The outsourcing of R&D through acquisitions in the pharmaceutical industry
AbstractFor acquisitions characterized by information asymmetries, we find evidence consistent with the proposition that acquirers are able to avoid the winner's curse. We examine the performance of acquirers of 160 biotechnology firms from 1994-2001 and find evidence that on average, the acquirers of biotech firms realize significant positive returns. These returns are positively correlated with acquirer access to information about the research and development activities at target firms and a superior negotiating position on the part of the acquirer. Further, we find that acquirers that use equity as payment realize significant positive returns.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Financial Economics.
Volume (Year): 80 (2006)
Issue (Month): 2 (May)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505576
Other versions of this item:
- Matthew Higgins & Daniel Rodriguez, 2003. "The Outsourcing of R&D through Acquisitions in the Pharmaceutical Industry," Emory Economics 0324, Department of Economics, Emory University (Atlanta).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Josh Lerner & Alexander Tsai, 2000.
"Do Equity Financing Cycles Matter? Evidence from Biotechnology Alliances,"
NBER Working Papers
7464, National Bureau of Economic Research, Inc.
- Lerner, Josh & Shane, Hilary & Tsai, Alexander, 2003. "Do equity financing cycles matter? evidence from biotechnology alliances," Journal of Financial Economics, Elsevier, vol. 67(3), pages 411-446, March.
- Mitchell, Mark L & Lehn, Kenneth, 1990. "Do Bad Bidders Become Good Targets?," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 372-98, April.
- Asquith, Paul & Bruner, Robert F. & Mullins, David Jr., 1983. "The gains to bidding firms from merger," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 121-139, April.
- Milgrom, Paul, 1989. "Auctions and Bidding: A Primer," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 3-22, Summer.
- Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-96, September.
- Schwert, G.W., 1994.
"Mark-up Pricing in Mergers and Acquisitions,"
95-01, Rochester, Business - Financial Research and Policy Studies.
- Comment, Robert & Schwert, G. William, 1995.
"Poison or placebo? Evidence on the deterrence and wealth effects of modern antitakeover measures,"
Journal of Financial Economics,
Elsevier, vol. 39(1), pages 3-43, September.
- Robert Comment & G. William Schwert, 1993. "Poison or Placebo? Evidence on the Deterrent and Wealth Effects of Modern Antitakeover Measures," NBER Working Papers 4316, National Bureau of Economic Research, Inc.
- Dodd, Peter & Warner, Jerold B., 1983. "On corporate governance : A study of proxy contests," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 401-438, April.
- Ball, Sheryl B. & Bazerman, Max H. & Carroll, John S., 1991. "An evaluation of learning in the bilateral winner's curse," Organizational Behavior and Human Decision Processes, Elsevier, vol. 48(1), pages 1-22, February.
- Healy, Paul M. & Palepu, Krishna G. & Ruback, Richard S., 1992. "Does corporate performance improve after mergers?," Journal of Financial Economics, Elsevier, vol. 31(2), pages 135-175, April.
- Mulherin, J. Harold & Boone, Audra L., 2000. "Comparing acquisitions and divestitures," Journal of Corporate Finance, Elsevier, vol. 6(2), pages 117-139, July.
- Gregor Andrade & Mark Mitchell & Erik Stafford, 2001. "New Evidence and Perspectives on Mergers," Journal of Economic Perspectives, American Economic Association, vol. 15(2), pages 103-120, Spring.
- Brown, Stephen J. & Warner, Jerold B., 1980. "Measuring security price performance," Journal of Financial Economics, Elsevier, vol. 8(3), pages 205-258, September.
- John Koeplin & Atulya Sarin & Alan C. Shapiro, 2000. "The Private Company Discount," Journal of Applied Corporate Finance, Morgan Stanley, vol. 12(4), pages 94-101.
- Schipper, Katherine & Thompson, Rex, 1983. "Evidence on the capitalized value of merger activity for acquiring firms," Journal of Financial Economics, Elsevier, vol. 11(1-4), pages 85-119, April.
- Roll, Richard, 1986. "The Hubris Hypothesis of Corporate Takeovers," The Journal of Business, University of Chicago Press, vol. 59(2), pages 197-216, April.
