Seminar (Dept. of Finance)

Title: Imitation and Product Innovation: Evidence from the Pharmaceutical Industry

Speaker: Fangyuan Ma, Assistant Professor of Finance, Peking University, HSBC Business School

Time: 10:00-11:30, May 10, 2024(Friday)

Venue: Room 1008, Mingde Business Building

Language: English/Chinese

ABSTRACT:

Product innovation inevitably has a negative impact on current products through demand cannibalization. As a result, firms tend to postpone the commercialization of their technology innovations, treating the timing of new product launch as a real option. In this paper, we focus on the pharmaceutical industry to study how competition from imitators affects the product innovation strategies of incumbent firms. We find that entry threat from imitator leads to an accelerated launch of new products that are technologically ready, by diminishing the real option value. Our findings highlight the disparity between technological readiness and market introduction of products, as well as the crucial role played by competition in reducing the disparity and spurring product innovation.

SHORT BIOGRAPHY:

Fangyuan Ma is an Assistant Professor of Finance in HSBC Business School, Peking University. She obtained her Ph.D.in Finance from the Business School in the Hong Kong University of Science and Technology. Her research interests center on Corporate Finance, Corporate Governance, CEO Compensation, Product Market Competition, Mergers and Acquisitions. She has published papers on Journal of Financial and Quantitative Analysis, Journal of Financial Economics and etc.