IDEAS home Printed from https://ideas.repec.org/a/taf/apeclt/v23y2016i4p278-283.html
   My bibliography  Save this article

Patents and R&D expenditure effects on equity returns in pharmaceutical industry

Author

Listed:
  • Martina Feyzrakhmanova
  • Constantin Gurdgiev

Abstract

As costs of pharmaceutical R&D soar and productivity falls, the role of research pipelines in firm valuations is changing. To date, surprisingly little work has been published on the effects of R&D pipeline performance on equity returns, while controlling for coincident factors, such as legacy patents and presence of blockbuster drugs in production. Using 1996-2013 data for nine largest pharmaceutical companies in the world, this article assesses the role of the above factors on returns to pharmaceutical companies equity. We show significant positive link between changes in the number of blockbusters on patent six months prior and returns in excess of pharmaceutical equity index. The number of patents granted by United States Patent and Trademark Office in a quarter is also a significant factor. On the other hand, we find that increases in R&D expenditure in large-cap pharmaceutical companies are viewed negatively by investors in the short term.

Suggested Citation

  • Martina Feyzrakhmanova & Constantin Gurdgiev, 2016. "Patents and R&D expenditure effects on equity returns in pharmaceutical industry," Applied Economics Letters, Taylor & Francis Journals, vol. 23(4), pages 278-283, March.
    • Handle: RePEc:taf:apeclt:v:23:y:2016:i:4:p:278-283
    DOI: 10.1080/13504851.2015.1071460
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13504851.2015.1071460
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13504851.2015.1071460?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fossett, Sarah J. & Wunnava, Phanindra V., 2017. "Active Ingredients: Exploring the Key Factors Affecting the Rising Cost of Developing New Drugs," IZA Discussion Papers 10817, Institute of Labor Economics (IZA).
    2. Kathryn Rudie Harrigan & Yunzhe Fang, 2020. "The financial benefits of persistently high forward citations," The Journal of Technology Transfer, Springer, vol. 45(2), pages 619-647, April.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:apeclt:v:23:y:2016:i:4:p:278-283. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/RAEL20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.