Mergers & Acquisitions in the Pharmaceutical Industry

Abnormal returns in stock markets are subject to many studies. In particular, the ability to test on specific industries has received much attention. The number of M&As have increased in the last decade, which also includes M&A deals in the pharmaceutical (pharma) industry, where companies acquire to reach distinctive capabilities to survive in the dynamic and complex business environment. Companies also utilize M&A to increase their ability to create shareholder wealth, though this has shown partially not to be correct. Previous studies conducted, have found rather different results on M&A transactions. This thesis examines the impact on shareholder wealth in pharmaceutical M&As, more precise the study tests the abnormal stock return around the announcement day. The study is conducted with a data sample consisting of 250 deals in the pharma industry between 2000 and 2014.