Does China's national volume-based drug procurement policy promote or hinder pharmaceutical innovation?

Introduction: The national volume-based drug procurement policy initiated in China since 2018 represents a significant reform in China's pharmaceutical distribution system. It has largely squeezed out the price bubble of low-end generic drugs, making competition in the pharmaceutical sales segment more intense and transparent. This policy intervenes in the distribution link of the pharmaceutical industry by intensifying market competition, thereby enhancing the innovation willingness and R&D capabilities of pharmaceutical companies. Methods: Taking the national volume-based drug procurement policy as the policy shock, we used the multi-period difference-in-difference method to study the impact of the policy on innovation input, innovation output quantity and innovation output quality of listed pharmaceutical companies and its impact mechanism. Results: We found that the volume-based policy can significantly promote the pharmaceutical companies' innovation input and the innovation output quality, but significantly reduced the innovation output quantity. For innovative and generic drug companies, this policy has limited impact on innovative drug companies, but force generic drug companies to pay more attention to cost control and market positioning, and the quality and cost-effectiveness of R&D output to ensure competitiveness in the market. For bid-winning and non-winning companies, the policy has a greater innovation incentive for non-winning companies than winning companies, by imposing greater survival pressure on non-winning companies, forcing them to increase R&D investment intensity and adopt the innovation strategy of preferring quality to quantity. Discussion: The results show that the national volume-based drug procurement policy should be expanded to lower drug prices and lighten the medical burden on patients, with enhanced quality and safety supervision. Additionally, it suggests cautious application of such policies to innovative and high-end generic drugs to encourage continued pharmaceutical innovation and industry advancement.

Sustainability-oriented innovation system and economic stability of the innovative countries.

Novelcoronavirus-19 has created a challenging situation for developed as well as developing countries to sustain economic stability. There are a lot of controversies for policymakers to formulate an effective policy for reviving economic stability and minimizing the economic effects of this pandemic. The present study focuses on the internal mechanism of the Sustainability Oriented Innovation System and its subsequent effects on economic stability in most innovative economies. For empirical analysis of the most innovative countries (12 countries) high-income, middle-income, low-income, and lower-middle-income countries are selected. The Sustainability Oriented Innovation System is represented through the innovation input index and innovation output index. Economic stability is measured through the GDP growth rate of respective countries. A set of panel data was developed for the period of 11 years and Fixed Effect Methods were used to ascertain the empirical findings. The outcomes indicate that innovation is the main force of economic stability. The study's results are important to policymakers to promote, stimulate and support economic stability through their strategies. Future studies may focus on the effects of the Sustainability Oriented Innovation System on economic stability in regional blocks like the EU, ASEAN, and G-20 countries.

Does China's centralized volume-based drug procurement policy facilitate the transition from imitation to innovation for listed pharmaceutical companies? Empirical tests based on double difference model.

Introduction: The normalized implementation of the centralized volume-based procurement policy for pharmaceuticals is a concerted push for supply-side structural reform of the pharmaceutical industry in China. The impact of the centralized drug procurement policy on pharmaceutical companies' transition from imitation to innovation is investigated to test whether a positive effect occurs in the innovation landscape of the pharmaceutical market. Methods: The double difference method and a series of robustness tests were used based on data from a sample of listed pharmaceutical companies in Shanghai and Shenzhen A-shares between 2015 and 2021. Results: The study found that the centralized drug procurement policy significantly contributed to the increased intensity of innovation input in the Chinese pharmaceutical industry. In terms of regional and firm nature heterogeneity, it was found that firms in the seven provinces belonging to the three economic regions had a better increase in innovation input intensity than other regions. Firms of state-owned nature had a better increase in innovation input intensity than private companies. The mechanism test found a partial mediating effect of nearly 10% for the cost of sales rate on the innovation input intensity of listed companies and a negative mediating effect on corporate operating profit. Discussion: Further research found that the effect of centralized drug procurement policy on the improvement of innovation quality of listed pharmaceutical companies was evident. The innovation development of Chinese pharmaceutical companies no longer focused on the accumulation of innovation quantity.

A Dynamic Model of Internationalization and Innovation in Emerging Market Enterprises: Knowledge Exploration, Transformation, and Exploitation.

Drawing on organizational learning theory and taking an institutional perspective, this study investigates (1) the dynamic relationship between internationalization and innovation in emerging market enterprises (EMEs), and (2) how state ownership moderates the focal relationships. Using a panel dataset of listed Chinese firms from 2007 to 2018, we find that internationalization encourages innovation input in EMEs, which in turn transforms into more innovation output. Higher innovation output leads to further international commitment, creating a dynamic upward spiral of internationalization and innovation. Interestingly, state ownership positively moderates the innovation input-innovation output link but negatively moderates the relationship between innovation output and internationalization. Our paper enriches and refines our understanding of the dynamic relationship between internationalization and innovation in EMEs by integrating the knowledge exploration, transformation, and exploitation perspectives, with the institutional perspective of state ownership.

