health care technology are now ubiquitous. Notable examples include the dramatic consolidation under way in the multinational pharmaceutical industry (a few of the major mergers and acquisitions are summarized in Table 9-1); the diversification of major pharmaceutical manufacturers into health care delivery, through acquisition of, or partnering with, firms that manage pharmacy benefits; consolidation (Table 9-1) and extensive partnering (Read and Lee, 1994) in the biotechnology industry; sharply depressed stock prices of pharmaceutical, biotechnology, and medical device firms for the past two years (Read and Lee, 1994); the reduced flow of new equity capital into the biotechnology and medical device industries (Littell, 1994; Read and Lee, 1994); and personnel cutbacks and downsizing reported by numerous firms in the health care technology industries.

Most of the changes related above are too recent to have had an observable effect on the level of R&D activity in the affected industries. Nonetheless, it seems unlikely that the consolidation of duplicate functions that normally accompanies the merger of similar firms will fail to impact research departments. Nor is it likely that firms in financial stress will neglect to scrutinize R&D budgets. Since virtually all of the capital raised by the smaller biotechnology and device