An Empirical Study On M & A Performance Of Chinese Listed Pharmaceutical Enterprises-based On Event Study

With the challenges keep growing since participating WTO as well as the penetrating of global financial crisis, our pharmaceutical corporations urgently needs to cultivate its core international competitiveness through M&A, especially under the favorable domestic development environment sheltered by the brand new medical care revolution. Regarding that pharmaceutical industry is facing several crucial problems such as enterprises are out of numbers, productivity reconstruction and competition chaos, etc, another huge pharmaceutical merger wave is expected in days ahead aiming to solve those imbalance problems and ready for the fist challenges generated both from domestic and foreign markets. The only issue which matters is how to enhance the M&A performance, how to rule the merger activities and how to function the pharmaceutical M&A in the maximum extent?This article primarily collects 342 pharmaceutical M&A activities from 127 medicine companies of Chinese A stock market during 2003 to 2008. Through CAR (Cumulated Average Return) and BHAR (Buy-and-Hold Average Return), the text then analyzes the M&A performance against Shanghai, Shenzhen as well as Pharmaceutical industry market index from 5 angle namely Company Type, M&A Type, M&A Means, Related Transaction and Payment Means. After the detail comparing and analyzing, the research argues that Company Type diversifies the correspondent M&A performance: Chinese herbal medicine acquires the best result, then after chemical medicine industry and biotech pharmaceutical industry, medicine logistics lays behind. Different M&A Type determines that horizontal merger performs worst, while vertical integration is acceptable, cross-industries alliance gains the most excellent result. M&A Means lead to the poor performance of corporate divestiture, but favorable outcome of Corporate Restructuring. Meanwhile, Related Transaction acts better than None Related Transaction during the announcing day, but finally goes opposite in the long run. When it comes to the Payment Means, the research result supports the asset and stock rather than cash. Those results indicate lots of problems stretching from the ignorance of technique and channels, inconsistent between M&A and development strategy, payment means limits to inappropriate administration. Combining with the current situation of M&A of our A stock pharmaceutical listed companies, a series of correspondent strategies are finally given based on the empirical study ahead such as strengthening the post M&A integration, exploring the potential of horizontal merger, consisting the M&A purpose and development target, increasing the quality of information, encouraging the financial innovation and embodying the M&A related parties duties.