Dusting Off the Old Ones: Drug Licensing to Startups, Innovation Success and Efficiency

59 Pages Posted: 13 Dec 2022 Last revised: 11 Apr 2024

See all articles by Mosab Hammoudeh

Mosab Hammoudeh

University of New Orleans

Joshua Krieger

Harvard University - Business School (HBS)

Jiajie Xu

University of Iowa - Henry B. Tippie College of Business

Date Written: November 18, 2022

Abstract

This paper investigates whether startups bring efficiency to product innovation relative to larger firms. Using comprehensive drug development data, we examine the innovation of drug projects licensed from large firms to startups. We find that these licensed projects are more likely to be developed and approved relative to comparable projects originated by larger firms but never licensed, or licensed between large firms. Relative to the other (never-licensed) projects in the licensor’s portfolio, out-licensed projects are older, more likely to use new technology, and target a new market with longer development times and lower revenues. We also find that startups are more likely to in-license projects that target existing markets but use new technology. Our findings underscore the importance of entrepreneurial firms in complementing the ‘shelved’ innovation of large firms and improving their efficiency.

Keywords: Firm Boundary, Startups, Conglomerates, Product Innovation, Research and Development, Drug Licensing, Product Market

Suggested Citation

Hammoudeh, Mosab and Krieger, Joshua and Xu, Jiajie, Dusting Off the Old Ones: Drug Licensing to Startups, Innovation Success and Efficiency (November 18, 2022). Available at SSRN: https://ssrn.com/abstract=4281957

Mosab Hammoudeh (Contact Author)

University of New Orleans ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States
2198809523 (Phone)

Joshua Krieger

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States
617-495-5864 (Phone)

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facid=951435

Jiajie Xu

University of Iowa - Henry B. Tippie College of Business ( email )

Pappajohn Business Building S296
Iowa City, IA 52242-1000
United States

HOME PAGE: http://www.jiajiexu.com/

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
12
Abstract Views
500
PlumX Metrics