Mergers and innovation in big pharma

Carmine Ornaghi

International Journal of Industrial Organization, 2009, vol. 27, issue 1, 70-79

Abstract: The aims of this paper are to study the effects of mergers on the R&D activity of consolidated firms and to explore the relationship between ex-ante relatedness of merging parties and their ex-post performances. The analysis is conducted using data of the pharmaceutical industry for the period 1988-2004. The empirical results suggest that merged companies have on average, worse performances than the group of non-merging firms. This result is confirmed when I account for the endogeneous formation of mergers by selecting a control group first using the propensity score method and then taking into account the technological relatedness of the firms. Finally, I find that higher levels of technological relatedness are not associated with better R&D outcomes.

Keywords: M&A; Innovation; Product; relatedness; Technological; relatedness (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (69)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:27:y:2009:i:1:p:70-79

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