Smeal College of Business Researches Recalls and Brand Loyalty

---

---

Consumers with high brand commitment, defined as people who are “attached to brands, form close relationships with them, and have a general desire to maintain this close relationship,” may take a dimmer view of product recalls than consumers with low brand commitment, according to research published by Smeal College of Business professors in 2013. The findings contradict the prevailing opinion that high brand loyalty helps companies weather periods of negative publicity.

The Smeal researchers investigated consumer reactions to recalls in cases where the products being called back could cause death or serious injury. They discovered that high brand commitment was a liability in those situations. Researchers speculated that consumers might feel more disappointed than usual when a company they particularly like lets them down in such a way. The findings did not hold in cases of low-severity recalls, in which the researchers confirmed previous studies stating that brand loyalty tended to mitigate the negative effects.

Bullish Biotech a Boon to Health Sector Investors

As the co-founder of Opus Point Partners, Lindsay Rosenwald, MD, devotes his considerable expertise as a physician and entrepreneur to managing one of Wall Street's top biotechnology-focused investment funds. Top investors like Lindsay Rosenwald have taken serious notice of the very bullish biotechnology sector this year.

A number of biotechnology acquisitions have been announced in the past few months, including:

- Valeant Pharmaceuticals International agreed to buy Bausch + Lomb for $8.7 billion, greatly expanding Valeant's eye care business.

- Actavis Inc., which manufactures generic drugs, announced the purchase of Warner Chilcott in an $8.5 billion transaction.

- Thermo Fisher Scientific, a maker of scientific instruments, acquired another instrument manufacturer, Life Technologies, for $13.6 billion.

- Amgen announced a deal worth $10.4 billion to buy Onyx and its line of cancer treatments.

Typically, a buyout forces the purchasing company's stock price to drop and the acquired company's price to spike. In recent biotech acquisitions, however, both parties' stock prices have risen, suggesting strong investor confidence in the sector. This attitude is further reflected in the recent positive performance of many biotechnology exchange traded funds (ETFs), which track along with sector-wide trends.

Many analysts believe this positive trend will continue as large firms seek to buy out small, agile companies with innovative new products. Given the aging trends in the populations of developed nations, investing in life sciences today would appear to be a good bet for the long term.

Smeal College of Business on Final Stretch of Five-Year Strategic Plan

Dr. Lindsay Rosenwald co-leads a New York City asset management firm focused primarily on biotechnology investment. A graduate of The Pennsylvania State University and the Temple University School of Medicine, Dr. Lindsay Rosenwald holds a seat on the Board of Visitors of Penn State's Smeal College of Business.

In 2008, the Smeal College of Business at The Pennsylvania State University introduced a five-year strategic plan that focused in on four core principles: extraordinary education, research with impact, dialogue with society, and community with distinction. Within each of these categories, officials identified an array of measurable goals, ranging from creating a new major to increasing research endowments to boosting mentorship programs. The Smeal College of Business developed these strategic goals with the ultimate objective of becoming one of the top five business schools in the nation.

Over the last five years, the Smeal College of Business has demonstrated its commitment to continued success and improvement. As the plan comes to an end with the close of 2013, officials will analyze the overall effectiveness of the initiative and its goals. To learn more about this school's educational programming for undergraduate, graduate, and executive students, please visit Smeal.PSU.edu.