This paper establishes a relationship between the elasticity of demand for pharmaceutical intermediates and the growth rate for these interme- diates variety. We build a model that contains two sectors, one nal good sector producing treatments, and one intermediate goods sector produc- ing a dierentiated input used in the nal treatment. The eects on the medicaments varieties' growth rate of the introduction of a scal in- strument over pharmaceutical producers' prots are discussed. When the scal instrument is a tax over intermediate rms' prots, R&D by rms in the pharmaceutical goods sector results in positive growth provided pro- vided there exists enough substitutability among intermediates assured by a patent system. Otherwise, a subsidy over pharmaceutical rms' prots should be considered to generate positive growth of innovation in medica- ments

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