The Impact of Acquisitions in the Biotechnology Sector on R&D Productivity

Workin Paper (2023)

with Luca Verginer, Federica Parisi, Jeroen van Lidth de Jeude and Massimo Riccaboni

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This study examines the effects of acquisitions on the retention and R&D productivity of inventors in the biotech sector, using data from 15,318 inventors involved in 1,375 acquisitions between 1990 and 2010. We employ a staggered difference-in-differences approach and find that acquisitions lead to a 13.5% decrease in inventor retention and a 35% drop in citation-weighted patent productivity post-acquisition. The productivity decline is more severe for inventors who remain with the acquiring firm, particularly for those whose expertise is closely tied to the target company. However, older inventors and those whose expertise aligns with the acquiring company's existing R&D portfolio tend to retain higher productivity levels after the acquisition.