Indian pharmaceutical industry has carved out a unique place on the global map, not only as a manufacturer of generic drugs but also of new formulations, with growing emphasis on research and development and new drug discovery. The present paper examines the short-run abnormal returns to India based mergers and acquisitions focusing on the pharmaceutical industry during 2001–2007 by using event study methodology. Short-term effects are of interests for immediate trading opportunities they create. We find that acquisitions of foreign companies significantly create short-term wealth on the announcement day to the shareholders of acquiring companies. Cumulative abnormal return (CAR) for Indian companies’ acquisitions activities aimed at foreign-based targets is positive over event window. It seems market perceives the deals of acquisitions of foreign targets by Indian pharmaceutical companies as efficiency enhancing.
Mergers, Acquisitions, Event Methodology, Cumulative Abnormal Returns (CAR), Pharmaceuticals, Competitiveness, Synergy
