Performance Research On Premium M&A Of Biopharmaceutical Industry In China

Biopharmaceutical industry is one of the seven strategic emerging industries in the 21 st century in China,and it is the key area of future economic development and industrial transformation.Compared with developed countries,China’s biopharmaceutical industry concentration is much low,which enterprises are small-scale and lack of research capabilities.Therefore,in recent years,China’s bio-pharmaceutical companies carried out a large-scale mergers and acquisitions in the same industry,the acquisition rate of premiums are getting higher and higher,whether the acquisition can produce premium performance become the focus of attention.In this paper,it takes the case of Shanghai Lai Shi and Banghe Yaoye’s M & A cases as an example for the analysis of the study of the performance of premium acquisition in bio-pharmaceutical industry in China.First of all,it introduces the relevant theory and the both sides of M&A for providing support for the following key research topics;Secondly,according to logical chain –— "Premium Analysis – Performance Analysis –Performance Evaluation",it systematically analyses the performance of this premium M & A.the part of “Premium Analysis” mainly analyses comparatively the premium degree of the M & A and studies the factors that affect the M & A.The part of “Performance Analysis” uses both method of event analysis and the factor analysis to detect respectively the market performance and financial performance of the M & A.Among them,the market performance comes out mainly by calculating the Cumulative Abnormal Return of the short-term market performance and Buy-andHold Abnormal Return of the long-term market performance.The financial performance is measured for the comprehensive financial performance score through the use of SPSS software to reduce the factor dimension of financial indicators of the comparable object.The part of “Performance Evaluation” is mainly for the comprehensive evaluation of the premium M & A and analyses the existing problems and causes of the case;Finally,it gets a summary of the performance of the premium M & A and put forward relevant policy recommendations.The case study found that the premium of M & A among biopharmaceutical companies mainly results from scarce resources,rich off-balance sheet assets and the synergistic effect of M & A,and the reasonable premium M & A can produce good performance as a whole,which not only greatly enhance the operating efficiency of both parties but also makes the wealth of shareholders doubled.However,the characteristics of the biopharmaceutical industry—— “high-tech,high-input,high-risk,high-yield and long-cycle” make the relatively high quality companies the target of the M & A market,which causes the acquirer lack an in-depth understanding of the merged party.As a result,it’ll produce some operating friction and make operating efficiency of the two sides down.