Factors affecting productivity of research-based pharmaceutical companies following mergers and acquisitions
AbstractThis paper analyzes the impact of mergers and acquisitions (M&A) activities in research-based pharmaceutical companies, specifically the impact of R&D expenditure, profitability, and sales revenue on firms’ productivity, R&D intensity, in pharmaceutical industries following M&A activities. The model was estimated using annual data, gathered from seven large research-based pharmaceutical companies pre and post-M&A, during the period 2003 until 2010. The regression analysis method uses a fixed effect method with generalized least square (GLS) analysis. The result further shows that following M&A activities, firms’ one-year lagged R&D expenditure (t-1) and lagged profitability (t-1) to be positive in increasing significantly the firms’ amount of R&D intensity in research-based pharmaceutical industries, while, surprisingly firms’ one-year lagged sales revenue (t-1) have a negative impact in increasing significantly the firms’ amount of R&D intensity in research-based pharmaceutical industries.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 42514.
Date of creation: Nov 2012
Date of revision:
Mergers and Acquisitions (M&A); R&D Expenditure; Profitability; Sales Revenue; R&D Intensity;
Find related papers by JEL classification:
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-24 (All new papers)
- NEP-COM-2012-11-24 (Industrial Competition)
- NEP-CSE-2012-11-24 (Economics of Strategic Management)
- NEP-EFF-2012-11-24 (Efficiency & Productivity)
- NEP-IND-2012-11-24 (Industrial Organization)
- NEP-INO-2012-11-24 (Innovation)
- NEP-SBM-2012-11-24 (Small Business Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Patricia M. Danzon & Andrew Epstein & Sean Nicholson, 2007.
"Mergers and acquisitions in the pharmaceutical and biotech industries,"
Managerial and Decision Economics,
John Wiley & Sons, Ltd., vol. 28(4-5), pages 307-328.
- Patricia M. Danzon & Andrew Epstein & Sean Nicholson, 2004. "Mergers and Acquisitions in the Pharmaceutical and Biotech Industries," NBER Working Papers 10536, National Bureau of Economic Research, Inc.
- Mark Rogers, 2002. "The Influence of Diversification and Market Structure on the R&D Intensity of Large Australian Firms," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(2), pages 155-172.
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