Thesis advisor: Tracy Regan / This study analyzes the response of pharmaceutical firms’ stock prices to the release of information regarding successful Phase III clinical studies and final FDA marketing approval. I employ an event study methodology to show that positive abnormal returns occur at these drug development stages, and that larger abnormal returns occur over a three-day window surrounding a sample of successful Phase III trial announcements in comparison to a sample of FDA approval announcements. To my knowledge, all previous literature of this kind has compared a random sample of firms making Phase III announcements to a random sample of FDA approval announcements. This study advances drug development literature by conducting a second set of event studies that compares the abnormal returns of the same drugs at the two drug development stages, and it finds that controlling for the unique characteristics of the drugs analyzed in event studies leads to a smaller difference in returns at the two drug development stages.
The drugs selected for analysis were taken from IMS Health’s lists of the top 100 (or 200) best-selling pharmaceuticals from 2003 to 2010. They were split into 13 therapeutic classes, such as drugs for cardiovascular ailments and drugs for respiratory ailments. Regression analysis was conducted on the returns of the three-day window to find a positive relationship between the FDA approval of alimentary and cardiovascular drugs and stock price increases for larger pharmaceutical firms and the approval of nervous system drugs and stock price increases for smaller pharmaceutical firms. To my knowledge, this is the first study to show these relationships. / Thesis (BA) — Boston College, 2015. / Submitted to: Boston College. College of Arts and Sciences. / Discipline: Departmental Honors. / Discipline: Economics.
| Identifer | oai:union.ndltd.org:BOSTON/oai:dlib.bc.edu:bc-ir_104305 |
| Date | January 2015 |
| Creators | Millette, Andrew |
| Publisher | Boston College |
| Source Sets | Boston College |
| Language | English |
| Detected Language | English |
| Type | Text, thesis |
| Format | electronic, application/pdf |
| Rights | Copyright is held by the author, with all rights reserved, unless otherwise noted., The full text of this item is available only on campus at Boston College. |
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