Accessing the U.S. capital market is a necessity for many foreign companies to raise capital for their business. In particular overseas pharmaceutical companies need such source of capital given the astronomical R&D costs for development of drugs. From the investment perspective, investing in ADRs while mainly used for portfolio diversication purposes, such investment should also have some reasonable returns, In researching ADRs performance, researchers have measured if mostly from a market timing perspective (21 day after IPOs or 3 years investment window), but did not investigate a 'risk-free' perspective of such performance. This reserach project introduced a risk-free measurement approach using Shapre ratio (91-day Treasury bill as a proxy) and investigated the performance of 11 ADRs and compared them to 5 US pharmaceutical companies and S&P500 performance.
Performance of Pharmaceutical American Depository Receipts (ADRs)