The Efficiency Of M&A In China’s Pharmaceutical Industry

The pharmaceutical industry is a high-tech,high-innovation and capital-intensive industrial groups,involving national health,social stability and economic development.There are a lot of problems in Chinese pharmaceutical industry,such as too much small enterprises,low concentration,poor R&D technology,and etc.Thus in order to promote and regulate the development of the pharmaceutical industry,the government has launched a series of measures to encourage mergers and acquisitions to increase the industry concentration.Through empirical analysis,this article aims to study the efficiency of the pharmaceutical industry mergers and acquisitions,but also influence factors.Hope this paper will help to give effective advises to the government,assist the company plan the development strategies,and at the same time give useful information to investors in the pharmaceutical industry.This paper adopted the DEA method with the actual data analysis the efficiency of M&A and the influence factors based on the study of the status and problems of pharmaceutical industry.The results showed that:(1)M&A significantly increased the scale-efficiency of pharmaceutical company;(2)horizontal mergers and acquisitions improved the company’s technical efficiency,thereby enhancing the overall efficiency of the company,while mixed mergers and vertical mergers reduce the company’s technical efficiency,so that the overall efficiency of the company remain unchanged or fall;(3)M&A in western and northeast regions improve the technical efficiency and scale efficiency of the company,thereby increasing the overall efficiency of the company;and the mergers in central and eastern regions reduced the technical efficiency due to the increase of scale efficiency,little change in overall efficiency;after rising ratio(4)the merger with the largest shareholder holds more than 50%shares will increase the company’s technical efficiency,while if the largest shareholder holds less than 34%or between 34%and 50%,the scale efficiency of the merger will most likely stay the same or decline slightly.Finally,the paper had given some suggestions to improve the efficiency of the merger in pharmaceutical industry from the macro and micro perspective respectively.This paper not only has theoretical significance,but also has a very important practical significance.In theory,the empirical analysis of this paper can enrich the basic theory of China’s pharmaceutical industry.In order to explore the factors that influence the success or not of mergers and acquisitions,this study also has important application value:(1)It can help the government and other regulatory authorities to better understand the situation and the existing problems of the pharmaceutical industry,and better serve the community.;(2)This paper can provide advice and guidance to the pharmaceutical mergers and acquisitions activities,to help pharmaceutical company develop the right investment strategy;(3)Help the investors better understand the development situation of China’s pharmaceutical industry and the mergers and acquisitions,thus help them analyze,evaluate and predict the development of the company which after mergers and acquisitions,then make the right investment decisions.