The key drivers and success factors for M&A strategies in the biotechnological and pharmaceutical industry\m{1}

Article type: Research Article

Authors: Schweizer, Lars

Affiliations: Otto-Friedrich-University of Bamberg, Germany

Note: [] Otto-Friedrich-University of Bamberg, Department of Business Administration, Human Resources & Organization, Feldkirchenstr. 21, D-96045 Bamberg, Germany. Tel.: +49 951 863 2656; Fax: +49 951 863 5570; E-mail: [email protected]

Abstract: This paper analyses the M&A and post-merger integration activities in the biotechnological and pharmaceutical industry resulting from a transformation process in both industries. To start with, the development of the pharmaceutical and biotechnology industry is analyzed from a more theoretical, literature-based point of view which leads to the conclusion that a strategic consolidation resulting in fewer but stronger, larger and more market capitalized companies is only a question of time. After that the M&A activities in both industries are described in numbers in a more specific, empirical way in order to support the first conclusion. This analysis is subdivided in three different layers: pharma-to-pharma, pharma-to-biotech and biotech-to-biotech deals and clearly shows a significant increase in M&A activities in each of these layers. In a next step-two of these layers are looked at more closely, changing the analytical focus from the industry perspective to the company perspective. In the final section, there is the confrontation of the theoretical and empirical considerations and findings. This reveals that the pressure from capital markets in terms of the need for a blockbuster as well as in market capitalization, the acquisition of knowledge and the building-up of a critical mass as far as capacities are concerned are the key divers for M&A activities. According to the specific situation different post-merger integration strategies (absorption, symbiotic or preservation approach) apply. The central factors that foster a successful post-merger integration -- irrespective of what post-merger integration strategy is chosen -- are the existence of a powerful integration manager, extensive personal communication and a cultural fit.

Journal: Pharmaceuticals, Policy and Law, vol. 5, no. 0, pp. 41-62, 2002