LAUSR

Government subsidies are important to the improvement of innovation level and sustainable development of biopharmaceutical firms. This paper empirically analyses the impact of government R&D and non-R&D subsidies on the innovation output of biopharmaceutical firms. We establish static, and dynamic panel mediation effect models using 2013–2019 data from China’s listed biopharmaceutical companies. Additionally, we further explore the mediating role of R&D investment between R&D subsidies and innovation output. The findings show that, first, R&D subsidies contribute to the innovation output of biopharmaceutical firms, while the effect of non-R&D subsidies is insignificant. Second, the study of the mechanism shows that R&D subsidies can significantly promote firms’ innovation output through R&D investment in the static mediating model; but interestingly, the R&D subsidies fail to promote innovation output in the dynamic mediating model through R&D investment, perhaps due to the sustainable impact of innovation. Based on the above results, this paper provides suggestions and insights for the formulation of different types of subsidy policies and the improvement of the innovation level of biopharmaceutical firms.