Analysis of Over 2,200 Life Science Companies Reveals a Network of Potentially Illegal Interlocked Boards

15 Pages Posted: 21 Oct 2022 Last revised: 12 Dec 2022

See all articles by Mark A. Lemley

Mark A. Lemley

Stanford Law School

Anoop Manjunath

Stanford University - School of Medicine

Nathan Kahrobai

Stanford University, School of Law, Students

Ishan Kumar

Stanford University - School of Medicine

Date Written: October 19, 2022

Abstract

Competition between life science companies is critical to ensure innovative therapies are efficiently developed to improve human health. Anticompetitive behavior may harm scientific progress and, ultimately, patients. One well-established category of anticompetitive behavior is the “interlocking directorate.” It is illegal for companies’ directors to “interlock” by also serving on the boards of competitors. To investigate anticompetitive behavior in the life sciences, we evaluated overlaps in the board membership of 2,241 public life science companies since 2000. At any given time, 10-20% of board members are interlocked; their tenures are 50% longer than non-interlocked directors. The number of interlocks has more than doubled in the last two decades. Interlocking directorates are particularly prevalent in oncology, neurology, immunology, and respiratory disease. Over half of all companies with more than $5 million in revenue are interlocked. A significant fraction of the life sciences industry is engaged in anticompetitive—and potentially illegal—behavior.

Suggested Citation

Lemley, Mark A. and Manjunath, Anoop and Kahrobai, Nathan and Kumar, Ishan, Analysis of Over 2,200 Life Science Companies Reveals a Network of Potentially Illegal Interlocked Boards (October 19, 2022). Stanford Law and Economics Olin Working Paper No. 578, Available at SSRN: https://ssrn.com/abstract=4253144 or http://dx.doi.org/10.2139/ssrn.4253144

Mark A. Lemley (Contact Author)

Stanford Law School ( email )

559 Nathan Abbott Way
Stanford, CA 94305-8610
United States

Anoop Manjunath

Stanford University - School of Medicine

291 Campus Drive
Li Ka Shing Building
Stanford, CA 94305-5101
United States

Nathan Kahrobai

Stanford University, School of Law, Students

Stanford, CA
United States

Ishan Kumar

Stanford University - School of Medicine ( email )

291 Campus Drive
Li Ka Shing Building
Stanford, CA 94305-5101
United States

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