Innovation is perceived as a powerful profit and revenue driver for firms, particularly in those industries that historically have experienced high rates of technological change. This research examines the premise that innovation always generates positive financial returns for firms by looking at the unique category of breakthrough inventions, defined as the top one percent (1%) most cited patents in a patent category. Breakthrough inventions in the pharmaceutical industry over a twenty-year period are analyzed. Results from the study suggest that up to some point, breakthrough inventions do generate positive financial returns for firms. However, once the number of breakthrough inventions for a particular firm reach some critical mass, the investment necessary to support the development of these inventions may overwhelm the revenue-generating capabilities of these breakthroughs. This suggests that firms should closely examine their new product development processes to ensure that the level of profit generated from breakthrough inventions sufficiently covers the capital investments required to generate these inventions, and resist the internally or externally driven urge to innovate for innovation's sake.
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