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This paper examines the outsourcing patterns of U.S. firms in the biopharmaceutical industry. Data from an exploratory survey of 86 companies suggest that the outsourcing of strategic activities such as applied research and formulary development has started to decline among firms of all sizes, though noncore activities such as manufacturing and clinical trials continue to be outsourced at an accelerating pace. The data suggest that there is no correlation between outsourcing and innovation performance, but that external collaboration supports innovation in positive ways.
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