Stock Price Movements as Evidence for Anticompetitive Effects of Drug Industry “Reverse-Payment” Settlements: The Nexium Trial

In “the closest judgment call the Court made” during the Nexium Antitrust Litigation, Judge Young decided that evidence of the Defendants’ stock price movements would not be heard by the jury.  This paper presents that evidence, using an event study to assess how the Nexium settlement announcement affected the stock price values of AstraZeneca and Ranbaxy.  On the single day on which the settlement was announced, the stock market capitalization of AstraZeneca and Ranbaxy went up (after statistical adjustments) by $2.8 billion and $0.3 billion, respectively.  We explain how this evidence contributes to assessment of anticompetitive effects and to estimation of the period of delay in a reverse-payment case.