Innovation in the Medical Device Industry: Evidence from Hurricanes
Doctoral Candidate, HSRP&A
Division of Health Policy & Management
Hear Alexander Everhart present findings on the relationship between a medical firm’s financial status and its investment in research and development. Using damage to device manufacturing facilities due to hurricanes in Puerto Rico as a natural experiment, Eberhart found that firms decrease their investments in R&D following financial shocks. After estimating a two-way fixed effects differences-in-differences model, he found a one standard deviation increase in experienced storm intensity is associated with a reduction in R&D spending equivalent to the estimated cost of bringing one medical device to market. These findings shed insights into how shocks that increase firms’ operating costs may impact investments in the development of future medical innovations.