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Economic Analysis: Theory and Practice
 

Assessing the impact of financial parameters on the mergers and acquisitions value of pharmaceutical companies

Vol. 14, Iss. 22, JUNE 2015

PDF  Article PDF Version

Available online: 19 June 2015

Subject Heading: INVESTMENT ANALYSIS

JEL Classification: 

Pages: 15-26

Balashov A.I. National Research University Higher School of Economics - St. Petersburg, St. Petersburg, Russian Federation
aleksey.i.balashov@gmail.com

Podtsikina S.V. National Research University Higher School of Economics - St. Petersburg, St. Petersburg, Russian Federation
flame27d@ya.ru

Importance The problem of assessing the impact of financial factors on the value of mergers and acquisitions of pharmaceutical companies is very important due to the patent collapse in the pharmaceutical products market, a reduction in the productivity of the new blockbuster drugs creation, and the price pressure on the industry by national governments, which increases during post-crisis economic recovery.
     Objectives The purpose of the paper is a theoretical formalization and econometric modeling of the structure and influence of financial factors on the value of pharmaceutical companies in the processes of their mergers and acquisitions in the market.
     Methods In this paper, using econometric methods, we tested four hypotheses about the impact of financial parameters on the value of mergers and acquisitions in the pharmaceutical market. Results The results of the analysis confirmed three of the four hypotheses at 5% level of significance and 0.843 determination factor (R-squared).
     Conclusions and Relevance Based on the findings, we have formulated recommendations for management related to consideration of the value and quality of total assets of the target company and its net profit in the processes of corporate integration of pharmaceutical companies. The results of the research are valuable, as they enable pharmaceutical companies' executives to exercise strategic management of modern business and increase investment appeal and competitiveness in the global market through the manipulation of the identified key cost factors of M&A transactions.

Keywords: mergers and acquisitions, M&A, pharmaceutical companies, company value, financial parameter

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