Pfizer's new offer to buy AstraZeneca for $ 100 billion could strengthen the trend character of mergers and acquisitions in the chemical-pharmaceutical segment. Previously, GlaxoSmithKline and Novartis were at the forefront of the financial market in the industry, trading more than $ 20 billion in assets in a series of cancer treatment and vaccine production operations.
The sum of portfolios and the division of research and development costs are among the main reasons behind a growing merger movement in the pharmaceutical industry. The association or acquisition of laboratories dedicated to different fields of action is a measure of agility for large multinationals in the sector to enter markets where they could not yet reach. In addition, laboratory mergers lead to lower internal development costs for products that already belong to the acquired company's catalog. Oncology is the category that stands out in the search for portfolio complementation, due to the high complexity of the research required.
In Brazil, in the early 2000s, the expansion of the market for similar and generic drugs prompted the purchase of companies by multinational laboratories. However, it was in the mid-1980s that this movement began to gain momentum in order to increase profitability and investment in research and development of the pharmaceutical industry. Within a decade (1988-1998), there were 12 mergers in the sector, involving 30 national and multinational companies from five countries: the United States, Germany, France, Brazil and Switzerland.
The trend is invigorating at this time, as indicated by research conducted by the School of Administration of the Federal University of Rio Grande do Sul (UFRGS). Pharmaceutical laboratories are a high value market that is still segmented, so there is room for concentration. Thus, it is natural that the number of companies in the sector will decrease as they grow in size and market dominance. In addition, there is a movement of US companies seeking overseas acquisitions to protect US tax profits.
If successful, Pfizer's purchase of AstraZeneca could materialize one of the largest deals in the industry.
Merger and acquisition processes, however, are delicate moments of transition. While aimed at improving the new brand's performance in the face of a market, the internal conduct of processes can be decisive for the success or failure of the operation. Approaches between two companies imply culture associations, management styles, organizational chart re-studies and an inevitable sense of insecurity on the part of most employees due to the stage of change.
In a scenario where significant sums are involved, any risk must be calculated and avoided. An Organizational Network Analysis for the Merger and Acquisition process is critical to a secure and stable process. Learn how Tree Intelligence can help you with this..
