OECD Trade Policy Papers

This series is designed to make available to a wider readership selected trade policy studies prepared for use within the OECD.

NB. No. 1 to No. 139 were released under the previous series title OECD Trade Policy Working Papers.


Trade and Innovation: Pharmaceuticals

Globalisation in the pharmaceuticals sector is entering a new phase. Many new drugs are marketed globally, and these revenues encourage further investment in research and development (R&D). The industry is undergoing substantial transition, with increased competition and downward pressure on prices. Moreover, there have also been widespread concerns that R&D productivity may be declining in recent years. This study examines how various linkages between trade and innovation work in the pharmaceuticals sector, focusing on the role of globalisation in the current innovation challenges of the pharmaceutical industry. It finds that emerging economies are increasingly important markets for pharmaceutical companies and more active participants in the R&D process. While this is an important part of an effort to reduce R&D costs and to improve R&D performance by established multinationals, this also contributes to upgrading the R&D capability of emerging economies. Various trade facilitating measures have been put in place at the international level, including tariff elimination under the World Trade Organization (WTO), plurilateral and bilateral regulatory harmonisation, mutual recognition and enforcement cooperation, and intellectual property protection. Given the growing participation of emerging economies in this sector, further involvement of emerging economies in these arrangements is likely to become more important to facilitate trade and globalisation of R&D.


Keywords: globalisation of R&D, tariff elimination, emerging economies, intellectual property, regulatory harmonisation, WTO, pharmaceutical innovation, mutual recognition
JEL: F13: International Economics / Trade / Trade Policy; International Trade Organizations; F14: International Economics / Trade / Empirical Studies of Trade; L65: Industrial Organization / Industry Studies: Manufacturing / Chemicals; Rubber; Drugs; Biotechnology; Plastics; O31: Economic Development, Innovation, Technological Change, and Growth / Innovation; Research and Development; Technological Change; Intellectual Property Rights / Innovation and Invention: Processes and Incentives
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