Do large mergers increase or decrease the productivity of pharmaceutical R&D?

There is current uncertainty regarding the effects of mergers on pharmaceutical R&D productivity, with various mechanisms reported by which mergers could either help or harm R&D, and mixed empirical findings in prior analyses. Here, we present an analysis that is novel in several ways: we use downstream measures of R&D productivity, account for both inputs and outputs in our calculations, and use a self-controlled design. We find that recent large pharmaceutical mergers are associated with statistically significant increases in R&D productivity. These results are perhaps not surprising in light of the broader literature on R&D productivity that points to two factors as instrumental in driving higher R&D productivity (depth of scientific information, and objectivity of decision-making based on that information), both of which could be expected to increase because of a merger.