Mergers and Acquisitions in the Indian Pharmaceutical Sector

Santosh Kumar Sahu and Nitika Agarwal ()
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Nitika Agarwal: Madras School of Economics

Working Papers from Madras School of Economics,Chennai,India

Abstract: Mergers and acquisitions (M and A) are common strategies of firms to increase its performance. Although, the motives of M and A are different however, the determinants are discreet. This study tries to determine the factors affecting M and A activities in the Indian pharmaceutical sector. The empirical findings suggest; export intensity, import intensity, firm size and research and development intensity as the major determinants of M and A in the Indian pharmaceutical sector. In the context of acquisition, there is a riskiness associated with any business strategy, for to which a firm may choose to finance the deal either via cash, stock or assets. This study further looks at the firm’s decision on the types of acquisitions and arrives at the determinants of such decisions. The factors such as capital intensity was found more important when acquisition by share was undertaken compared to others. The success of the M and A is observed by considering the financial performance of the firm measured in terms of profit margin at firm level. Using propensity score matching technique, this study concludes that M and A have positive effect on the profit margin in the post M and A scenario.

Keywords: Mergers; Acquisitions; Indian Pharmaceutical Sector (search for similar items in EconPapers)
JEL-codes: C13 G34 L65 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2015-09
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
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