Short Selling and Implications for The Biopharmaceutical Industry

Over the past decades, the practice of short selling in the biopharmaceutical industry has grown substantially. Biopharmaceutical companies have actively expressed concern about the potential consequences of short selling for the development of new drugs and therapies. We present evidence that biopharmaceutical companies are disproportionally targeted by short sellers. We also show that companies with an emphasis on <em>Oncology</em> treatments seem to be more likely to be targeted by short sellers. Finally, we find that an increase in the number of short positions is associated with a decrease in <em>New Product </em>and C<em>linical Trial Initiations</em>.