Mergers and Acquisitions in the Pharmaceutical and Biotech Industries

Loading...
Thumbnail Image
Penn collection
Health Care Management Papers
Degree type
Discipline
Subject
Growth and Development
Other Business
Pharmacoeconomics and Pharmaceutical Economics
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Danzon, Patricia. M
Epstein, Andrew
Nicholson, Sean
Contributor
Abstract

We examine the determinants and effects of M&A activity in the pharmaceutical/ biotechnology industry using SDC data on 383 firms from 1988 to 2001. For large firms, mergers are a response to expected excess capacity due to patent expirations and gaps in a firm’s product pipeline. For small firms, mergers are primarily an exit strategy in response to financial trouble (low Tobin’s q; few marketed products, low cash–sales ratios). In estimating effects of mergers, we use a propensity score to control for selection based on observed characteristics. Controlling for merger propensity, large firms that merged experienced a similar change in enterprise value, sales, employees, and R&D, and had slower growth in operating profit, compared with similar firms that did not merge. Thus mergers may be a response to trouble, but they are not a solution.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2007-01-01
Journal title
Managerial and Decision Economics
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation
Collection