Pharmaceutical Innovation Collaboration, Evaluation, and Matching

Abstract

This paper theoretically studies pharmaceutical innovation collaborations, where heterogeneous firms compete for heterogeneous academics. At an interim stage, the firm evaluates the project, which allows it to monitor academics and decide whether to terminate the project to avoid the loss from a future failure. This paper explores the contract, project termination strategy, and collaboration matching. The firm’s innovation strategy (exploitations or explorations) determines the evaluation structure, which may affect the market equilibrium. (...)