【Micro/Empirical Seminar】Startup Acquisitions and Innovation in the Biopharmaceutical Industry
2024/12/05
研討會日期 : 2024-12-05
時間 : 14:30
主講人 : Professor Hayley Wabiszewski
地點 : Conference Room B110
主持人 : Professor Leo Lam
演講者簡介 : Professor Hayley Wabiszewski received her Ph.D. in Economics from Washington University in St. Louis in 2024. She is a Sorenson Post-Doctoral Fellow at the University of Utah. Her research interests are Industrial Organization, Health Economics, Innovation, and Applied Microeconomics.
演講摘要 : Big pharma is increasingly using acquisitions to fill their R&D pipelines and the proliferation of the biotechnology industry has created a thick market of innovative target startups. This paper analyzes the dynamic equilibrium effects of biotech startup acquisitions by big pharma on drug innovation and entry. Using a novel dataset on 175 acquired startups from 2000 - 2018, I document several new facts regarding the R&D outcomes of acquired drug projects and entry behavior of startups in markets where acquisitions occur. Motivated by this evidence, I build a dynamic oligopoly model of the pharmaceutical industry featuring big firms and startups that endogenizes drug development, startup acquisitions, product market competition, and entry. Firms select on unobserved project quality at each phase of R&D and into acquisition, allowing higher quality projects to reach later phases of R&D and be a more likely acquisition target. Counterfactual simulations focused on oncology markets suggest that banning startup acquisitions leads to a decline in entry among low-quality startups, who benefit most from lower R&D costs of their acquiring big firms. This and higher selection on quality during R&D among startups results in a decrease in the number of projects that reach the product market and an increase in their quality. Both of these effects are generally small in magnitude. This result directly informs recent discussions among regulators who have expressed concern about the implications of startup acquisitions for market concentration and innovation in the pharmaceutical industry.
