Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach

Innovation is the key to the development of the pharmaceutical industry. The pilot program of China’s “4 + 7” volume-based procurement policy (“4 + 7” procurement policy) brings the drug price back to a reasonable level through trading procurement quantities for lower drug prices. The policy manages...

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Autores principales:	Yuanyuan Hu, Shouming Chen, Fangjun Qiu, Peien Chen, Shaoxiong Chen
Formato:	article
Lenguaje:	EN
Publicado:	MDPI AG 2021
Materias:	innovation pharmaceutical firms firm value R&D intensity “4 + 7” volume-based procurement policy event study Medicine R
Acceso en línea:	https://doaj.org/article/86786516469944cc815ef8b076a04837
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spelling	oai:doaj.org-article:86786516469944cc815ef8b076a048372021-11-25T17:50:37ZWill the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach10.3390/ijerph1822120371660-46011661-7827https://doaj.org/article/86786516469944cc815ef8b076a048372021-11-01T00:00:00Zhttps://www.mdpi.com/1660-4601/18/22/12037https://doaj.org/toc/1661-7827https://doaj.org/toc/1660-4601Innovation is the key to the development of the pharmaceutical industry. The pilot program of China’s “4 + 7” volume-based procurement policy (“4 + 7” procurement policy) brings the drug price back to a reasonable level through trading procurement quantities for lower drug prices. The policy manages to reduce the burden of the health care system, improve efficiency, and push the pharmaceutical industry to transform and update from the era of high gross profit of generic drugs to innovative drugs. So far, few studies have investigated the influence of the volume-based procurement policy on the innovation of pharmaceutical firms. By combining the event study and Difference-in-Difference (DiD) methodology, this study finds that the abnormal return (AR) of firms with high R&D intensity is lower than that of firms with low R&D intensity during the event window period. Moreover, further analysis identifies the moderating effect of firm size and firm type. Specifically, the results show that the negative influence of high R&D intensity on abnormal return (AR) during the announcement of the “4 + 7” procurement policy is stronger in large firms and innovative pharmaceutical firms. Finally, we discuss the policy implications of our study.Yuanyuan HuShouming ChenFangjun QiuPeien ChenShaoxiong ChenMDPI AGarticleinnovationpharmaceutical firmsfirm valueR&D intensity“4 + 7” volume-based procurement policyevent studyMedicineRENInternational Journal of Environmental Research and Public Health, Vol 18, Iss 12037, p 12037 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	innovation pharmaceutical firms firm value R&D intensity “4 + 7” volume-based procurement policy event study Medicine R
spellingShingle	innovation pharmaceutical firms firm value R&D intensity “4 + 7” volume-based procurement policy event study Medicine R Yuanyuan Hu Shouming Chen Fangjun Qiu Peien Chen Shaoxiong Chen Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach
description	Innovation is the key to the development of the pharmaceutical industry. The pilot program of China’s “4 + 7” volume-based procurement policy (“4 + 7” procurement policy) brings the drug price back to a reasonable level through trading procurement quantities for lower drug prices. The policy manages to reduce the burden of the health care system, improve efficiency, and push the pharmaceutical industry to transform and update from the era of high gross profit of generic drugs to innovative drugs. So far, few studies have investigated the influence of the volume-based procurement policy on the innovation of pharmaceutical firms. By combining the event study and Difference-in-Difference (DiD) methodology, this study finds that the abnormal return (AR) of firms with high R&D intensity is lower than that of firms with low R&D intensity during the event window period. Moreover, further analysis identifies the moderating effect of firm size and firm type. Specifically, the results show that the negative influence of high R&D intensity on abnormal return (AR) during the announcement of the “4 + 7” procurement policy is stronger in large firms and innovative pharmaceutical firms. Finally, we discuss the policy implications of our study.
format	article
author	Yuanyuan Hu Shouming Chen Fangjun Qiu Peien Chen Shaoxiong Chen
author_facet	Yuanyuan Hu Shouming Chen Fangjun Qiu Peien Chen Shaoxiong Chen
author_sort	Yuanyuan Hu
title	Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach
title_short	Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach
title_full	Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach
title_fullStr	Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach
title_full_unstemmed	Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach
title_sort	will the volume-based procurement policy promote pharmaceutical firms’ r&d investment in china? an event study approach
publisher	MDPI AG
publishDate	2021
url	https://doaj.org/article/86786516469944cc815ef8b076a04837
work_keys_str_mv	AT yuanyuanhu willthevolumebasedprocurementpolicypromotepharmaceuticalfirmsrdinvestmentinchinaaneventstudyapproach AT shoumingchen willthevolumebasedprocurementpolicypromotepharmaceuticalfirmsrdinvestmentinchinaaneventstudyapproach AT fangjunqiu willthevolumebasedprocurementpolicypromotepharmaceuticalfirmsrdinvestmentinchinaaneventstudyapproach AT peienchen willthevolumebasedprocurementpolicypromotepharmaceuticalfirmsrdinvestmentinchinaaneventstudyapproach AT shaoxiongchen willthevolumebasedprocurementpolicypromotepharmaceuticalfirmsrdinvestmentinchinaaneventstudyapproach
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Will the Volume-Based Procurement Policy Promote Pharmaceutical Firms’ R&D Investment in China? An Event Study Approach

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