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Acquiring R&D Projects: Who, When, and What? Evidence from Antidiabetic Drug Development

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  • Jan Malek
  • Melissa Newham
  • Jo Seldeslachts
  • Reinhilde Veugelers

Abstract

This paper analyzes M&A patterns of R&D projects in the antidiabetics industry. For this purpose, we construct a database with all corporate individual antidiabetics R&D projects over the period 1997 - 2017, and add detailed information on firms’ technology dimension using patent information, next to their position in product markets. This allows us to identify the identity of targets and acquirers (who), the timing of acquisitions along the R&D process (when), and which type of R&D projects changes hands in terms of technology novelty (what). The main results can be summarized as follows. First, most of the action in M&As is in early R&D stages, still far from product markets. Second, most of the early-stage projects that change hands are high-risk/high-gain novel projects. Third, the industry leaders in the product markets are rather inactive in acquiring those novel early-stage projects. The likely acquirers of such projects are small or pipeline firms. Our results put in perspective the narrative that large incumbents acquire small targets with low-risk projects close to product launch.

Suggested Citation

  • Jan Malek & Melissa Newham & Jo Seldeslachts & Reinhilde Veugelers, 2024. "Acquiring R&D Projects: Who, When, and What? Evidence from Antidiabetic Drug Development," Discussion Papers of DIW Berlin 2073, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp2073
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    References listed on IDEAS

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    More about this item

    Keywords

    M&As; innovation; R&D; pharmaceutics; technology; novelty; patents;
    All these keywords.

    JEL classification:

    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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