Abstract: Merger and Acquisition is an important means and strategy for a company to exert the synergistic effect of management and operation and achieve sustainable development. At present, merger and acquisition has become an important way for companies to achieve extensive innovation. As a typical technology-driven industry, pharmaceutical industry has the characteristics of high investment, high risk and high return in independent technology development, and extensive innovation relying on merger and acquisition has gradually become the choice of enterprises. According to statistics, the number of merger and acquisition cases in the pharmaceutical industry in 2015 was up to 239, and the amount of merger and acquisition was 66.6 billion Yuan. The number, amount and growth rate of merger and acquisition were significantly higher than the average level of the whole society. Taking M&A cases of listed Chinese pharmaceutical companies during 2004-2015, this paper gives an empirical analysis on the influence of mergers and acquisitions on innovation performance. Specifically, we focus on three questions: the impact of merger and acquisition and the number of mergers and acquisitions on the innovation ability of enterprises, and further explores whether there are differences in the innovation performance of companies with different ownership properties after merger and acquisition. Therefore, we propose three hypotheses. Hypothesis 1 is that M&A promotes the technological innovation of listed companies in China’s pharmaceutical industry. Hypothesis 2 is that the more the number of mergers and acquisitions, the stronger the technological innovation. State-owned and private enterprises take the same decision, may bring completely different market reaction, that is, the role of the nature of enterprise ownership cannot be ignored. So Hypothesis 3 is that compared with state-owned enterprises, private enterprises have higher performance in M&A technology innovation. The contribution of this paper is reflected as follows: The existing domestic literature mostly takes high-tech industry as the research subject, and rarely takes pharmaceutical industry as the research object. The existing research patent measures the innovation ability of the company, but the patent categories have not been subdivided, which leads to errors in the overall effect evaluation.The sample we select is the M&A events of listed Chinese pharmaceutical companies, and then delete the failed M&A events, retain the events of asset acquisition, merger absorption, offer acquisition and equity transfer. The final sample was from 2004 to 2015, with a frequency of 589 observations and 102 pharmaceutical companies. Technological innovation refers to the first commercial application of new products, new processes, new systems and new services, which is manifested as the synergy effect of creating new internal knowledge or introducing new external knowledge. Existing literatures measure innovation ability from the perspective of input (such as R&D input) and output (patent). Input indicators indicate that enterprises attach great importance to innovation, and it is difficult to indicate the level of innovation ability. In addition, limited data release on R&D input reduces the effective sample size. In order to evaluate the effectaccurately, we use utility patent, design patent and application patent to measure innovation performance. According to statistics, the total number of patent applications increased year by year, from 291 in 2004 to 900 in 2015. The peak of the average total number of patents of the company was 19.6 in 2012, which has been at a relatively stable level. From the perspective of patent subdivision, the proportion of the company’s invention patent application is relatively high, and the number of utility model and design patent application has also increased significantly. And then we use panel model to estimate the effect of M&A on the innovation. In order to explore the causal relationship between mergers and acquisitions of listed pharmaceutical companies and technological innovation and reduce endogenous problems, Propensity Score Matching (PSM Model) was used in this paper to conduct dimensionality reduction processing on corporate characteristic variables, and a control group (non-merger and acquisition group) and an experimental group (merger and acquisition group) were constructed to analyze technology innovation performance. The result suggests that: Firstly, mergers and acquisitions of listed pharmaceutical companies can improve the innovation ability of the company, but have different effects on different types of patent applications. Mergers and acquisitions significantly increase the number of invention patent applications of the company, and the results are stable. It has a positive effect on utility model and total patent application, but the result is not robust. It has no significant effect on the number of design patent applications. From the economic logic to explain, after the company mergers and acquisitions, can obtain the target company technology resources, improve the innovation ability, and in the patent, a patent for invention for substantial improvement on existing products and methods, the highest technical content, was the main motivation of company mergers and acquisitions, patents, utility models and designs respectively for the design of the shape or appearance, not the pursuit of the core competitiveness of company. Therefore, merger and acquisition of the company significantly increases the number of application of invention patents of the company, which verifies the fact that the company enhances the external technology introduction through acquisition.Secondly, the more the number of mergers and acquisitions, the stronger the innovation ability, but the marginal effect of the number of mergers and acquisitions on the innovation performance decreases.Finally, mergers and acquisitions have a significant interaction with the nature of corporate ownership, which shows that compared with state-owned enterprises, private enterprises have a higher degree of technological innovation ability through mergers and acquisitions.In a word, while solving the insufficiency of internal innovation, corporate merger and acquisition can help companies break through the "innovation threshold" and quickly enter the corresponding fields, producing positive effects. Chinese pharmaceutical enterprises acquire new patented technologies through mergers and acquisitions, which can rapidly improve their innovation ability. However, they need to actively integrate and absorb the technologies of target enterprises, so as to achieve effective transformation. Therefore, the enterprise should reasonably evaluate and integrate the target enterprise’s talent, product research and development, production and other systems, thoroughly digest new technologies through continuous research and development, and lead the enterprise to improve its innovation ability, so as to promote the upgrading and development of China’s pharmaceutical industry.

Key words: pharmaceutical industry, mergers and acquisitions, innovation performance, ownership nature