Factors Related to Small- and Mid-Capitalization Pharmaceutical Company Success Using Stock Performance as a Surrogate.
Background Developing novel pharmaceuticals demands substantial investment despite high uncertainty of success and ultimate market value. While many established drug companies are highly profitable and have large portfolios of diversified assets, much of new drug innovation, a very high-risk, high-reward gambit, stems from smaller companies striving to bring their first products to market. While drug costs, and thus pharmaceutical company profits, can be controversial, it is unquestionable that the products from these companies provide great benefit to humanity. Hence, the ongoing success of the industry as a whole is quite relevant from a public health perspective. Methodology We sought to investigate factors influencing pharmaceutical company success using company stock performance on major US indices as a surrogate. As the profitability of large-capitalization (cap) pharmaceutical companies is well established, we focused on small- and mid-cap companies in this analysis. Small- and mid-cap pharmaceutical companies (both currently active and now defunct) and historical share prices were captured, including company details and the nature of drug pipelines. Funding by US academia was acquired via CMS.gov Open Payments and categorized into contributions < or ≥$100,000. Stock performance was considered good (+ ≥25%), mediocre (±25%), or poor (- ≥25%). Univariate and multivariate associations were assessed. Results Of the 420 companies included in the analysis, 101 (24%) had good, 76 (18%) mediocre, and 243 (58%) poor performance. The following were associated with performance in univariate analysis: initial public offering (IPO) price (
Published In/Presented At
Ferris, M. J., Sun, K., Savard, C., Suresh, T., & Mishra, M. V. (2021). Factors Related to Small- and Mid-Capitalization Pharmaceutical Company Success Using Stock Performance as a Surrogate. Cureus, 13(9), e18210. https://doi.org/10.7759/cureus.18210
Medicine and Health Sciences
Department of Medicine, Department of Medicine Fellows and Residents, Fellows and Residents