesty may make this easier said than done.

Although R&D has been retained by the large pharmaceutical firms, there has been a continuous decline in the R&D productivity. Controlling R&D is imperative to the success of a Pharmaceutical firm. However, as the pharmaceutical industry is maturing, there are diminishing returns to the R&D investment. Fewer and fewer blockbuster drugs are being discovered and therefore R&D is not the most value adding component in the value

The business world today is overstretched on what it is supposed to offer to the market. Today, an organization that does not embrace involution and technological changes in its operations is as well doomed to fail. There is no choice left other than that of deeply venturing in innovation and technological changes. Clients, in this century, are on the lookout for that organization, which is offering more than just a product to satisfy their needs. The client needs have evolved and other preferences, which include elements of modernism, are redefining what customers are looking for once the go out for shopping. Therefore, if an organization wants to survive the hostile business environment, it cannot underscore the importance of change. With this understanding, business organizations have ensued on measures that position them on the right track to achieve innovation and embrace changes on the products they offer to the market. Today, these organizations are setting aside large amounts of cash to fund research and development activities that will ensure they are up-to-date technologically. However, the chief goal of this paper is to explore and critically analyze the correlation between expenditure on R & D and the state of innovation level. The main question is to whether investing heavily on R & D activities really makes a company to be very innovative or whether it is worth it. Alongside this, the paper also examines other elements

Pharmaceutical sales, as a percentage of total healthcare spending, are expected to increase to 27 per cent by 2016 from 18.9 per cent in 2008