2020/11/06 by Colleen Cunningham, Florian Ederer, Song Ma · 9 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Intellectual Property and Patents #Pharmaceutical Economics and Policy
paper · doi:10.1086/712506
openalex publication_date 2020/11/06 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/02
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.