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Product Complexity and Strategic Alliance on Drug Approval

Author

Listed:
  • Taoyong Su

    (Tongji University)

  • Wanrong Hou

    (University of Texas - Rio Grande Valley)

  • Edward Levitas

    (University of Wisconsin - Milwaukee)

  • Sibin Wu

    (University of Texas - Rio Grande Valley)

Abstract

Management of the business-government relationship is critical for firm performance in regulated industries. In this paper, we predict a U-shaped relationship between product complexity and the time to approval by the US Food and Drug Administration (FDA). Moreover, we argue that this association is contingent on the types of strategic alliances (i.e., R&D alliance, Marketing alliance) of the focal firm in that those alliances help FDA and pharmaceutical companies achieve harmony. Using the approved drugs by FDA from 1999 to 2016 as the sample, our hypotheses are supported by the empirical analysis on US pharmaceutical firms. The findings have important implications to achieving harmony between pharmaceutical firms and regulatory agencies.

Suggested Citation

  • Taoyong Su & Wanrong Hou & Edward Levitas & Sibin Wu, 2021. "Product Complexity and Strategic Alliance on Drug Approval," American Business Review, Pompea College of Business, University of New Haven, vol. 24(1), pages 36-53.
    • Handle: RePEc:ris:ambsrv:0025
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