Acquiring R&D within the healthcare industry

Abstract: This paper examines the effect of M&A on R&D intensity within the healthcare industry. The healthcare industry as defined in this paper consists of two industry segments; the pharmaceutical industry and the medical device industry that are both examined separately but with the same methodology using inverse propensity score weighting and weighted least squares. There is some trouble with the covariate balancing meaning that one should be cautious with over interpreting the results. I find that the effect on R&D intensity from acquisitions is insignificant but that cross border acquisitions appear to have a more positive impact on R&D than domestic acquisitions. I also find that there is some evidence of medical device manufacturers opting to acquire technology rather than developing in-house. No evidence that multi-acquirers behave differently from other acquirers is found.