Factors affecting productivity of research-based pharmaceutical companies following mergers and acquisitions

Tjandrawinata, Raymond R. and Simanjuntak, Destrina Grace (2012): Factors affecting productivity of research-based pharmaceutical companies following mergers and acquisitions.

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

• Item Type: MPRA Paper
• Language: English
• Keywords: Mergers and Acquisitions (M&A), R&D Expenditure, Profitability, Sales Revenue, R&D Intensity
• Subjects: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity

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Tjandrawinata, Raymond and Destrina Grace Simanjuntak. 2012. The Impact of Mergers and Acquisitions in Research-Based Pharmaceutical Companies on Productivity. Department of Business Development, Dexa Medica Group, Tangerang, Indonesia. Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1981889.

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