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Advisor(s)
Abstract(s)
The pharmaceutical industry has been in the spotlight for the last decades regarding some conflicting trends. Despite a consistent increase in research and development (R&D) investment, the number of approved drugs has remained, at most, constant. In addition, the pharma industry has witnessed a large trend in consolidation through mergers and acquisitions (M&As), which has not always translated in an improvement in R&D productivity. The aims of this paper are to study the effect of a pre-acquisition alliance on the R&D productivity of the merged firm, as well as looking at specific alliance characteristics that may influence this outcome. This study looks at the pharmaceutical industry from 1981 to 2017 and finds that the existence of an alliance prior to a merger negatively affects the R&D productivity of the merged firm. Reasons for this relationship may be that the knowledge gained during the alliance period does not benefit the acquirer in a way that is significant enough to increase its R&D productivity, or even that this earned insight is not immediately reflected during the post-M&A period. The implications of these findings look to improve the understanding of the productivity crisis in the pharmaceutical sector.
Description
Keywords
M&A Merger Acquisition R&D Alliance R&D productivity Pharmaceutical Pharma