The impact of healthcare legislation on the relationship between intangible investments and investor returns in the US pharmaceutical industry Online publication date: Fri, 30-Sep-2022
by Richard A. Heiens; Robert T. Leach
International Journal of Healthcare Technology and Management (IJHTM), Vol. 19, No. 2, 2022
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.
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