Research On Value Chain Integration In The Pharmaceutical Industry Mergers And Acquisitions

To change the situation of scattered distribution and low industry concentration of pharmaceutical industry as soon as possible, our government issues a series of documents and policies to encourage the pharmaceutical industry to carry out mergers and acquisitions, and promote industrial restructuring and upgrading. It maintains large growth in 2014, after a surge in quantity and amount of pharmaceutical mergers and acquisitions in 2013. Under the guidance of macroeconomic policy, Mergers and acquisitions, which are based on the value chain integration, have become the mainstream way of consolidation of the pharmaceutical industry. Based on this background, this article reviews the path of the value chain integration based on mergers. And on the basis of industry analysis, this article studies the case of Shanghai Pharmaceutical Holding Co., Ltd. to explore strategies and results of value chain integration.Firstly, this article analyzes every value link of the pharmaceutical industry, including R & D, manufacturing, distribution, retail and medical services, and summarizes internal and external value chain integration strategies in M & A of the pharmaceutical industry. The strategies of the external value chain integration include expanding, extension and reconstruction of the value chains. The strategies of the internal value chain integration include a wide range of integration strategies, including the integration of organization, business processes, and human resources.Secondly, based on industry analysis, this paper focuses on case study of Shanghai Pharmaceutical from 2010 to 2014, to analyze the strategies and results of internal and external value chain integration. Around key nodes, Shanghai Pharmaceutical launched both of the internal and external integration. By reconstructing the internal value chain, Shanghai Pharmaceutical eliminated some value chain links which are overlapping and non-value added. And through external acquisitions, it absorbed high-quality medical resources. The value chain extension and expansion not only promote the expansion of marketing channels and business scale, and also optimize the product structure. Internal integration includes integration of business processes, supply and marketing channels, human resources, organizational structure, information management and other aspects, in order to achieve the targets of M & A, and reach the purposes of optimizing the value chain.This paper compared the value chain structure of Shanghai Pharmaceutical before and after the integration, and combined with channel working capital management theory, AHP and fuzzy comprehensive analysis, to analyze the change of operation capacity and corporate performance. The study found that operational efficiency greatly enhanced, especially in procurement aspects, and overall operating capacity and corporate performance had been improved significantly. It indicates that the value chain integration indeed plays a positive role in the development of enterprises.Meanwhile, based on a comprehensive analysis of the value chain integration of Shanghai Pharmaceutical, the paper confirms that the internal and external integration of the value chain complement each other. Lack of external integration, it can’t change the corporate value chain structure, and lack of internal integration, it will affect the transmission of value flow and information flow within the organization instead. In the context of industry consolidation, in order to stimulate industrial chain optimization, the internal and external value chain integration based on M & A has become the only way for the orderly development of the pharmaceutical industry.