The role of brand equity on mergers and acquisition in the pharmaceutical industry

Abstract

PurposeThe purpose of this paper is to describe the role of brand equity on mergers and acquisition (M&A) in the pharmaceutical sector; also to emphasize the various strategies and the benefits incurred in the arena of M&A in this sector.Design/methodology/approachThe author studies two major mergers in recent years, i.e. the Daiichi‐Ranbaxy and the Pfizer‐Wyeth deals. Brand equities were calculated. This study applied the “RKS” model developed by the author and Inter‐brand model for calculation of brand equity. The results obtained after the application of the two models were analysed for financial‐based decisions.FindingsThe study captures the perceived importance of brand equity factors to M&A decision making. Although this strategy carries a high price tag, it offers quick returns, including access to new markets or a stronger position in current markets. A study on the recent acquisition and mergers in the pharmaceutical industry indicates that there is consolidation in medical devices, generic and consumer health segments of the healthcare industry.Originality/valueThe paper studies two recent mergers which indicate that often these decisions are based on emotion rather than rationality. Therefore, it is suggested that managers should be more rational while taking decisions on mergers or acquisition.

Emerging Trends in Cross-Border Mergers and Their Tax Implications in India: A Critical Appraisal

“…As a result of the scale effect, 71 products can be offered at a more competitive price in the market. 72 Strengthening their financial position and revival of sick companies, 73 the advantage of brand-equity, 74 diversification, competitive advantage, and sustaining growth are some of the other reasons for which companies go for mergers. 75 In addition to these factors, the geography, quality of accounting disclosure, and bilateral trade increase the likelihood of cross-border mergers between two countries.…”

Marka Performansinin Rekabet Gücüne Etki̇si̇:ulusal Ve Uluslararasi Bi̇rleşme Ve Satin Almalar Açisindan Bi̇r Değerlendi̇rme

“…Başka bir deyişle, daha iyi bir marka edinerek, işletmeler markanın mevcut imajını geliştirirler. Srivastava (2012) çalışmasında, marka değeri bileşenlerinin birleşme ve satın alma karar sürecinde algılanan önemlerini ortaya koymayı amaçlamıştır. Çalışmada, bu stratejinin yüksek maliyetli olsa da, yeni pazarlara erişim veya mevcut pazarlarda daha güçlü bir konum sağlama gibi pek çok avantaj sağladığı sonucuna ulaşılmıştır.…”

A typology of post-M&A marketing integration

“…The literature explicitly referring to brand integration describes the strategies and effects of transferring product brands between the acquirer and the acquired party. Central topics are the value of brands (brand equity) in the M&As (Bahadir et al, 2008;Kumar and Hansted Blomkvist, 2004;Lambkin and Muzellec, 2010;Rao-Nicholson and Khan, 2017;Srivastava, 2012), how various brands may infer new brand perceptions as they become integrated (Lee et al, 2014;Strach and Everett, 2006), decisions on brand transfer as a means to integrate businesses (Gussoni and Mangani, 2012;Lambkin and Muzellec, 2008;Vu et al, 2009;Yang et al, 2012), and customers' (consumers') reaction to any change in brands (Jaju et al, 2006;Machado et al, 2012). Recent literature has focused extensively on brands in relation to emerging market firms (Liu et al, 2017;Rao-Nicolson and Khan, 2017).…”

“…cf. Bahadir et al, 2008;Kumar and Hansted Blomkvist, 2004;Lambkin and Muzellec, 2010;Srivastava, 2012). If brands are of equal strength, or if they represent different segments of the same market, decisions should be made to maintain both companies' brands.…”