Performance Analysis Of Fosun Pharmaceutical’s Acquisition Of Gland Pharma

The aging of the domestic population and the increasing attention to health issues have led to a continuous increase in demand for the pharmaceutical industry,and the scale of the drug industry is also expanding,but the development of China’s pharmaceutical industry is also facing many problems,such as low research and development capabilities and unreasonable industry structure.The national policies of "two-ticket system" and medical reform have forced pharmaceutical companies to transform and develop,and some pharmaceutical companies have adopted M&A and market equity license in order to expand their scale,strengthen their strength and seize the market.However,there are no consistent findings on whether the use of M&A can achieve the purpose.In this paper,the case of Fosun Pharma’s acquisition of Gland Pharma,the largest M&A transaction in the pharmaceutical industry in2017,is selected for analysis.Exploring the motivation of Fosun Pharma’s M&A,we found that Fosun Pharma was driven by its globalization strategy,hoping to acquire Gland Pharma’s R&D technology and scientific personnel,improve the industrial chain layout,and break the market barriers.Thus,after reviewing a large amount of literature on the motivation and performance of overseas M&A at home and abroad,we decided to evaluate the short-term market performance using the event study method,the long-term financial performance using traditional financial indicators including growth capability,operational capability and EVA model,and also focused on non-financial indicators such as R&D investment,R&D capability,market position and domestic and overseas operating income to evaluate Fosun Pharma’s M&A performance was comprehensively evaluated to explore whether it achieved its M&A motives.From the market performance analysis,the excess cumulative return rate climbed all the way up after the M&A,and the short-term market performance was good;from the financial analysis,the traditional financial indicators showed that Fosun Pharma’s long-term benefits were affected by the epidemic,but there was continuous R&D of its own products,and the traditional indicators showed a trend of first decreasing and then increasing.After calculation,Fosun Pharma EVA was positive before and after the M&A,and it was found that the enterprise value continued to increase after the M&A,EVA value-added first decreased and then increased,and EVA value-added is expected to rise in the future.From the analysis of non-financial indicators,the company has a huge room for growth in the long run because of its improved R&D capability and R&D revenue,expanded market position and market share.In summary,Fosun Pharma could not realize the synergy of M&A immediately after the acquisition,but through one or two years of integration,Fosun Pharma was able to complement the advantages of Gland Pharma,Fosun Pharma’s revenue increased significantly,and the M&A was able to adjust the industrial structure of Fosun Pharma and improve its core competitiveness,thus the M&A realized its M&A motive.Based on the cases studied in this paper,the following points are summarized to inspire companies to make overseas acquisitions: firstly,companies should reasonably choose their target companies according to their development plans;secondly,in order to promote the successful completion of M&A,they should flexibly adjust their M&A plans according to the policy background at home and abroad;finally,companies should pay attention to the integration of resources after the completion of M&A to maximize the synergistic effect of M&A and make the post-merger companies Finally,companies should pay attention to the integration of resources after the completion of M&A to maximize the synergistic effect of M&A and make the post-merger company more competitive.