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An Empirical Study of Mergers and Acquisitions in China’s Healthcare Industry: Strategies of State-Owned and Central Enterprises
- 1 Dongbei University of Finance and Economics
* Author to whom correspondence should be addressed.
Abstract
The healthcare industry, a key pillar of China’s economy, has shown steady growth driven by expanding revenues and its critical role in national development. Globally, increasing healthcare demand has prompted policies such as healthcare reforms and health promotion programs, fostering growth. Simultaneously, innovations in big data, AI, and biotechnology have advanced precision medicine, telemedicine, and drug development. However, rising competition, the proliferation of SMEs, stricter regulatory standards, and escalating costs pose significant challenges. Amid these dynamics, mergers and acquisitions (M&A) have become a key strategy for Chinese state-owned and central enterprises (SOEs and COEs) to gain market share and accelerate growth. This study examines the M&A landscape of China’s healthcare industry, focusing on SOEs and COEs. It analyzes key drivers, including policy support, market incentives, and synergy effects. To strengthen the empirical foundation of this research, a case study of Boya Bio-pharmaceutical’s acquisition by China Resources Pharmaceutical evaluates the impact of M&A on profitability and operations using financial indicators and post-merger strategies. Results indicate that M&A activities have grown significantly, driven by supportive policies and market demand, yet require post-merger integration to improve financial and operational outcomes. The findings indicate that, in the face of evolving policy directions, rapid market transformation, and intensified industry competition, M&A has become a critical strategy for healthcare enterprises to expand market share, enhance revenue, and drive growth. This is particularly evident in the activities of SOEs and COEs. These trends are closely linked to supportive national policies, market-driven demand, and the significant benefits gained from synergy effects. Financial analyses reveal that improvements in the financial performance of acquired companies are not immediate. Rather, they require post-merger measures, such as resource integration and the divestment of non-core businesses, to gradually enhance financial and operational outcomes. The future trajectory of M&A in the healthcare industry appears promising, with enterprises expected to adopt more rational investment approaches to mitigate M&A-related risks. Cross-border M&A is also expected to enhance international influence and foster comprehensive development.
Keywords
merger and acquisition activity, healthcare industry, state-owned and central enterprises
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Cite this article
Cheng,Y. (2024). An Empirical Study of Mergers and Acquisitions in China’s Healthcare Industry: Strategies of State-Owned and Central Enterprises. Journal of Applied Economics and Policy Studies,15,61-71.
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