By Nigel Walker, Partner & Managing Director, Energy, Utilities, and Life Sciences Services, TPI
The pharmaceutical industry is seeing a lot of mergers and acquisitions as companies seek ways to reduce costs even while they can see a drop in their future revenues looming due to drugs coming off patent. But mergers will not deliver savings or revenue increases if executives do not manage the integration effectively and decisively.
Big mergers have many moving pieces. The complexity is compounded by the fact that companies in the pharmaceutical space have often been traditionally been very decentralized. When you combine decentralized organizations, you run the risk of losing the advantages of a merger. For example, it’s not unusual to see HR working towards one goal, while IT works towards another. Departments, business units and integration efforts cannot be isolated. Newly merged companies that allow themselves to operate in the same decentralized manner they followed before the merger will have the much of the same overhead and cost structure they had earlier.
To achieve the BUSINESS GOALS of a merger, companies must holistically look across their business for cost savings. One quick win organizations often overlook is corporate real estate, which can offer huge cost savings if managed right. We know firsthand the cost savings that can be achieved. Our work with other organizations is proof that great cost savings can be achieved in year one by taking a disciplined approach to merger integration.