• Covid-19
• ESG Factors
• M&A Operation
• Pharmaceutical Sector
• R&D

In the last years, sustainability and ESG factors have gained more and more importance in the economic landscape.
Companies are increasingly dealing with the needs of stakeholders who are more and more sensitive to not only the economic but also the ethical impacts of business. The pharmaceutical sector in recent years has had to deal with much debated ethical issues concerning certain methodologies and processes used, especially on drug testing and development. In light of these ethical requirements, the sector is under increasing pressure to improve its sustainability performance.
The COVID-19 pandemic further emphasised the importance of ESG considerations, transforming not only the economic priorities but also the operations and strategies of the pharmaceutical industry. During the pandemic, the pharmaceutical industry played a key role in global public health, accelerating the development of vaccines and drugs at an unprecedented pace. However, the crisis also brought attention to the sector's economic vulnerabilities, including supply chain dependencies, R&D costs and the need for sustainable innovation. Moreover, Merger and Acquisition (M&A) operations have become a key strategy for pharmaceutical companies trying to optimise resources and accelerate innovation in the urgency of the pandemic. M&A activities have reshaped the industry, facilitating access to new technologies and research capabilities that can support sustainable growth for both small and large companies.
However, the link between ESG factors and corporate financial performance is still uncertain, leading to a highly debate in the academic field. In particular, it remains to be understood whether and how ESG scores can influence financial performance indicators, such as ROA (Return on Assets) and ROE (Return on Equity).
This research intends to investigate this relationship using linear regression models, with different objectives. The main objective of this research is to analyse how different ESG factors influence US pharmaceutical companies' financial returns. Secondly, the thesis explores the effect of the interaction between ESG scores and R&D intensity to understand how sustainable innovative investments can impact corporate performance. Furthermore, this analysis wants to understand if the relationship between the R&D and each ESG pillar has changed before and after the pandemic and how innovation impacts on sustainability.
The focus on US pharmaceutical companies is strategic, as this market represents one of the largest and most influential sectors globally. Examining this sector allows conclusions to be drawn that may be relevant to the industry. Furthermore, by analysing M&A activity in this context, the research seeks to highlight the importance of this type of operations as a means of supporting innovation.
The paper is organized as follows: chapter 2 provides the literature review, including an industry overview, the role of ESG and of the COVID-19 pandemic in this industry; chapter 3 describes methodology, data collection process, the econometric models used and states the two research hypotheses; chapter 4 describes the results of the analysis; chapter 5 presents a comparison of the relationship between R&D and each ESG pillar before and after COVID-19; chapter 6 completes with conclusions and some recommendations for further analysis.