Mergers, Acquisitions and Firms’ Performance: Experience of Indian Pharmaceutical Industry

In the context of policy reforms in the 1990s in general and three important amendments made to the Indian Patent Act (1970) in 1999, 2002 and 2005 in particular, the present paper makes an attempt to examine the impact of MA on financial performance of Indian pharmaceutical companies. It is found that the profitability of a firm depends directly on its size, selling efforts and exports and imports intensities but inversely on their market share and demand for the products. However, MA do not have any significant impact on profitability of the firms in the long run possibly due to the resultant X-inefficiency and entry of new firms into the market. In addition, in-house R&D and foreign technology purchase also do not have any significant impact on profitability of the firms.