The Impact of Mergers and Acquisitions in Research-Based Pharmaceutical Companies on Productivity

20 Pages Posted: 9 Jan 2012

See all articles by Raymond R. Tjandrawinata

Raymond R. Tjandrawinata

Dexa Laboratories of Biomolecular Sciences, PT Dexa Medica

Destrina Grace Simanjuntak

Dexa Laboratories of Biomolecular Sciences, Dexa Medica Group

Date Written: January 9, 2012

Abstract

This paper analyzes the impact of mergers and acquisitions (M&A) activities in research-based pharmaceutical companies, specifically the impact of R&D expenditure, sales revenue, and R&D intensity on firms’ productivity, on drug approval in pharmaceutical industries following M&A activities. The model was estimated using annual data, gathered from eight large research-based pharmaceutical companies in the world post-M&A, during the period 2003 until 2010. The regression analysis method uses a pooled regression method with generalized least square (GLS) analysis. The result further shows that following M&A activities, firms’ one-year lagged sales revenue (t-1) and R&D intensity to be positive in increasing significantly the firms’ amount of total approval of drugs in research-based pharmaceutical industries, while, surprisingly firms’ one-year lagged R&D expenditure (t-1) have a negative impact in increasing significantly the firms’ amount of total approval of drugs in research-based pharmaceutical industries.

Keywords: mergers and acquisitions (M&A), R&D expenditure, sales revenue, R&D Intensity, total approval, new molecular entity

JEL Classification: A10, C33, G34, L21, M21

Suggested Citation

Tjandrawinata, Raymond R. and Simanjuntak, Destrina Grace, The Impact of Mergers and Acquisitions in Research-Based Pharmaceutical Companies on Productivity (January 9, 2012). Available at SSRN: https://ssrn.com/abstract=1981889 or http://dx.doi.org/10.2139/ssrn.1981889

Raymond R. Tjandrawinata (Contact Author)

Dexa Laboratories of Biomolecular Sciences, PT Dexa Medica ( email )

Tangerang
Indonesia

Destrina Grace Simanjuntak

Dexa Laboratories of Biomolecular Sciences, Dexa Medica Group ( email )

Boulevard Bintaro St. Sector 7, Block B7/B1 No.05
Tangerang, ID Banten 15224
Indonesia
(62)(21)7451777 (Phone)
(62)(21)7452573 (Fax)

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