- Berger, Philip G. & Ofek, Eli, 1995. "Diversification's effect on firm value," Journal of Financial Economics, Elsevier, vol. 37(1), pages 39-65, January.
- Ravenscraft, David J. & Scherer, F. M., 1989. "The profitability of mergers," International Journal of Industrial Organization, Elsevier, vol. 7(1), pages 101-116, March.
- Raghavendra Rau, P. & Vermaelen, Theo, 1998. "Glamour, value and the post-acquisition performance of acquiring firms," Journal of Financial Economics, Elsevier, vol. 49(2), pages 223-253, August.
- Ritter, Jay R, 1991. " The Long-run Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 46(1), pages 3-27, March.
- Bradley, Michael & Desai, Anand & Kim, E. Han, 1988. "Synergistic gains from corporate acquisitions and their division between the stockholders of target and acquiring firms," Journal of Financial Economics, Elsevier, vol. 21(1), pages 3-40, May.
- Smith, Vernon L, 1985. "Experimental Economics: Reply," American Economic Review, American Economic Association, vol. 75(1), pages 264-72, March.
- Hansen, Zeynep & Higgins, Matthew, 2007. "The Effect of Contractual Complexity on Technology Sourcing Agreements," MPRA Paper 4979, University Library of Munich, Germany.
- Carolin Haeussler & Matthew J. Higgins, 2012. "Explaining Preferences for Control Rights in Strategic Alliances: A Property Rights and Capabilities Perspective Approach," NBER Working Papers 18364, National Bureau of Economic Research, Inc.
- Ashish Arora & Alfonso Gambardella & Laura Magazzini & Fabio Pammolli, 2009.
"A Breath of Fresh Air? Firm Type, Scale, Scope, and Selection Effects in Drug Development,"
INFORMS, vol. 55(10), pages 1638-1653, October.
- Arora, Ashish & Gambardella, Alfonso & Magazzini, Laura & Pammolli, Fabio, 2007. "A Breath of Fresh Air? Firm types, scale, scope and selection effects in drug development," MPRA Paper 16042, University Library of Munich, Germany.
- Ashish Arora & Alfonso Gambardella & Laura Magazzini & Fabio Pammolli, 2009. "A Breath of Fresh Air? Firm Type, Scale, Scope and Selection Effects in Drug Development," KITeS Working Papers 003, KITeS, Centre for Knowledge, Internationalization and Technology Studies, Universita' Bocconi, Milano, Italy, revised Mar 2009.
- Schön, Benjamin & Pyka, Andreas, 2013. "The success factors of technology-sourcing through mergers & acquisitions: An intuitive meta-analysis," FZID Discussion Papers 78-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
- Woltering-Lamers, Philipp, 2011. "Die sequenzielle Organisationswahl: Kooperationen als Vorstufe von Akquisitionen," Arbeitspapiere 122, Westfälsche Wilhelms-Universität Münster (WWU), Institut für Genossenschaftswesen.
- Jerry Thursby & Marie Thursby, 2011. "University-industry linkages in nanotechnology and biotechnology: evidence on collaborative patterns for new methods of inventing," The Journal of Technology Transfer, Springer, vol. 36(6), pages 605-623, December.
- Peter Rousseau & Caleb Stroup, 2011. "Director Histories and the Pattern of Acquisitions," Vanderbilt University Department of Economics Working Papers 1124, Vanderbilt University Department of Economics.
- Frantzeskakis, Kyriakos & Ueda, Masako, 2007. "A Dynamic Equilibrium Model of Firm's Life Cycle and Mergers as Efficient Reallocation," CEPR Discussion Papers 6079, C.E.P.R. Discussion Papers.
- Stuart, Graham & Higgins, Matthew, 2007. "The Impact of Patenting on New Product Introductions in the Pharmaceutical Industry," MPRA Paper 4574, University Library of Munich, Germany.
- Povel, Paul & Sertsios, Giorgo, 2014. "Getting to know each other: The role of toeholds in acquisitions," Journal of Corporate Finance, Elsevier, vol. 26(C), pages 201-224.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.