Renewed interest in the resource‐based theory of the firm has focused attention on the role of heterogeneous organizational ‘competence’ in competition. This paper attempts to measure the importance of these effects in the context of pharmaceutical research. We distinguish between ‘component’ and ‘architectural’ competence, and using internal firm data at the program level from 10 major pharmaceutical companies show that together the two forms of competence appear to explain a significant fraction of the variance in research productivity across firms. Our results raise some intriguing questions about the nature of competencies and the ways in which they diffuse over time.

Low reproducibility rates within life science research undermine cumulative knowledge production and contribute to both delays and costs of therapeutic drug development. An analysis of past studies indicates that the cumulative (total) prevalence of irreproducible preclinical research exceeds 50%, resulting in approximately US$28,000,000,000 (US$28B)/year spent on preclinical research that is not reproducible—in the United States alone. We outline a framework for solutions and a plan for long-term improvements in reproducibility rates that will help to accelerate the discovery of life-saving therapies and cures.

We examine the interface between for‐profit and publicly funded research in pharmaceuticals. Firms access upstream basic research through investments in absorptive capacity in the form of in‐house basic research and ‘pro‐publication’ internal incentives. Some firms also maintain extensive connections to the wider scientific community, which we measure using data on coauthorship of scientific papers between pharmaceutical company scientists and publicly funded researchers. ‘Connectedness’ is significantly correlated with firms’ internal organization, as well as their performance in drug discovery. The estimated impact of ‘connectedness’ on private research productivity implies a substantial return to public investments in basic research.

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