Publications
Publications
- 2024
- HBS Working Paper Series
Dusting Off the Old Ones: Drug Licensing to Startups, Innovation Success and Efficiency
By: Mosab Hammoudeh, Joshua Lev Krieger and Jiajie Xu
Abstract
This paper investigates whether moving R&D from incumbents to startups can increase innovation. Using comprehensive drug development data, we examine the outcomes of drug projects licensed from large firms to startups. We find that these projects licensed to startups are more likely to be developed and approved relative to comparable projects originated by larger firms but never licensed, or licensed between large firms. To explore the mechanisms behind that out-licensing success, we analyze employee movements. We find that employees moving along with a project is a key driver of the superior performance. Finally, we use large pharma company layoff events as shocks to the out-licensing propensity. We show that the marginal out-licensed projects enjoy similar improved performance—suggesting that excess valuable licensing opportunities are “stuck on the shelf.” Our findings underscore the importance of entrepreneurial firms in complementing large firms and improving their efficiency.
Keywords
Product Development; Innovation and Invention; Business Startups; Research and Development; Performance Efficiency; Pharmaceutical Industry
Citation
Hammoudeh, Mosab, Joshua Lev Krieger, and Jiajie Xu. "Dusting Off the Old Ones: Drug Licensing to Startups, Innovation Success and Efficiency." Harvard Business School Working Paper, No. 24-067, March 2024.