Concentrated Announcements on Clustered Data: An Event Study on Biotechnology Stocks

In spring 2000, three events—two political statements by Bill Clinton and Tony Blair and a breakthrough announcement by Celera Genomics—had a major impact on biotechnology stocks. We analyze their effects over a comprehensive set of biopharmaceutical companies, using a composite return-generating model with an industry-specific patent-based factor. Our results show that stocks can be clustered according to their responsiveness to political and scientific events. Furthermore, we emphasize different impacts on the market value of intangible assets for each cluster, suggesting that growth options are valued with different criteria for therapeutics, and technology-based subsectors.