Pharmaceutical Industry, The Choice Of Acquisition Targets

China's pharmaceutical industry is in "small, scattered, chaotic" conditions, the concentration of industries is not high, the ability of independent innovation is low. Mergers and acquisitions is one of the ways to deal with that condition. In general, most mergers and acquisitions were failure, one of the reasons, mainly concentrated on two points: the choice of target acquisition and integration after the merger, the former is the focus of this paper.On the foundation, the paper studies the procedure a method of selection of target corporations in M&A. The specific procedure of target corporation selection is as follows: Confirming the whole development strategy, development condition analysis of acquiring corporation, selecting the appraising index of target corporations, searching target corporations, preparatory choice of target corporations, evaluation of target corporations, target corporations' investigation and choosing the best corporation.Evaluation of target corporations is the core of M&A. With reference to fundamental theory and experience of corporation evaluation, the paper explores the basic theories and practical problems of corporate valuation in order to establish a theory and method system as guidance to corporate valuation.Thesis gives an analysis on the five methods of corporate valuation, including discount cash flows method, market method, cost method, EVA method and real options method, and discusses their respective adaptability and limitation. In the procedure of corporation selection , this thesis combines with the quantitative and qualitative analysis. Then AHP method is used to appraise several target corporations, and choose the best from them. The last part takes the DB pharmaceutical group as an example to apply the method to choose target corporations.