Large firms in the pharmaceutical industry are forced to adjust strategies in order to maintain firm value as a result of ‘productivity gaps’ and ‘patent cliffs’. We inquire whether different types of M&A’s benefit the largest pharma firms in terms of innovation performance and financial performance. More specifically, we divided M&A deals into technological and non-technological M&A deals. Surprisingly, we find that M&A’s with acquiring external sources of knowledge as acquisition motive are not able to increase the number of developed drugs, despite an increase in innovation expenditures. In line with our hypotheses, we find weak support that technological M&A deals have a negative effect on short-term financial performance and that non-technological M&A’s will benefit the financial performance of large pharma firms in the short-term. Furthermore, we find no support that either technological or non-technological M&A’s will benefit the financial performance of firms in the long-term. These results implicate that large pharma firms will not uniformly overcome the difficulties in the pharmaceutical industry by engaging in the analyzed types of M&A’s.

Additional Metadata
Thesis Advisor H.P.G. Pennings
Persistent URL
Series Economics
N.M. Hummel. (2019, November 8). Technological and non-technological M&A: the effect on innovation and financial performance in the pharmaceutical industry. Economics. Retrieved from