The Effects of Mergers and Acquisitions on Marketing Decisions and Effectiveness: Evidence from the Biopharma Industry.

This article empirically examines how mergers and acquisitions (M&As) affect marketing decisions and their effectiveness in the biopharma industry, analyzing sales, prices, and detailing spending for 375 branded drugs involved in 73 M&A deals from 2007 to 2020. The study finds that acquiring firms typically reduce detailing spending while increasing target drug prices post-M&A, with detailing elasticity rising and price elasticity showing heterogeneous changes influenced by drug age and acquirer experience in the therapeutic category. These adjustments generated over $23 billion in additional revenue and reduced detailing expenditures by over $1 billion in the two years following deals. The findings highlight implications for firm strategy, regulatory oversight, and consumer welfare, suggesting that M&As may enhance market power and contribute to drug price increases despite potential cost efficiencies.