The Study Of M&A Performance In Chinese Pharmaceutical Industry

With the promotion of world economic globalization, the worldindustrial structure is faced with the new-round adjustment and upgrade.In order to establish their competitive position in the world and realizethe aim of resources disposing in the world, the World Medical tycoonsraise the merging and acquisition tide continually and make thecompetitive situation of the global medicine industry cause new change.Meanwhile, as China is a member of the WTO, Chinesepharmaceutical industry is facing big challenge along with tariff tax'sreduction, strictly protection of patented drug's property, graduallyopening restriction foreign circulation enterprise into domestic market. Toscramble for market share in China, foreign capital is launching offensiveon domestic pharmaceutical business by right of abundant capital. Somestudies show that some "districts' pharmaceutical business will surge atidal wave of M&A when it suffers from pressure from the exterior. Inaddition, domestic pharmaceutical enterprises need recombining in alarge-scale way due to the business actuality of low added-value, low-level scientific technology, lacking innovation capability, small scale of enterprises, low degree of industry concentration and non-standard operation of medicine market.So it is very important to research the M&A performance of List Company in the pharmaceutical industry in either theory or practice. At first the paper analyzes the theory about M&A, and sum up the domestic and foreign M&A tide. Secondly, the paper analyzes the M&A situation of listed companies in medicine industry. Discussing the cause, the approach and the characteristic of M&A in this situation. Then based on the studies of M&A events that happened in listed companies of China in 2002 by Abnormal Returns Methodology, this paper tries to analyze the short-term performance of companies during M&A, and find the cause that affect the M&A performance. Furthermore, based on the same events by Finance Indicator Approach, this paper tries to analyze the long-term performance of companies during 2001 to 2004 and discuss whether the finance index will be changed. At last this paper study the problems in the M&A of medicine industry, and find the way to settle them, especially on the integrated problem after M&A .The paper study this question by the case of Shanghai Pharmaceutical Company.On the basis of the literature research on M&A question, this paper adds my innovation in a certain extent. The paper studies the short-termand long-term performance of medicine companies between M&A by using the analytic approach of description and the analytic approach of main composition. This paper adopts SPSS and Excel Statistical software. The conclusion of this paper is: The companies which have merged other companies will get abnormal returns, but the companies which have been merged will not get those returns. While studying the long-term performance during M&A, this paper can conclude that the companies will reduce the performance on the first year after M&A, will change the performance on the second year after M&A, and the performance will be reduced on third year after M&A. All in all, the companies that have been merged can get more return than those that has merged other companies. Additionally, among the horizontal M&A, conglomerate M&A and vertical M&A, the result of horizontal M&A is the best, the second is vertical M&A, and the result of conglomerate M&A is the worst.