Research On The Financial Risks Of Continuous Mergers And Acquisitions Of Pharmaceutical Companies

In the global market,M & A has always been a popular research topic.Especially,M & A in the pharmaceutical industry is in full swing.The number of M& A is increasing,the size of the capital is becoming larger,and the scope of M &A is usually not limited to the industry and the country.For example,some large pharmaceutical enterprises,such as Fosun Pharmaceutical,Shanghai Pharmaceutical,Xinhua Medical,and so on,have shown the trend of continuous mergers and acquisitions.In recent years,with the continuous improvement of domestic policy on the pharmaceutical industry,the accumulation of their own development and expansion is becoming more difficult.In addition,with the outbreak of the new crown epidemic in late 2019,the pharmaceutical industry due to the particularity of the public again,and the relevant policies may become more stringent.Therefore,continuous M & A should become the necessary method for the rapid development of the pharmaceutical industry.However,although M & A can achieve rapid development without consuming internal resources,there are risks in every step of M & A,especially the financial risk that may lead to bankruptcy.For example,the risk of asset impairment caused by overvaluation in the valuation stage,the risk of solvency caused by financing payment,etc..Because of the concealment and accumulation of financial risk,it is not easy to find when it comes into being,and it is difficult to deal with when it accumulates to a certain extent.Therefore,this paper studies the financial risk of M& A of pharmaceutical enterprises,identifies the risk and puts forward a brief solution,hoping to provide some reference for pharmaceutical enterprises in the process of M & A.This paper mainly uses the case study method to analyze the financial risk during the continuous M & A of LEPU medical,which has been frequently M & A in recent years.This paper reviews the existing research results at home and abroad at first,and then introduces the theoretical basis of this study.Secondly,we use the double model to analyze the overall financial risk of LEPU medical,and then use the step of M & A process as the classification standard to analyze the specific financial risk,then clarify the causal relationship between financial risk and M & A behavior.Finally,combined with the analysis of financial risk and the specific situation of LEPU medical,put forward the corresponding preventive measures to reduce the financial risk of LEPU medical.Based on the overall research of the two-model and specific analysis,this paper considers that the main financial risk of LEPU Medical M & A comes from its financing payment mode of continuous large-scale M & A.As a result of its over use of debt financing and cash payment methods,the solvency and liquidity of LEPU has continued to decline,far below its competitors and the industry average.On the other hand,in order to maintain a stable cash flow,it still need debt financing,which will cause more and more weak solvency.In addition,the high goodwill caused by the overvaluation of the target of M & A also bring a series of assets impairment losses in the later period.However,after the merger and acquisition,LEPU medical did a good job of integration,many subsidiaries’ profit have been significantly improved after M&A,relatively,the rising profits also provide a strong guarantee of solvency.