Title: The impact of healthcare legislation on the relationship between intangible investments and investor returns in the US pharmaceutical industry

Authors: Richard A. Heiens; Robert T. Leach

Addresses: Department of Business Administration, University of South Carolina Beaufort, One University Boulevard, Bluffton, SC, 29909, USA ' School of Business Administration, University of South Carolina Aiken, 471 University Parkway, Aiken, SC, 29801, USA

Abstract: The current study examines the relationship between intangibles and investor returns in the pharmaceutical industry over two separate time frames; before the Patient Protection and Affordable Care Act (ACA) was initially enacted in 2010, and post-ACA. Our results show that pharmaceutical firms in the post-ACA sample significantly outperformed those firms in the pre-ACA sample. Secondly, pharmaceutical firms investing little in R&D offered higher investor returns in comparison to those that invested more in R&D. Also, the negative relationship between R&D and holding-period returns was more pronounced in the post-ACA sample than in the pre-ACA sample. Finally, in the post-ACA period, investor holding-period returns were above average for firms that included goodwill and other intangible assets on their balance sheets, and negative for firms that did not.

Keywords: ACA; Affordable Care Act; intangibles; R&D; HPR; holding period returns; pharmaceutical industry.

DOI: 10.1504/IJHTM.2022.125837

International Journal of Healthcare Technology and Management, 2022 Vol.19 No.2, pp.167 - 184

Accepted: 06 Mar 2021
Published online: 30 Sep 2022 *

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