Book contents
- Frontmatter
- Contents
- List of figures
- List of contributors
- Preface
- Acknowledgments
- 1 The business of healthcare innovation in the Wharton School curriculum
- Part I The life sciences
- 2 The pharmaceutical sector
- 3 The biotechnology sector – therapeutics
- 4 Biotechnology business and revenue models: the dynamic of technological evolution and capital market ingenuity
- 5 Mergers, acquisitions, and the advantages of scale in the pharmaceutical sector
- Part II Devices and information technologies
- Index
5 - Mergers, acquisitions, and the advantages of scale in the pharmaceutical sector
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- List of contributors
- Preface
- Acknowledgments
- 1 The business of healthcare innovation in the Wharton School curriculum
- Part I The life sciences
- 2 The pharmaceutical sector
- 3 The biotechnology sector – therapeutics
- 4 Biotechnology business and revenue models: the dynamic of technological evolution and capital market ingenuity
- 5 Mergers, acquisitions, and the advantages of scale in the pharmaceutical sector
- Part II Devices and information technologies
- Index
Summary
Introduction
Preceding chapters have dealt with a common set of topics: horizontal consolidation, mergers and acquisitions, the advantages of size, economies of scale and scope, diversification, and industry concentration. These topics all inter-relate around the fundamental issue in industrial organization: how best to organize firms and markets in order to achieve optimal economic performance? For example, mergers and acquisitions lead to greater firm size and industry concentration, are often undertaken to achieve scale and scope economies, and can involve horizontal integration of similar firms, vertical integration of firms in adjacent stages in the chain of production, or diversification into related and unrelated industries. What is important for our purposes is that these topics all have implications for firm innovation and performance.
In this chapter we analyze the impact of these combinations on innovation and financial performance among pharmaceutical firms. Researchers are still unsure whether innovation leads to improved firm performance, or whether past performance fosters future innovation, or both. Thus, we examine the impact of industrial organization on both sets of measures. We specifically focus on mergers and acquisitions (M&As) due to the rich research literature here as well as the successive waves of M&As in the pharmaceutical sector during the past fifteen years.
Our analysis addresses several related questions. What is the value of size, scale, and M&As for pharmaceutical firms? Do such strategies help firms to develop new products? What are the challenges and opportunities created by M&As?
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- Information
- The Business of Healthcare Innovation , pp. 223 - 268Publisher: Cambridge University PressPrint publication year: 2005
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