This study identifies and analyzes factors which determine productivity in the drug industry. It shares a general concern about recent decline in industrial productivity in the United States with Abernathy, Clark, and Kantrow (1983), who developed a theoretical framework for analyzing the causes of lackluster industrial performance. According to Abernathy, et al. (1983), performance is determined by government fiscal and monetary policy, production capability, socioeconomic environment,(of which regulation is a subset), and corporate management. This study finds that the theoretical framework of Abernathy et al (1983) can be used as a context for analyzing productivity in the drug industry. In a recent case of drug development, socioeconomic and managerial problems caused costly delays in development, hampering the company's capacity to be productive. The study also finds that the strategy for industrial revitalization developed by Abernathy et al. (1983) is applicable to the drug industry. Specifically, corporate management must integrate the development activities of innovation, production, finance, and marketing more efficiently. More efficient integration will help management to consider the impact of one activity on the others, and to identify deficiencies which can delay development. This will help management cut development time and increase profits, which will help revitalize the drug industry. / Master of Science