Mergers and Acquisitions in Pharmaceutical Sector in India Part 3: Master Thesis

Running head: MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
Mergers and acquisitions in Pharmaceutical sector in India
Part 3: Master Thesis
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1MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
Abstract
A merger and acquisition is referred as arrangement whereby assets, liabilities as well as
business of two organization become vested in or controlled by one of the particular
organization. In recent past years, it has been witnessed that an entire host of mergers and
acquisitions by Indian Pharmaceutical organizations. The organizations do not only cater to
domestic market. However, it exports the products overseas. There are several reasons that may
be attributed to the expanded Mergers and Acquisition activity by Indian Pharmaceutical
Organizations. Present study deals with the impact of merger and acquisition on Pharmaceutical
sector in India. A research has been conducted where aims and objectives are set. In this regard,
a comprehensive literature review has been organization where data from secondary sources like
books, journals and articles are gathered and analyzed. In third chapter of the research, research
methodology and its tools are described. Appropriate methodological tools are selected that were
helpful for proper conduction of the research. On the other hand, chapter 4 discusses regarding
the primary data gathered from online survey. It is helpful to get proper outcome and lead to
make an appropriate conclusion and recommendations for the research.

2MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
Acknowledgement
I have gathered a great knowledge and experience by conducting this research. Conduction of the
research has helped me to improve my knowledge regarding Mergers and acquisitions in
Pharmaceutical sector in India. I have gained great help from my supervisors while conducting
this research and therefore, I would like to thank my supervisor .................................... for
guiding me throughout the research. I would also like to thank my friends and family members
for supporting me in this difficult phase. I would also like to thank the participants of data
collection process as without their participation I might not be able to complete this research
with best outcome.
Thanks and regards
Yours Sincerely

3MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
Table of Contents
Chapter 1: Introduction........................................................................................................5
1.0Background of the study.............................................................................................5
1.1Research Aim, Objectives and Questions...................................................................6
1.2 Problem Statement.....................................................................................................7
1.3 Rationale....................................................................................................................7
Research Structure.........................................................................................................10
1.4 Summary..................................................................................................................10
Chapter 2: Literature review..............................................................................................11
2.1 Overview of acquisition and merger........................................................................11
2.2 M&A Strategy.........................................................................................................14
2.3 Benefits of mergers and acquisitions in the Pharmaceutical sectors of India..........15
2.4 Impact of mergers and acquisition on performance................................................18
Chapter 3: Research Methodology....................................................................................19
3.1 Introduction..............................................................................................................19
3.2 Method Outline........................................................................................................19
3.4 Research Philosophy................................................................................................20
3.5 Research Approach..................................................................................................20
3.6 Research Design......................................................................................................21
3.7 Data collection process............................................................................................22
3.8 Population and Sample............................................................................................22
3.9 Sampling system......................................................................................................22
3.10 Sample Size...........................................................................................................23
3.11 Ethical Consideration.............................................................................................23
3.12 Research limitation................................................................................................24

4MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
3.13 Research timeline...................................................................................................24
Chapter 4: Data analysis and findings...............................................................................25
4.1 Preface.....................................................................................................................25
4.2 Quantitative analysis................................................................................................25
4.3 Summary..................................................................................................................44
Chapter 5: Conclusion and Recommendations..................................................................45
5.0 Conclusion...............................................................................................................45
5.1 Recommendations....................................................................................................46
5.2 Future work..............................................................................................................46
References..........................................................................................................................48
Appendices....................................................................................................................53
Appendix 1.....................................................................................................................53
Appendix 2.....................................................................................................................55

5MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
List of tables
Table 1: Size-wise Classification of Mergers................................................................................12
Table 4.1: Period for associated with the industry........................................................................29
Table 4.2: Impact of merger and acquisition on Indian Pharmaceutical sector.............................30
Table 4.3: The key characteristics of Indian Pharmaceutical Industry..........................................32
Table 4.4: Lack of resources as a reason for merger and acquisition............................................33
Table 4:5: The major challenges faced by Indian Pharmaceutical companies..............................35
Table 4.6: Mergers and acquisition Sector has a great impact on current economy.....................37
Table 4.7: Tax concession, responsible for merger and acquisition of Indian Pharmaceutical
Sector.............................................................................................................................................38
Table 4.8: Impact of DaiiChi-Ranbaxy Acquisition Deal and Abott-Piramal Acquisition Deal on
overall Indian Pharmaceutical Sector............................................................................................40
Table 4.9: Impact of FDI policy on Pharmaceutical sector...........................................................41
Table 4.10: Increasing investment on health sector helpful to improve Indian Pharmaceutical
sector..............................................................................................................................................43
Table 4.11: Government has an important role on development of Indian Pharmaceutical sector
.......................................................................................................................................................44
Table 4.12: Measures for development of Indian Pharmaceutical Sector.....................................46

6MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
List of figures
Figure 1: Mergers and Acquisitions in Indian Pharmaceutical Industry for the Period of 2001-
2010...............................................................................................................................................11
Figure 2: Research Structure.........................................................................................................13
Figure 2: Merger and acquisition stakeholders..............................................................................15
Figure 3: Mergers and acquisitions................................................................................................16
Figure 3: Advantages of Mergers..................................................................................................20
Figure 4.1: Period for associated with the industry.......................................................................29
Figure 4.2: Impact of merger and acquisition on Indian Pharmaceutical sector...........................30
Figure 4.3: The key characteristics of Indian Pharmaceutical Industry........................................32
Figure 4.4: Lack of resources as a reason for merger and acquisition..........................................34
Figure 4:5: The major challenges faced by Indian Pharmaceutical companies.............................35
Figure 4.6: Mergers and acquisition Sector has a great impact on current economy....................37
Figure 4.7: Tax concession, responsible for merger and acquisition of Indian Pharmaceutical
Sector.............................................................................................................................................38
Figure 4.8: Impact of DaiiChi-Ranbaxy Acquisition Deal and Abott-Piramal Acquisition Deal on
overall Indian Pharmaceutical Sector............................................................................................40
Figure 4.9: Impact of FDI policy on Pharmaceutical sector..........................................................41
Figurer 4.10: Increasing investment on health sector helpful to improve Indian Pharmaceutical
sector..............................................................................................................................................43
Figure 4.11: Government has an important role on development of Indian Pharmaceutical sector
.......................................................................................................................................................44
Figure 4.12: Measures for development of Indian Pharmaceutical Sector....................................46

7MERGERS & ACQUISITIONS IN PHARMACEUTICAL SECTOR IN INDIA
Chapter 1: Introduction
1.0 Background of the study
Pharmaceutical industry has been a growing sector in India. India stands at thirteenth
position on the planet in respect to the Pharmaceutical products. The corporate sector in India has
been restructuring its operations method in the market (Brueller, Carmeli and Markman 2016).
Various strategies are being followed in order to initialize globalization in India. Government
policies in India have been supporting the Pharmaceutical companies in the market. The Indian
market has seen various merger and acquisition in the Indian Pharmaceutical companies. The
present study focuses on the impact of the merger and acquisition in Pharmaceutical companies
in India. However, most of the M&A deals are motivated in order to gain financial stability on
the market. This have helped in gaining power in the market by gaining market share (Holburn
and Vanden Bergh 2014). The current globalized scenario has several high-tech industries that
have focused on the research and development wing in their companies. Innovation in the sector
has been a key factor in the development of Pharmaceutical industry. The shift in industrial
policy in 1991 has paved the way in order to make changes in the concept of merger and
acquisition. The Competition Policy Act 2002 have decided to implement Competition
Commission of India (CCI) (Greve and Zhang 2017). This commission focuses on investigating
anti-competitive activities including collusive bidding, consolidation and cartels.
However, economic reforms in India have significantly able to reduce its firm level
rigidities. The corporate sector in the Pharmaceutical industry have affected with merger and
acquisition with other companies. The big companies have maintained the competitive
advantages in the market. Therefore, domestic firms are taking steps to collaborate with the each