Asian Journal Of Social Pharmacy

Abstract: Objective To empirically analyze the relationship between Government R&D funding and R&D investment of the enterprises in different sub industries of pharmaceutical industry, and to provide reference for the development of policies related to R&D funding input. Methods Granger causality test was performed using the data of relevant indicators in different sub industries of China’s pharmaceutical industry from 1995 to 2019 based on the theory of covariance. Results and Conclusion The funding of R&D from the government had a significant positive effect on their R&D funding inputs to enterprises with chemo products, Chinese patent products, and biological products. It means the improvement of government funding was beneficial in promoting the R&D investment from various sub industries of pharmaceutical industry. The order of this influence was biological products, chemo products, and Chinese patent drugs. As to chemical drugs and biological products, the government’s R&D funding and enterprises R&D funding input showed a good trend of mutual promotion in a certain lag period. The government can fully leverage its funding to promote the investment of all sub industries of pharmaceutical industry. Meanwhile, regulatory mechanisms should be refined for government funding. For the inheritance, innovation, and development of traditional Chinese medicine, the government should give more policy support than financial support.

Key words: pharmaceutical industry, government R&D subsidies, enterprise’s R&D investment, cointegration theory