Creating value from mergers in the South African pharmaceutical industry
Date
2012-10-05
Authors
Naidoo, Angie Nicole
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Abstract
Mergers and acquisitions (M and A's) has become a strategic option for
companies to meet the strategic needs of the rapidly changing competitive
landscape. Pharmaceutical companies are facing several major inter-related
challenges, the most strategic being the decline in Research and Development
(R and D) productivity resulting in empty product pipelines which cannot replace
the products nearing patent expiry, competition from generics, healthcare costs
and product liability. The aim of this study was to identify and describe the
drivers of merger success in the pharmaceutical industry in South Africa and the
aspects of an effective post-merger value creation strategy that will grow the
business and maintain business continuity. Data was collected through
conducting 20 semi-structured interviews to search for a deeper understanding
of merger and acquisitions in the pharmaceutical industry in South Africa. The
main findings in this research have shown that the aspects of an effective postmerger
value creation strategy start with a well-articulated plan for integration.
Each step of each plan has to be communicated to all stakeholders in a manner
that is transparent, open and honest so that there is buy-in, acceptance and
finally mobilisation of the company to create the desired value. Pivotal to local
companywide post-merger value creation are leaders that are trusted, who will
enable the organisation to align around the vision and mission and goals of the
merger. Decisions require foresight. Culture underscores the success of any
strategy in the organisation. The end goal of achieving post-merger value
creation depends on the organisation’s resources, the people, processes and
systems; and matching these with the external opportunities. Retaining the best
from both legacy organisations and fusing them together will result in a high
performance organisation which will create post-merger value. Not much has
changed in the industry except for the risks and the size of the opportunities.
Strategic alliances with companies that have expertise in health economics and
health technology assessments and companies that have strong relationships
with authorities, who will register products faster, should be an option for
serious consideration for future growth.
Description
MBA thesis - WBS
Keywords
Mergers and acquisitions, Pharmaceutical industry