Research On Goodwill Impairment Of Continuous Mergers And Acquisitions Of Pharmaceutical Distribution Companie

After the introduction of the "two-ticket system" and other preferential policies in the pharmaceutical market,pharmaceuticals only need to go through two invoicing sessions from pharmaceutical manufacturers to pharmaceuticals,which reduces the problem of price increases in the pharmaceutical distribution chain and promotes the development of successive mergers and acquisitions of listed pharmaceutical companies.Although successive M&As can enhance the core competitiveness of pharmaceutical companies and improve the concentration of the industry,there are certain risks associated with successive M&As.In particular,the risk of goodwill impairment in M&A is more prominent,and many pharmaceutical companies have experienced a "thunderstorm" of performance due to goodwill impairment,which has brought negative impact to the market.Therefore,it is important to study the causes of goodwill impairment risk of successive mergers and acquisitions and related risk prevention measures for the sustainable operation of pharmaceutical companies.In this context,this paper analyzes and studies Ruikang Pharmaceuticals as a case company.Firstly,we use literature analysis method to sort out the relevant literature on successive mergers and acquisitions,goodwill and goodwill impairment at home and abroad.Second,using case studies and qualitative and quantitative analysis,the paper focuses on the goodwill impairment risk of Ruikang Pharma’s successive mergers and acquisitions,reviews its M&A history,compares the process of goodwill formation and goodwill impairment after M&A,and aims to identify the causes of goodwill impairment risk of Ruikang Pharma’s successive mergers and acquisitions,so as to propose targeted prevention suggestions to reduce goodwill impairment risk.According to the risk analysis of each aspect of M&A,the causes of goodwill impairment risk of Ruikang Pharmaceuticals include: excessive M&A premium paid before M&A;in the process of M&A,the M&A target’s performance commitment is not met,the M&A payment method is unreasonable,and the goodwill information disclosure is not perfect;after M&A,the enterprise management has the motive of surplus management and the corporate governance is not perfect.Finally,this article uses the comparative analysis method,event study method and Z-Score scoring model to analyze the economic consequences of goodwill impairment of Ruikang Pharmaceuticals after consecutive mergers and acquisitions.The article’s analysis concludes that goodwill impairment resulting from successive M&A is very detrimental to the business development of the company.It is suggested that before successive M&As,companies should carefully select M&A targets,reasonably value M&A targets,and reasonably formulate performance commitment agreements;during the M&A process,diversified M&A payment methods can be adopted,disclosure of goodwill impairment information should be strengthened,and supervision of the companies themselves should be enhanced;after M&As,integration of the M&A companies should be strengthened and corporate governance should be enhanced.The analysis of this paper can provide reference significance for Ruikang Pharmaceutical Company itself and pharmaceutical distribution enterprises to prevent goodwill impairment risk in successive mergers and acquisitions.