The value of interfirm cooperation: An event-study of new partnership announcements in the pharmaceutical industry

Sandy Campart () and Etienne Pfister ()
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Sandy Campart: CERENE - Centre d'Etude et de Recherche en économiE et gestioN LogistiquE - ULH - Université Le Havre Normandie - NU - Normandie Université
Etienne Pfister: BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique, CREDES - Centre de Recherches et de Documentations Economiques - Université Nancy 2

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Abstract: We investigate share price responses to the formation of 237 partnerships in the biotechnology/pharmaceutical industry spanning 1995-2000. The average stock price response is positive, more so than in previous empirical works, which could be interpreted as evidence that interfirm collaboration is particularly valuable in high-technology industries. We find no evidence of wealth transfers. While all sorts of alliances can be associated to significantly positive returns, more value accrues to the partnership when it involves the creation or the transfer of technological knowledge. Looking at the firm characteristics, we conclude that being the smaller partner in a technological alliance generates higher abnormal returns (while no correlation is found in non-technological partnerships). Finally, the stock market value associated to the partnership increases with the profitability of the member firm.

Keywords: Interfirm partnerships; Event study; Biotechnology (search for similar items in EconPapers)
Date: 2006
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Published in Economics of Innovation and New Technology, 2006, pp.37

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00279267

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