How will shareholders of a target company react to a M&A? In this study, the aim was to analyze the impact of an announcement of a merger or an acquisition in the pharmaceutical sector. This sector is special since it is high cost including research, development, and patent. Moreover, the industry has a big role when it comes to how important it is to manufacture a vaccine and bring to the market. Which is currently an important topic during the ongoing pandemic of covid-19. Mergers and acquisitions are mechanisms for companies to obtain more control and achieve success.

This report examined the short-term effect on share prices due to announcements of mergers and acquisitions during 2019-2020 of 14 companies. The method used is the market model and event study approach where abnormal returns are determined for each company for the event window (-7, +20). The results showed that all target companies achieved positive abnormal returns after the announcement day. The effect lasted the entire event period for all companies but one. The report concluded that positive abnormal returns are present in the short run for the pharmaceutical industry in 2019-2020.