Drivers and Decoupling Effects of PM2.5 Emissions in China: An Application of the Generalized Divisia Index.

Although economic growth brings abundant material wealth, it is also associated with serious PM2.5 pollution. Decoupling PM2.5 emissions from economic development is important for China's long-term sustainable development. In this paper, the generalized Divisia index method (GDIM) is extended by introducing innovation indicators to investigate the main drivers of PM2.5 pollution in China and its four subregions from 2008 to 2017. Afterwards, a GDIM-based decoupling index is developed to examine the decoupling states between PM2.5 emissions and economic growth and to identify the main factors leading to decoupling. The obtained results show that: (1) Innovation input scale and GDP are the main drivers for increases in PM2.5 emissions, while innovation input PM2.5 intensity, emission intensity, and emission coefficient are the main reasons for reductions in PM2.5 pollution. (2) China and its four subregions show general upward trends in the decoupling index, and their decoupling states turn from weak decoupling to strong decoupling. (3) Innovation input PM2.5 intensity, emission intensity, and emission coefficient contribute largely to the decoupling of PM2.5 emissions. Overall, this paper provides valuable information for mitigating haze pollution.

China's Carbon Emissions and Trading Pilot, Political Connection, and Innovation Input of Publicly Listed Private Firms.

Taking China's carbon emissions and trading pilot (CCETP) as a quasi-natural experiment, this paper examines the impact of CCETP on publicly listed private firms' innovation input and the moderating effect of the firms' political connection based on the difference-in-differences model. The results show that CCETP has a significantly positive effect on the innovation input of Chinese publicly listed private firms. Moreover, the political connection of executives exhibits a positive moderating effect on CCETP's impact on innovation input. Meanwhile, the effect is more significant in regions with high environmental protection investment and large publicly listed private firms. The conclusions could provide some policy enlightenment for China's carbon market, as well as a rational adjustment of the relationship between political connection and innovation input of publicly listed private firms in the future.

Elucidating the effectiveness of cognitive CEO on corporate environmental performance: the mediating role of corporate innovation.

This study contemplates the effectiveness of the cognitive CEO on corporate environmental performance for the 1058 listed Chinese firms on Shenzhen and Shanghai stock exchanges for the years 2015-2019. The contributive concept of the cognitive CEO has been demonstrated through CEO tenure, education, goodwill, and attainment of tacit knowledge while implementing the DAE statistical technique. Additionally, the corporate environmental performance has been formulated, signifying the eight environmental attributes. Convincingly, innovation is intertwined with corporate environmental responsibility, which has been analyzed as a mediator. Remarkably, our findings envisage the cognitive CEO as a promoter of corporate environmental responsibility. Meanwhile, under the patronage of the cognitive CEO, innovation output has been ascertained as a vigorous intensifier of corporate environmental performance as compared with innovation input. Moreover, firms exhibiting specific characteristics like firm age, presence of independent directors, and being a state-owned enterprise proclaim their orientation towards corporate environmental responsibility. Specifically, under the patronage of stakeholder theory, empirical results have been interpreted. Significantly, the integrity of empirical results has been authenticated via the execution of GMM instrumental regression. Lastly, the implication of the study recommends the mangers, academicians, and organizational theorists to perceive the significance of cognitive CEO who can manage the funds for both innovation and corporate environmental responsibility.

The Impacts of Green Innovation Input and Channel Service in a Dual-Channel Value Chain.

This paper constructs a dual-channel value chain composed of one altruistic manufacturer and one altruistic retailer, where the manufacturer makes green innovation input for green products and sells its green products to its customers through both the direct channel and the traditional channel, the retailer provides channel service for customers and sells green products through the traditional channel. We consider two scenarios in which the manufacturer and the retailer make decentralized and centralized decisions, respectively. We develop two dynamic game models for the two scenarios and analyze the dynamic behaviors of the two dynamic game models using bifurcation diagram, LLE (largest Lyapunov exponent) and attraction of basin, etc. We find that the stability region in decentralized decision model is greater than that of centralized decision, and narrow with increase of service value, green innovation input. In the decentralized decision model, the stability of the system decreases with the altruistic behavior increasing. With the price adjustment speed increasing, the dual-channel green value chain system enters into chaotic state through flip bifurcation or N-S bifurcation. In the stable state, the manufacturer and the retailer can obtain the maximum utility with the appropriate value of green innovation input. In the chaotic state, the utilities of the manufacturer and retailer are greatly affected and significantly reduced. This study will provide good guidance for sustainable development decision-making of dual-channel green value chain.