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  • https://doi.org/10.1109/icdmw69685.2025.00398Copy DOI Icon

Quantifying Biopharma Alliance Fragility Using a Strategic Shock Risk Index (SSRI)

  • Nov 12, 2025
  • Tingyu Zhou
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Abstract

In the volatile biotech sector, strategic alliances between startups and pharmaceutical incumbents are essential yet vulnerable. When these partnerships dissolve, they often trigger sharp negative market reactions. This paper introduces the Strategic Shock Risk Index (SSRI), a pre-event, regression-based model that quantifies the expected market impact of alliance breakdowns. Using pre-termination features, including deal size, duration, dependency, financial buffer, prior terminations, clinical phase, and contract structure (e.g., unilateral exit rights), the model employs a flexible quadratic regression with standardized nonlinear interaction terms. SSRI scores demonstrate strong predictive power (<tex xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">$\mathrm{R}^{2}=0.82$</tex>, AUC =0.96), capturing over 80% of the variance in post-termination abnormal returns. The SSRI estimates the severity of a termination, enabling proactive risk assessment and mitigation planning. Validated on a novel alliance dataset, the model serves both as a decision-support tool and a theoretical contribution to alliance risk analysis in innovation ecosystems.

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