Mergers and Innovation: Evidence from the Pharmaceutical Industry

Sarah Schultz, PhD Candidate, The Wharton School

Abstract: Among mergers regulators in the US, there is uncertainty how M&A, specifically among pharmaceutical companies, influences their overall innovation strategy. This is especially relevant in an industry like the pharmaceutical industry, where then business strategy relies on patents for new technologies. The goal for this paper is to detangle whether mergers and acquisitions occurring in the biopharmaceutical industry yield their intended effects. More specifically, how does increasing M&A activity affect different measures of innovation in the pharmaceutical industry, such as patents, R&D spending, and new drug discoveries, and how does this impact the price we pay for lifesaving drugs.