Abstract
Indian pharmaceutical firms have been on an acquisition spree and witnessed around 216 cross border acquisition deals worth more than $11,350 million during January 2005 to March 2019.1 The primary motive of this study is to analyse the impact of cross border acquisition (CBA) announcements on the short-run abnormal returns to Indian acquirers in the pharmaceutical sector. This study applied event study methodology and analysed 55 CBAs that happened in 24 foreign markets by 27 Indian pharmaceutical firms, from the year 2005 to 2018. Both parametric and non-parametric tests were applied to examine the robustness of abnormal returns. It was found that the announcements of foreign acquisitions by Indian pharmaceutical firms have created wealth gains for the shareholders. Further, there is strong evidence that Indian pharmaceutical firms experience significant positive abnormal returns surrounding the acquisition announcements of target firms in the developed markets and in contrast experienced insignificant negative abnormal returns when the acquired target firms were based in developing markets.
Published Version
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