Study Of Horizontal Merger Performance Of The Lummy Pharmaceutical Enterprise

In recent years,the number and the amount of mergers and acquisitions in pharmaceutical industry have showed a sustained growth trend.Due to the impact of macro and micro economic factors,such as the implementation of the new GMP,poor industry concentration,etc.In purpose of horizontal integration,many large pharmaceutical companies have been aiming at small pharmaceutical companies with certain strong developing potentials,using precipitation funds and market capitals.Under this background,a case study of horizontal merger performance during 2009 to 2015 of the Lummy Pharmaceutical enterprise is conducted in this paper.Literature research method,the case study method,the event study method,the principal component analysis method and the index analysis method are mainly used in this study.Based on the theories of horizontal merger motivation,the main motivation of Lummy pharmaceutical horizontal mergers includes macro-economic factors,achieving economies of scale,improving market competitiveness,entering into a new industry or market and to achieve synergistic effect;The CAR evaluation of short-term market reaction to the merger events during 2009-2015 indicates positive short-term market reaction in the earlier three merger events,the following one is not significant,the last one is negative;Establishing a comprehensive performance score model with 6 major financial indicators which represent the enterprise's solvency,operating capacity,profitability and development capacity,to measure the overall enterprise performance in different stages of horizontal merger,results show that the overall enterprise performance is effectively enhanced in the short term,but not significant in a long run;plus with tracking and analysis of 3 important operating and management related indicators,we find that horizontal merger significantly speed up the growth of operating revenues and R&D investment in the short term,but not in sales and management level,neither any positive effect on the three indicators in the long run.