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Group 11

Umar Farooq (13997) Umair Khan (13858)

Syed Imran (11519) Haseeb Hayat (12107)

Research Overview
Impact of Merger\Acquisition on Firm’s Profitability
Case study of Pakistan GlaxoSmithKline(GSK) Here we analyze the Dividend with respect to Sales Volume. Hypothesis:
There is a Positive relationship between Acquisition of Firm and Firm Profitability

Pakistan Pharmaceutical Industry
Pakistan has a very vibrant and forward looking Pharma Industry. Today Pakistan has about 400 pharmaceutical manufacturing units including those operated by 25 multinationals present in the country.
The Industry meets around 70% of the country's demand. The value of pharmaceuticals sold in 2007 exceeded US$1.4bn The value of medicines sold is expected to exceed US$2.3 B by 2012 Pharmaceutical industry contributes around Rs 56,125.420 millions- of the country's GDP in 2011. The pharma industry is focusing to an Export Vision of USD 500 Million by 2013.

GSK Contribution in Pharmaceutical Industry
56,125.42 47,892.23

39,566.70
33,228.40 27,181.78 24,529.58 22,415.16 23,438.46 24,417.42 21,750.15 18,916.19 13,403.22 6,993.03 2001 1 2002 2 8,101.06 8,866.96 9,416.88 10,088.25 10,610.88 28,936.34

14,719.13

2003
3

2004 4

2005 5

2006 6

2007 7

2008 8

2009 9

2010 10

Pharmacuetical Industry

GSK Contribution

Galxo Market Structure
Market Share 2010
18,916.191 10,995.701 6,158.295 1,273.375 2,636.538 475.248 1,446.477 3,680.213 2,310.191

Market Share 2011
Abbott Laboratories Pakistan Limited 5% 8% 23% Ferozsons Laboratories Limited GlaxoSmithKline Pakistan Limited 3% 3% 1% 5% Otsuka Pakistan Limited 39% Sanofi-Aventis Pakistan Limited Searle Pakistan Limited Highnoon Laboratories Limited IBL Healthcare Limited

13%

Galxo Market Structure
• According to above GlaxoSmithKline Market analyses, the following can be concluded.


• •

-Pharmaceutical industry dominate by small number of large firms (Abbot, SanofiAventis , Searle, Wyeth Pakistan) Also many firms make up the industry.
-Pharmaceutical industry has high barriers to entry also exit. -GSK has high quality products because their advance research & Development so they have loyalty from customer also they release differential products and homogenous products in to market. This pharmaceutical industry has price stability within the market. Company likes GSK in pharmaceutical industry can't change their products prices to increase profit. When

considering all these facts, it's clearly shown that a one of the major pharmaceutical industry "GlaxoSmithKline Pharmaceutical industry Ltd." comes under the "Oligopoly" market structure.

Galxo Merger\Acquisition History
• In 2001 Glaxo wellcome merger with Smithkline Beecham • In 06-03-2009 Acquisition of UCB S.A's by GlaxoSmithKline • GSK acquired the total share capital of Stiefel internationally for a cash consideration of $2.9 billion . The move comes nearly a year after GSK completed the acquisition of Stiefel globally in July 2009. • GSK to buy Bristol's Pakistani group

Results

Conclusion
• To some extent Hypothesis is Accepted as the F statistic result i.e 0.000 • The variation occur in Dividend is not due the change in the Sales volume. • The Coefficient of Correlation “R” with the value 0.587 show the average relationship. • R-square, indicates there are some more factors which are influencing the Dividend payout. • The error of your estimate is considerably lower, about 19.083