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Killer Acquisitions
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DOI：10.1086/712506.png)
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Abstract
En 中文
This paper argues that incumbent firms may acquire innovative targets solely to discontinue the target's innovation projects and preempt future competition. We call such acquisitions killer acquisitions. We develop a model illustrating this phenomenon. Using pharmaceutical industry data, we show that acquired drug projects are less likely to be developed when they overlap with the acquirer's existing product portfolio, especially when the acquirer's market power is large because of weak competition or distant patent expiration. Conservative estimates indicate that 5.3%-7.4% of acquisitions in our sample are killer acquisitions. These acquisitions disproportionately occur just below thresholds for antitrust scrutiny.
Keywords:
RESEARCH-AND-DEVELOPMENT
MEDICARE PART D
DRUG DEVELOPMENT
PRICE CONTROLS
MARKET-SIZE
INNOVATION
ENTRY
MERGERS
COMPETITION
INCENTIVES
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