Investment Opportunity in Biosimilars and Its Impact on Firms’ Capital Structure: Evidence from Drug Manufacturing Companies

This paper examines whether drug manufacturing companies in India, Japan, China, and Untied States alter their capital structure as a response to an investment opportunity, specifically in the biosimilar market. The influence of investment opportunity is examined in the study using linear regression analysis. The article uses data from 10 drug manufacturing companies from each country during the period 2018–2022. The results provide insight into how such companies react to the investment shock and whether the firms purposefully change their capital structure due to this investment opportunity. We found that after the announcement of the opportunity, firms in three countries had reduced their leverage and financed their operations and investments from their retained earnings while increasing their tangible assets.