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Merk Medco Merger Essay

1615 words - 7 pages

Merck & Medco “The Merger”

For 102 years of innovations, our company has thrived in the health-care arena and overcome the challenges and changes in the industry. Our researchers have helped the people around the world by finding new ways to treat and prevent illness and create healthier and brighter future for all people around the world. Today, Merck is the world’s largest drug manufacturer, thanks to the vision of the former management and directors who were able to see in the future and overcome all obstacles and competition and positioned the company as world leader.
Ladies and gentlemen of the board, we are experiencing a rapid change in the industry of health-care and a different ...view middle of the document...

Experts who cover health-care predict that “90% of Americans will have drug costs included in some kind of managed care plan, and 60 percent of all outpatient pharmaceuticals will be purchased by managed care programs”.
“Why paying $6.6 Billion for a company when you can buy the information for cheaper?” History of waves of mergers in the past indicates that change forces driven by economical and cultural trends such as what we are experiencing of rapid changes to the health-care industry, when they take place, mergers will follow. The shift in prescription decision-making authorities away from doctors and physicians to PBM administrators, drug manufacturers’ marketing strategies similarly will shift their focus from several hundreds thousands of doctors to a few thousand formulary and plan managers, this will result in a dramatic reduction in the sales forces of pharmaceutical manufacturers. It is inevitable that mergers will take place and I believe Merck has to be not just part of it, we have to take the lead to gain competitive advantages over its rivals. The growth opportunities in managed-care plans are enormous.
Merck and Medoc merger is a diversity that will better our position in the health-care system that expected to emerge from the recent health-care reform, we will be closer to our customers and patients in a rapidly changing and highly competitive market. Market wisdom has taught us that strong change forces in an industry requires more frequent adjustments by firms to restructure and diversity, and that is what we should do.
Accessing Medco’s enormous database in its managed-care plans will make Merck the first and only firm that can oversee its drugs from the time they are in production to the time they are consumed and monitor the effectiveness of its drugs. We will be utilizing the information for analysis to contribute to our laboratory research and discover new patterns and improve the effectiveness of our drugs, we will be able to identify patients who fail to refill prescriptions that amount to an annual of hundreds of millions of dollars in lost sales, and we can use the information to increase our revenues and market share. Also, access to Medco network will bring down the prices of Merck’s expensive drugs and make them within reach to many managed-care organization budgets. Merck will benefit from the economies of scale to become more cost-effective.
Medco pharmacists make about two million phone calls annually to doctors and physicians, Merck can reap the benefits of marketing its own drugs. Merck’s sales division will have access to thousands of doctors and pharmacists in Medoc’s database. As a result, Merck will realize about $1 billion in synergies of annual savings with reduction in sales forces; eliminate redundancy in market operations, and reduced marketing and sales expenses. Merck’s VP Sales & Marketing believe the acquisition will open new marketing leverage opportunities in the Managed Care market....

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