Biotechnological mergers and acquisitions: features, trends and new dynamics

Abstract

Purpose

The purpose of this paper is to analyze the phenomenon of mergers and acquisition (M & A) in high-tech sectors with a special focus on biotechnological firms. Recent years have witnessed an impressive wave of M & As, but these operations, despite their popularity, have produced mixed results for their stakeholders and presented no systemic vision.

Design/methodology/approach

The paper is descriptive and the result of a secondary data-based research. Methodologically founded on the works of Rossi et al. (2011, 2013) and following an extensive literature review on M & A processes in high-tech sectors, the paper analyzes the dynamics, trends and attributes biotechnological M & As.

Findings

The biotechnology sector, over the economically turbulent past few years, faced a distinct difficulty in attracting significant investor capital. Traditional pharmaceutical companies with sufficient cash from their existing sales but facing a dried-out product and patent pipeline have acquired innovative, but cash-poor biotech firms. The findings indicate that the trends in the biotech industry make consolidation in this sector inevitable. For acquiring firms, therefore, it will be necessary to realize a rigorous process of strategic target identification, due diligence and unified post-merger integration as the only way to create a sustainable shareholder value and high firm performance.

Research limitations/implications

The limitations of the paper are a consequence of its very nature, i.e. the fact that it is a descriptive, secondary data-based research. Further, empirical research is therefore necessary to test the findings, to refine the contextual parameters involved and to prescribe target-specific action.

Originality/value

The value of the paper stems from its definition of the link between the biotech industry attributes and M & A activities, consequently offering a valuable theoretical basis for empirical development and practical application, as well as a context for prescribed actions and processes.

Citation

Rossi, M., Thrassou, A. and Vrontis, D. (2015), "Biotechnological mergers and acquisitions: features, trends and new dynamics", Journal of Research in Marketing and Entrepreneurship, Vol. 17 No. 1, pp. 91-109. https://doi.org/10.1108/JRME-07-2014-0013