stock market response to drug legislation:

A study of the reaction of the New York Stock Exchange to the 1969 lifting, and then the 1987 enactment, of strict patent protection for pharmaceuticals in Canada indicates that the stock market responded positively when the change was made in 1989. Pharmaceutical companies require patent protection for their products in order to see gains for development costs, as imitation costs are low. Researchers should be careful not to judge market response too soon, as the market had not yet reacted against the change in the early 1970's.