Abstract
The U.S biopharmaceutical industry engaged in merger and acquisition activities frequently and Research and Development(R&D)spending have been increasing in recent years. Although merger and acquisition is a popular external growth strategy, however, many previous studies indicate that may not always lead to positive post-merged performance. Therefore, acquiring firms allocate a fit of M&A strategies to achieve a better outcome become important. Also, to examine relationship firm’s innovation input and output influence firm performance. This study attempts to investigate how different relationship among the M&A activity, prior M&A experience, relative firm size, and patent issued as well as the interaction effect of payment of method, relatedness, and cross-border M&A strategies influence firm financial performance. the M&A announcement, U.S patent and financial data of 472 U.S-based biopharmaceutical public firms were collected and integrated as the empirical base for testing the hypotheses. In addition, the results show that average M&A activity has significantly positive relationship with firm performance. However, relative firm size has significantly negative effect on post-merged performance. Besides, average M&A activity with cash payment, and un-relatedness and uncross-border M&A strategies have negative interaction effects on post-merged performance. The surprising findings about both the Tobin’s Q ratio and short-term profitability(ROA)as firm’s financial performance to measure R&D intensity, innovation output of patent issued and prior M&A experience are implication can be different. Implications of these research findings were discussed.