Mergers and acquisitions: A consideration of the drivers and hurdles

Abstract

Mergers and acquisitions (M&A) are increasingly being included by biopharmaceutical companies within earlier stage strategies as a means of accelerating technology development and thus quickening the path to shareholder value. These drivers are generally different from those of the larger established pharmaceutical companies that are more earnings focused. The authors consider some of the drivers of and hurdles to the successful implementation of M&A from both a national and cross-border perspective. In 2000 the number of cross-border transactions increased to 41 per cent of all M&A deals; however, generally, returns from international transactions are much lower. The authors also consider the important issues of determination of the price to be paid and the use of stock as 'currency'.