Product Complexity and Strategic Alliance on Drug Approval

Taoyong Su (), Wanrong Hou (), Edward Levitas () and Sibin Wu ()
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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

American Business Review, 2021, vol. 24, issue 1, 36-53

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.

Keywords: Product Complexity; Regulatory Approval; Harmony (search for similar items in EconPapers)
Date: 2021
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