The Allocation of Control Rights in Pharmaceutical Alliances

Higgins, Matthew John

doi:10.2139/ssrn.918980

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The Allocation of Control Rights in Pharmaceutical Alliances

30 Pages Posted: 26 Jul 2006

See all articles by Matthew John Higgins

Matthew John Higgins

University of Utah - Department of Entrepreneurship & Strategy; National Bureau of Economic Research (NBER); Max Planck Institute for Innovation and Competition

Date Written: July 5, 2006

Abstract

This paper uses alliances to test theories of the firm within the context of the biopharmaceutical industry. I find that the allocation of control rights between pharmaceutical and biotechnology firms is sensitive to the bargaining position of both parties. In addition, biotechnology firms entering their first alliance tend, on average, to relinquish more rights. I also explore if and when alliances begin to impact pharmaceutical firm shareholder value. Overall, the market tends to favor earlier stage alliances which are consistent with an underlying healthy pharmaceutical research pipeline.

Keywords: Strategic alliances, Control rights, Biopharmaceutical industry

JEL Classification: G32, L22

Suggested Citation: Suggested Citation

Higgins, Matthew John, The Allocation of Control Rights in Pharmaceutical Alliances (July 5, 2006). Available at SSRN: https://ssrn.com/abstract=918980 or http://dx.doi.org/10.2139/ssrn.918980