academic studies that specifically dig deep into what happens to innovation at biotech companies after takeovers by large drugmakers, or after extended takeover battles, says Louis Galambos, co-director of the Institute for Applied Economics and the Study of Business Enterprise at Johns Hopkins University. It’s an especially difficult question in biotech, because it takes years for a drug candidate to mature into a marketed product.
“What fascinates me is that I haven’t seen a good study of this that examines the effect of takeovers on innovation at biotech companies over a 10-year period,” Galambos says. “This is a really good question, it may just be that we lack data for it.”
Based on interviews he’s done with scientists at biotech companies, Galambos says a proxy battle like the one waged by Icahn might drag down morale, yet he’s skeptical it would harm innovation over a 10-year period. Scientists are far removed from the executive suite where proxy battles are fought, and what they seem to get most excited about—and motivated by—are promising drug candidates, Galambos says.
“The people that wear white lab coats see themselves as a separate breed,” Galambos says. “They are different than the suits. The suits are probably the ones who are most affected.”
