Factors affecting productivity of research-based pharmaceutical companies following mergers and acquisitions

Raymond Tjandrawinata () and Destrina Grace Simanjuntak

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the impact of mergers and acquisitions (M&A) activities in research-based pharmaceutical companies, specifically the impact of R&D expenditure, profitability, and sales revenue on firms’ productivity, R&D intensity, in pharmaceutical industries following M&A activities. The model was estimated using annual data, gathered from seven large research-based pharmaceutical companies pre and post-M&A, during the period 2003 until 2010. The regression analysis method uses a fixed effect method with generalized least square (GLS) analysis. The result further shows that following M&A activities, firms’ one-year lagged R&D expenditure (t-1) and lagged profitability (t-1) to be positive in increasing significantly the firms’ amount of R&D intensity in research-based pharmaceutical industries, while, surprisingly firms’ one-year lagged sales revenue (t-1) have a negative impact in increasing significantly the firms’ amount of R&D intensity in research-based pharmaceutical industries.

Keywords: Mergers and Acquisitions (M&A); R&D Expenditure; Profitability; Sales Revenue; R&D Intensity (search for similar items in EconPapers)
JEL-codes: D21 D24 (search for similar items in EconPapers)
Date: 2012-11
New Economics Papers: this item is included in nep-com, nep-cse, nep-eff, nep-ind, nep-ino and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42514

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