INNOVATION in the U.S. ethical drug industry in recent years has beencharacterized by a number of adverse developments. In particular, there hasbeen a sharp decline in the rate of new product introductions and the incentivefor engaging in research and development (R & D) activity has beennegatively influenced by rapid increases in the costs and risks of developingnew products. While there is little debate about the existence of these adversetrends, there is considerable controversy about the factors producingthem.Briefly, we list below five hypotheses that have been discussed as explanationsfor the declining rate of innovation
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