First to market: Is technological innovation in new product development profitable in health care industries?

Do innovative products incorporated advanced technologies help firms improve operating performance? In this study we traced the operating performance of 168 publicly traded manufacturing firms in the USA that announced technologically innovative products in two major industries from the health care domain, namely pharmaceuticals and medical instruments. We employed the event-study methodology and collected objective financial data from Compustat. We found that technologically innovative products have a statistically significant positive effect on operating performance. The median abnormal increase in return-on-assets ranged from 2.20% to 7.07% over a four-year period. The median abnormal increase in return-on-sales ranged from 4.16% to 4.70% and the median abnormal increase in sales-over-assets ranged from 5.85% to 7.38%.