Gilead's deal of a lifetime

Nature Biotechnology (Impact Factor: 41.51). 06/2009; 27(5):423. DOI: 10.1038/nbt0509-423
Source: PubMed


Gilead Sciences' ascent to the upper echelon of biotech centered around one very savvy acquisition that launched an HIV franchise.

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Available from: Christopher Thomas Scott, Dec 09, 2014
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    ABSTRACT: We examine the determinants and effects of M&A activity in the pharmaceutical|biotechnology industry using SDC data on 383 firms from 1988 to 2001. For large firms, mergers are a response to expected excess capacity due to patent expirations and gaps in a firm's product pipeline. For small firms, mergers are primarily an exit strategy in response to financial trouble (low Tobin's q, few marketed products, low cash-sales ratios). In estimating effects of mergers, we use a propensity score to control for selection based on observed characteristics. Controlling for merger propensity, large firms that merged experienced a similar change in enterprise value, sales, employees, and R&D, and had slower growth in operating profit, compared with similar firms that did not merge. Thus mergers may be a response to trouble, but they are not a solution. Copyright © 2007 John Wiley & Sons, Ltd.
    Managerial and Decision Economics 02/2007; 28(4-5):307-328. DOI:10.2139/ssrn.468301