Performance of Mergers and Acquisitions in the Pharmaceutical Industry: A Comparative Perspective

Mehmet Demirbag (Lecturer in strategic management in the Management School at the University of Sheffield)
Chang‐Keong Ng (MBA graduate in the Management School at the University of Sheffield)
Ekrem Tatoglu (Associate professor of international business in the Department of Management at Bahcesehir University)

Multinational Business Review

ISSN: 1525-383X

Publication date: 17 June 2007

Abstract

This study provides new evidence on the nature of value creation in M&A activity based on a sample of giant pharmaceutical M&As and independent non‐M&A rival firms. Relying on multiple indicators of performance, their post‐M&A performance was compared with their pre‐M&A performance as well as with the performance of other major pharmaceutical firms that have not been involved in M&A activity. Based on three measures of operating M&A performance, it has been noted in general that no value creation was realized in the sample M&As in terms of research productivity, return on investment, and profit margin. The sample M&As had lower research productivity than that of both pre‐M&A and independent non‐M&Arival firms. In a similar vein, with regard to return on investment, M&As were not better than their pre‐M&A firms, but performed relatively better than their non‐M&A rivals. As far as the profit margin is concerned, the sample M&As, however, appeared to have better performance than pre‐M&Afirms and almost on par with the non‐M&A rivals.

Keywords

Citation

Demirbag, M., Ng, C. and Tatoglu, E. (2007), "Performance of Mergers and Acquisitions in the Pharmaceutical Industry: A Comparative Perspective", Multinational Business Review, Vol. 15 No. 2, pp. 41-62. https://doi.org/10.1108/1525383X200700007

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Publisher

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Emerald Group Publishing Limited

Copyright © 2007, Emerald Group Publishing Limited

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