Common Ownership in the US Pharmaceutical Industry: A Network Analysis

51 Pages Posted: 1 Dec 2020

See all articles by Albert Banal-Estañol

Albert Banal-Estañol

affiliation not provided to SSRN

Melissa Newham

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich; KU Leuven

Jo Seldeslachts

KU Leuven - Faculty of Business and Economics (FEB); German Institute for Economic Research (DIW Berlin)

Date Written: November 2020

Abstract

We investigate patterns in common ownership networks between firms that are active in the US pharmaceutical industry for the period 2004-2014. Our main findings are that “brand firms” — i.e. firms that have R&D capabilities and launch new drugs — exhibit relatively dense common ownership networks with each other that further increase significantly in density over time, whereas the network of “generic firms” — i.e. firms that primarily specialize in developing and launching generic drugs — is much sparser and stays that way over the span of our sample. Finally, when considering the common ownership links between brands firms, on the one hand, and generic firms, on the other, we find that brand firms have become more connected to generic firms over time. We discuss the potential antitrust implications of these findings.

Keywords: Common ownership networks, pharmaceutical companies, competition, innovation

JEL Classification: G23,K21,L11,L41,L65

Suggested Citation

Banal-Estañol, Albert and Newham, Melissa and Seldeslachts, Jo, Common Ownership in the US Pharmaceutical Industry: A Network Analysis (November 2020). DIW Berlin Discussion Paper No. 1918, Available at SSRN: https://ssrn.com/abstract=3738575 or http://dx.doi.org/10.2139/ssrn.3738575

Albert Banal-Estañol

affiliation not provided to SSRN

No Address Available

Melissa Newham

ETH Zürich - CER-ETH - Center of Economic Research at ETH Zurich

Zürichbergstrasse 18
Zurich, 8092
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium
3000 (Fax)

Jo Seldeslachts (Contact Author)

KU Leuven - Faculty of Business and Economics (FEB) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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