We analyze a large sample of patent litigation lawsuits between brand-name pharmaceutical companies and generic drug manufacturers. During the litigation, brand incumbents file patent-infringement lawsuits against generic manufacturers that challenge the monopoly status of patent-protected drugs. These challenges, if successful, can allow generic drugs into the market before patents expire, and thereby lead to sharp declines in drug prices. We find institutional cross-holdings, measured by the weight of top generic shareholders' ownership in the brand incumbent relative to their ownership in the generic entrant, are significantly positively associated with the probability that the two parties will enter into a settlement agreement. Cross-holdings are also positively associated with the brand's daily abnormal returns around the settlement. A panel-IV strategy that exploits the September 2003 mutual fund trading scandal confirms our results.
| Speaker: | Dr Xie Jin Assistant Professor, The Chinese University of Hong Kong |
| When: |
3.30 - 5.00pm |
| Venue: | School of Accountancy Level 3, Seminar Room 3-1 |
| Contact: | Office of the Dean Email: SOAR@smu.edu.sg |