Study On The Risks And Preventive Measures Of Gambling Merger And Acquisition Of Yatai Pharma

During the "14th Five-Year period",the environment for the development of the pharmaceutical industry has undergone complex and profound changes,domestic pharmaceutical market has entered a stage of high-quality development;the pharmaceutical industry is in urgent need of quality change,efficiency change and power change to provide strong support for the construction a new development pattern.The new coronavirus infection in recent years has also accelerated the radical reform of China’s medical system,the competition among the pharmaceutical industry is unprecedentedly fierce,in order to reduce cost and increase efficiency,quickly obtain superior resources and gain an advantageous position in the increasingly fierce market competition.M&A through gambling agreement has become a particularly popular investment initiative for many companies.But actually gambling agreement in M&A is a high-risk behaviour,with the risks of betting on various aspects of the process overlapping and intertwining,and the probability of failure at over 70%.In this article,we research the case of Yatai Pharma’s M&A of Shanghai New Peak by using the gambling agreement.It evaluates the betting effect,studies the risks encountered in the betting process,and provides suggestions for risk prevention of the gambling agreement.Zhejiang Yatai Pharma Co.(hereinafter referred to as "Yatai Pharma")hoped to complete its strategic transformation and upgrade through the M&A of Shanghai New Peak Biopharmaceutical Co(hereinafter referred to as "Shanghai New Peak").However,this M&A transaction,which was expected by Yatai Pharma.not only failed to achieve the expected purpose but also led to a storm of illegal disclosure violations and the lowest share price in recent years.This article uses the HHM framework method and the case analysis method to research the risks and preventive measures arising from the M&A of Yatai Pharma.Firstly,this article points out the background and current situation of M&A in China’s pharmaceutical industry,and reviews the significance of the research.Secondly,it discusses the relevant concepts and theoretical basis of M&A and counter gambling agreement;This article followed by a brief introduction to the companies on both sides of the merger,an analysis of the motivation for the M&A of this gambling agreement.Then the HHM framework is applied to analyze that: it has target selection risk,market risk and risk of blindly entering into a gambling agreement before the gambling agreement is signed;it has valuation risk,betting target establishment risk and payment method selection risk in the performance of the gambling agreement;it has integration risk,goodwill impairment risk and management behavior risk after the gambling agreement is implemented.Through the study,this article summarizes the matters that enterprises should pay attention to when using gambling agreement for M&A: before M&A,companies needs to select gambling agreement scientifically and prudent assessment of market sector risks.Analyze the feasibility of M&A from various aspects such as development potential,industry competition and integration difficulty;during M&A,companies should rational assessment of business value,formulate scientific M&A plans,set reasonable assessment indexes and choose appropriate payment methods;after M&A,companies should strengthen the effectiveness of internal control mechanisms,prevent the risk of high premium,and timely restrain management behavior.