Analysis of Over 2,200 Life Science Companies Reveals a Network of Potentially Illegal Interlocked Boards

Mark A. Lemley (Stanford University), Anoop Manjunath (Stanford University), Nathan Kahrobai (Stanford University), Ishan Kumar (Stanford University), Analysis of Over 2,200 Life Science Companies Reveals a Network of Potentially Illegal Interlocked Boards, Stan. L. & Econ. Onlin Working Paper 578 (2022):

Competition between life science companies is critical to ensure innovative therapies are efficiently developed to improve human health. Anticompetitive behavior may harm scientific progress and, ultimately, patients. One well-established category of anticompetitive behavior is the “interlocking directorate.” It is illegal for companies’ directors to “interlock” by also serving on the boards of competitors. To investigate anticompetitive behavior in the life sciences, we evaluated overlaps in the board membership of 2,241 public life science companies since 2000. At any given time, 10-20% of board members are interlocked; their tenures are 50% longer than non-interlocked directors. The number of interlocks has more than doubled in the last two decades. Interlocking directorates are particularly prevalent in oncology, neurology, immunology, and respiratory disease. Over half of all companies with more than $5 million in revenue are interlocked. A significant fraction of the life sciences industry is engaged in anticompetitive—and potentially illegal—behavior.