• search hit 31 of 158
Back to Result List

Strategic Intention and Success of Mergers and Acquisitions in the Pharmaceutical Industry: A Case Study of the Acquisition of Genentech by Roche

  • Abstract The purpose of this paper is twofold: first, to identify the strategic intentions of pharmaceutical companies engaging in mergers and acquisitions (M&A), and second, to determine whether corporate takeovers executed in the pharmaceutical sector create value. In this respect, the industry’s key developments are analysed to ascertain what has led to substantial M&A activity since the mid-1990s. The paper finds that patent expirations on blockbuster drugs, declining research and development (R&D) productivity, enhanced buyer power, heightened competition from me-too, follow-on and generic medicines, and the emergence of biotechnology firms have caused pharmaceutical deals to be primarily motivated by the need to replenish R&D pipelines and drastically cut costs through economies of scale and scope. Other, less obvious, but equally important rationales for big pharma M&A are diversification, market power and tax inversion. Despite these rather benign intentions, the majority of studies conclude that, on average, pharmaceutical transactions generate gains for the target company but not the acquirer; overall they create little or no value. As these studies usually provide detailed evidence regarding the short-term impact but generally fail to adequately investigate the long-term outcomes, the author applies a dual quantitative approach consisting of an event study and ratio analysis to comprehensively assess whether the acquisition of U.S. biotech firm Genentech by Swiss pharmaceutical giant Roche completed in March 2009 has generated benefits in both the short and long run. The results reveal that in the short term Roche’s acquisition of Genentech, which has been scarcely explored so far, created substantial value for the combined shareholders; on a stand-alone basis, though, the takeover gains accrue entirely to Genentech. In the long term, Roche’s post-acquisition performance is largely disappointing: neither sales nor cost synergies have been achieved in the six years following the takeover, calling into question the overall effectiveness of pharmaceutical M&A.

Download full text files

  • Heinemann,Anika_MA_2015.pdf
    deu

    Full text available on BSEL Campuses / Volltexte von den Standorten der HWR aus einsehbar

Export metadata

Additional Services

Share in Twitter Search Google Scholar Statistics
Metadaten
Author:Anika Heinemann
URN:urn:nbn:de:kobv:b721-opus4-4918
Document Type:Master's Thesis
Language:German
Date of first Publication:2015/12/02
Publishing Institution:Hochschulbibliothek HWR Berlin
Granting Institution:Hochschule für Wirtschaft und Recht Berlin
Release Date:2015/12/02
Page Number:78
Institutes:FB I - Wirtschaftswissenschaften