Developing synergies in the pharmaceutical sector: M&A activity post 2005

Abstract

Mergers and acquisitions (M&A) are inorganic growth strategies which have their importance in the present corporate world because of the prevailing stringent business conditions. In the current globalised economy, M&As are progressively utilised for enhancing the intensity of pharmaceutical firms through the rise of their market share in the industry, widening of product portfolio to enter new markets and geographies (competitive advantage) and reaping benefits through enhanced economies of scale. A strong and developing domestic market, a substantial pipeline of generic medicines and a capacity to service established markets abroad have swiftly made the Indian pharmaceutical companies most sought-after in the M&A space. This paper analyses the performance of M&A activities in the pharmaceutical space in India. It aims to consider the pattern in M&A across pharmaceutical companies in India, especially during the period 2005–2017 through a pre-merger and post-merger analysis. The paper performs a pre and post-merger comparison of 4 most crucial M&A deals in the Indian pharmaceutical landscape through metrics like ratio analysis, share price performance (accretion or dilution in case of listed companies) and synergy benefits from the point of view of the target as well as the acquirer and the combined entity as a whole.