Mergers & Acquisitions

04:27 EST 23rd January 2019 | BioPortfolio

Commercial and market reports on mergers and acquisitions in the biotechnology, pharmaceutical, medical device and life-science industries. Mergers and acquisitions (abbreviated M&A;) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture. The distinction between a "merger" and an "acquisition" has become increasingly blurred in various respects (particularly in terms of the ultimate economic outcome), although it has not completely disappeared in all situations. An acquisition or takeover is the purchase of one business or company by another company or other business entity. Such purchase may be of 100%, or nearly 100%, of the assets or ownership equity of the acquired entity.

Varieties of Mergers

From the perspective of business structures, there is a whole host of different mergers. Here are a few types, distinguished by the relationship between the two companies that are merging:

  • Horizontal merger - Two companies that are in direct competition and share the same product lines and markets.
  • Vertical merger - A customer and company or a supplier and company. Think of a cone supplier merging with an ice cream maker.
  • Market-extension merger - Two companies that sell the same products in different markets.
  • Product-extension merger - Two companies selling different but related products in the same market.
  • Conglomeration - Two companies that have no common business areas.

Characteritics of M&A in the pharmaceutical industry

Characteristics of biotechnology mergers and acquisitions (M&As).  Analysis of the development of the biotechnology industry from scientific and organizational perspectives leads to the conclusion that a strategic consolidation in the biotechnology industry will take place. M&A activities in the biotechnology industry are driven by the motive to internationalize research and development, to take part in the industry’s development process, as well as to realize the biotech firm’s growth strategy. A successful post-acquisition integration of biotechnology M&A deals requires careful consideration of culture, people, and organizational integration. Pharmaceutical companies need to apply a hybrid post-acquisition integration approach, with simultaneous short- and long-term motives/orientations and segmentation at a different pace across different value-chain components in order to successfully integrate an acquired biotechnology firm.  

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