Firm Merger & Acquisition And Industry Evolution

Since the end of 20th century, merger and acquisition (M&A) have been prevailing in the pharmacy industry, and the impact of M&A on enterprise's development and on industry evolution has become a hot issue. Therefore, this paper will adopt a positive method to do a further research on the impact of M&A on industry evolution of China's pharmacy industry.Firstly, this paper studies the theories of M&A and industry evolution and analyses their relation in order to offer a theoretical foundation and evaluation index for the following positive analysis. Then, it takes China's pharmacy industry as the research target, has a detail explanation of the M&A history from 1994 to 2004 .At last, it will discuss the impact of M&A on industry evolution by a relative analysis between enterprises' quantities, market concentration ratio, profit changes of this industry and the quantity of M&A. This paper's purpose is to provide a reference for governments' policy.The result shows that China's pharmacy industry is still in the initial stage of industry expanding. After ten years' merging, the industry concentration ratio is increasing constantly, and a number of large-scale enterprise groups have already been established. The horizontal merger is as a main mode and mixed merger as a new way increase rapidly at the latest time. The M&A enhance enterprises' capabilities of profit creation, but companied with competition, the average profit of the industry decreases to some extent.