The Contract Research Organization Enterprise Vertical Integration And Business Performance

Since China's reform and opening,people's living standards have been increasing and they have paid more and more attention to health.And with the support of a series of national policies,the pharmaceutical industry has developed rapidly in recent years,and CRO is one of the sub-sectors.The enterprise integration strategy has long been an efficient way to achieve resource restructuring and large-scale development of the company.After the reform in 1978,most domestic companies realized that vertical integration has significant advantages in reducing the overall transaction expenses and improving operational efficiency.Therefore,it will rely on the vertical integration model to increase its scale.Because the current concentration of China's pharmaceutical CRO industry is not high,many companies are actively promoting vertical integration.However,this development model may enhance market forces and further form a series of anti-competitive behaviors like exclusion,barriers and price discrimination.The vertical mergers and acquisitions conducted by most companies have not triggered anti-monopoly attention.Therefore,the problem analyzed by the thesis is that WuXi Apptec Co.is based on the theory of industrial organization and transaction cost theory to analyze the changes of its enterprise performance with the vertical integration process.This paper summarizes the research results of predecessors,carries out theoretical analysis and mechanism construction.Based on industry status analysis,it calculates the vertical integration index VAS of major enterprises.According to the comparative analysis of each enterprise index,it chooses WuXi Apptec Co.,the leading pharmaceutical CRO enterprise,as a case study.According to the measurement index of vertical integration and the process of merger and acquisition,this paper divides the process of vertical integration of WuXi Apptec Co.into stages ?,2007-2011,stage ?,2012-2015,and stage ?,from 2015 to now,and analyses the layout of its industrial chain.Then,based on the financial data of enterprises,the paper analyses the long-term financial performance,and then uses the event study method to analyze the three stages of vertical integration.To deal with the short-term market reaction of M&A events,the mechanism and economic consequences of vertical integration on the performance of pharmaceutical CRO enterprises were analyzed.The research found that:(1)The results of long-term financial performance analysis,management and the synergy effect of finance is relatively obvious with the performance of asset specificity,and the cost decreases.In general,with the deepening of vertical integration,the financial performance of the company is positive;(2)the results of the event research method show that the news of further vertical integration of enterprises significantly affects the stock price of the company and has a positive impact on the stock price.Relying on the analysis of the actual case of WuXi Apptec Co.,it can be concluded that the current enterprise can achieve the improvement of overall corporate performance by means of vertical integration,but this behavior will also have the effect of enhancing market power and leading to monopoly.Through the analysis of this article,it helps to achieve more reliable decision support for regulators and provide reference for other companies in the industry.