Determinants of an M&A Premium Paid in Pharmaceutical Industry

Mergers and acquisitions are a widespread way of development for companies. The pharmaceutical industry has been actively consolidating the past few decades. The influence of global trends forces companies to seek new sources of income, in overwhelming majority due to mergers and acquisitions that is why this research is actual for all countries, including in Russia. One of the most common methods, event study, was chosen to assess the effectiveness of recent transactions. It is the determination of the ratio of the price of shares on the day of the announcement of the transaction and the price of the shares for a certain period before the announcement of the transaction expressed in percent. The study showed that factors significant for the whole aggregate of mergers and acquisitions are not significant when considered at the industry level. In addition, the main trends in the pharmaceutical market were considered, as they affect the market of mergers and acquisitions in this industry. The results of empirical analysis using the method of events indicate that the premium on the pharmaceutical market depends on the internal trends of the industry.