M&A of Generic Pharmaceutical Companies Increases Productivity
Destrina Grace Simanjuntak
Dexa Laboratories of Biomolecular Sciences, Dexa Medica Group
Raymond R. Tjandrawinata
Department of Business Development and Dexa Laboratories of Biomolecular Sciences, PT Dexa Medica
October 20, 2011
This paper analyzes the impact of M&A activities in generic pharmaceutical companies. Specifically the role of lagged R&D expenditure, lagged profitability, and R&D intensity on firms’ productivity, which is firms’ amount of total approval of drugs in pharmaceutical industries following M&A activities were examined. The model was estimated using annual data, gathered from six large generic pharmaceutical companies in the world post-merger & acquisition, during the period 2003 until 2010. The regression analysis method uses a pooled regression, with generalized least square (GLS) method. The result further shows, following M&A activities, firms’ one-year lagged R&D expenditure (t-1), one-year lagged profitability (t-1), and R&D intensity to be positive in increasing significantly the firms’ amount of total approval of drugs in generic pharmaceutical industries.
Number of Pages in PDF File: 13
Keywords: M&A, R&D expenditure, profitability, R&D intensity, total approval, generic drug
JEL Classification: A10, C33, G34, L21, M21working papers series
Date posted: October 20, 2011
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