Pedro Isao Mori
William Hippler, associate professor of finance, discussed how misconduct by pharmaceutical companies impacted their ability to perform research in his lecture, titled “Firm Reputation and Innovation in the Pharmaceutical Industry,” Tuesday in the Quay Davis Executive Board Room.
“We chose the pharmaceutical industry because there were clear metrics we could use,” Hippler said. “One was how many FDA approved products came out and the second was the issuing of patents.”
Hippler went into detail on his research, which looked at the effects of corporate misconduct on innovation. Misconduct in this context, he said, is defined as any fines or lawsuits brought up against a given company.
To improve his research, he also used match sampling, which involves putting companies into similar categories based on statistics such as market share, the number of Food and Drug Administration approvals and investments in research and development.
He said that any misconduct by drug companies negatively impacted their FDA approvals.
Factors that led to an increase in innovation included asset values, competition and adequate funding.
However, there was no correlation found in the overall amount of patents being handed out, Hippler said.
Hippler said that patents have a time limit and companies need to continuously defend them, making it less desirable for pharmaceutical companies to pursue them.
Hippler said that companies are reluctant to do business with another company that received any form of punishment. These factors all played a role in the decrease of innovation among the pharmaceutical industry.
Questions and discussion followed.
“Are there cases for multiple years (of reported misconduct)?” asked Adham Chehab, professor of finance.
Hippler said this was not covered specifically by his research, but should be looked at in detail in future studies.
Omid Furutan, professor of management, asked about inflation and other external factors that could affect the controls of the study.
Hippler said this would fall into categories together with analyst concern which looked at long-term problems that affected companies
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