Health Care Management Papers

Document Type

Journal Article

Date of this Version

7-2005

Publication Source

Journal of Business

Volume

78

Issue

4

Start Page

1433

Last Page

1464

DOI

10.1086/430865

Abstract

We examine the determinants of biotech-pharmaceutical alliance prices to determine whether the market for alliances is characterized by asymmetric information. We find that inexperienced biotech companies receive substantially discounted payments when forming their first alliance. A jointly developed drug is more likely to advance in clinical trials than a drug developed by a single company, so the first- deal discount is not consistent with the drug’s subsequent performance. Biotech companies receive substantially higher valuations from venture capitalists and the public equity market after forming their first alliance, which implies that alliances send a positive signal to prospective investors.

Additional Files

biotech phamaceutical alliances_1.pdf (265 kB)

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Date Posted: 27 November 2017

This document has been peer reviewed.