Overview
Ensure merger and acquisition success - at any point in the M&A process
Pharmaceutical Mergers and Acquisitions guides you to build an M&A plan that focuses on key goals, avoids costly mistakes, and realizes deal potential as quickly as possible. CEI designed this study to identify the primary drivers of M&A activity. Through the input of pharma industry leaders, our study provides solutions to the greatest M&A pitfalls and gives clear, detailed insight of trends in pharmaceutical deals. The result: a roadmap to the M&A landscape.
The past year has been marked by heightened M&A activity among companies of all sizes. Small companies are increasingly investing in large-molecule products that are expensive to produce and test in clinical trials - but in this tough economic climate, they face diminishing capital and the threat of closing. To continue their work on time-sensitive compounds, they are exploring the possibility of a company sale. On the other hand, for those companies with cash, this situation presents an opportunity to acquire attractive compounds and technology platforms at a discount.
Timelines, rankings, strategies, and deal profiles will allow you to maximize the benefits and growth opportunities of a deal:
Understand the M&A environment
Learn what is driving the acquisition strategies of top companies - and how other organizations are seeking suitors for their own sales.
Build a competitive deal-making process
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Target the right deals with an M&A task force
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Implement a timeline that works for both sides
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Track different types of financing across deals brokered by companies of different sizes
Complete the integration as soon as possible -- and boost productivity
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Build an integration timeline
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Clarify roles and responsibilities in the new organization
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Reduce the impact of attrition
Learn from the recent past
We've vetted the top 75 deals of 2009 to determine purchasing trends, including:
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Price/pipeline ratios
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Financing options
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Deal motivators
Look into the future of M&A
Gather perspectives and predictions on future deals from the managers who execute them.
Compare your deal to others
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Use the deal profiles to compare metrics for 19 different deals
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Explore deal size, functional involvement in deal-making, timelines, challenges and employee retention
Excerpts
Sample Content from the Report
The following excerpt is taken from Chapter 1, "Deal Background." The chapter discusses some of the key motives of profiled companies and the logistics of M&A purchases. It sets the stage for the entire report and places profiled deals in context.
Specific Deal Details
Figure 1.10 [data appear in full report] lists the individual values of the deals used as examples by survey respondents and interviewees when they discussed M&A activity. Teams report a wide array of deal prices, with the average value landing at $188 million. Among these acquisitions, 41% were complete between four and six months of initiation (Figure 1.11) [data appear in full report]. Organizations push deals through as quickly as possible to save money and to get the ball rolling on operational and personnel integration.
Though no formula exists for deal standardization, organizations do have a starting point of interest for acquisition targets. An interviewed executive from Deal 7 explains that purchasers lower overall risks taken in M&A when they seek products in Phase 2 clinical trials and beyond. Products in Phase 2 typically carry a higher price, but at that point, organizations can be assured that the product has proof of concept.
The following excerpt is taken from Chapter 3, "Resolving Integration Challenges." Metrics identify the top post-merger challenges. Interviewed participants provide recommendations on how to overcome them.
Recruit Committed Leadership for Merged Company
Deal 2 suffered another mistake that led to terrible results for the acquired employees. The venture capital firm funding both companies wanted to remove a poorly performing CEO from the larger company, so it solicited and received a commitment from the CEO of the smaller company to perform this function for the combined company. Unfortunately, the CEO only committed to run the company until the firm could find a replacement - and only on a part-time basis. He had little desire to actively pursue true integration of the two companies.
As a result, the employees from his own company were sidelined, and the organizational deficits of the larger company remained unaddressed. Moreover, finding the replacement took longer than anticipated. Before a replacement could be found, all projects from the smaller company had been cancelled, and all employees who were not contractually guaranteed a job were fired or quit.
Spearheading integration not only takes a unique set of skills and experiences, but it also takes a strong commitment from the person in charge of overseeing the merger. In order to move a merger along with minimal disruption to desired projects of either company, decision-makers must devote many hours to examining all aspects of both companies, from technology systems to company culture. They need to commit significant time to determine which aspects each company will bring to the new entity.
To accomplish this task, some companies use integration teams. Those which do not will need a full-time leader committed to the integration process. In Deal 1, an employee was offered this taxing job with the understanding that, if the merger went smoothly, a senior management position would follow.
The following is an excerpt from Chapter 5, "The Future of M&A," section 2, Opportunities for Acquirers. The full report details M&A trends and projections that will impact the market in 2010.
Acquisitions Focused on Expanding Expertise
Two interviewees see the recent deal on HIV compounds between Pfizer and GlaxoSmithKline as an indication that the market is becoming more therapeutically focused. While this deal was a joint venture rather than an acquisition, it may suggest that larger companies are looking toward areas of specialization rather than chasing after any high-grossing compound. Most large companies have marketing and sales teams whose jobs are jeopardized by the coming wave of patent expirations, and replacing profitable brands with acquired compounds in the same therapeutic area may save the company from mass layoffs and costly reorganizations.
Additionally, large companies increasingly find themselves competing with mid-size pharmaceutical and biotech companies which have spent decades building their companies vertically rather than horizontally. As a result, these mid-size firms and biotechs have strong skills in one or two therapeutic areas, and these skills are present across the entire organization. Large pharmaceutical companies will need to gain or maintain mastery of these areas in the coming years, or they risk losing out to mid-size companies with narrower focus and expertise.
Companies featured in this report
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