This website uses cookies to ensure you have the best experience. Learn more

Upjohn Merger Case Analysis

1709 words - 7 pages

INTRODUCTION
The 1990’s saw a highly fragmented pharmaceutical industry with many competitors. The top ten firms in pharmaceutical sales held 28% market share in mid-1995. The top 50 firms held just over 60 percent. Changes were occurring in the pharmaceutical industry in the 1990’s. With pharmaceutical benefit management (PBM) firms working to reduce costs, pharmaceutical firms held less power. PBMs sought to reduce the number of supplier firms by only purchasing from the largest firms and requiring doctors to prescribe drugs from approved lists called formularies. Many pharmaceutical firms saw mergers as a means of reducing costs and increasing market share. On August 20, 1995, two ...view middle of the document...

It would be hard for a new entrant to obtain the capital necessary for this endeavor with little certainty as to if they will ever be able to pay it back. Further barriers to entry are probablein the future. The economies of scale created by the current consolidation occurring in the pharmaceutical industry will be hard to match.
SUPPLIER POWER
Suppliers to the pharmaceutical industry hold some amount of power in the pharmaceutical industry. The most important suppliers are those of intellectual resources. Companies employ thousands of scientists and physicians who are usually specialists in specified fields. Salaries expected by scientists and researchers range from $100,000 to $5 million. In an increasingly technological world, new technologies are readily available. In addition to intellectual suppliers, the only power would be from suppliers of advanced equipment and any compounds that cannot be created in-house.
THREAT OF SUBSTITUTES
Substitutes for the medications created by the pharmaceutical industry are slim to none. The consumers of their products are those that are ill. The only way to treat a disease or other medical condition is through medication or hospitalization. In the cases where medication is a viable option, the consumer is likelyto choose that option, as hospitalization or surgery are much more expensive, painful, and dangerous. Also, in most cases where hospitalization or surgery is necessary, medications will still be used as a supplement.
BUYER POWER
The main pitfall of the pharmaceutical industry in 1995 was the power of the buyers. A change was occurring, shifting the power from the industry to the buyers. This shift was due to the increasing formation of PBMs that were demanding lower costs for bulk purchases. These PBMs and individual plan administrators made approved lists, or formularies, for doctors to prescribe from. Exclusion from these lists was practically a death sentence to a pharmaceutical firm, limiting possible buyers.
RIVALRY
Rivalry in the pharmaceutical industry at this time was at a good level. As stated before, the industry has low concentration, consisting of numerous firms. No one firm has significant market share. This allows existing firms the opportunity for success. A firm is also only given market exclusivity on a newly developed drug for approximately 10.2 years, or as long as the patent lasts. After this time, other pharmaceutical firms are allowed to duplicate the drug as a generic brand. This regulation on drugs insures that no one company will have an unfair advantage in gaining dominance in the industry.
UPJOHN’S STRATEGY: PRE-MERGER
Prior to its merger with Pharmacia, Upjohn operated in several market segments, ranking as the nineteenth largest pharmaceutical company in the world. Pharmaceutical products were divided into the areas of central nervous system; steroids, anti-inflammatory and analgesic; reproductive and women’s health; critical care,...

Other Papers Like Upjohn Merger Case Analysis

Daimler And Chrysler: Lessons From A Merger

597 words - 3 pages CASE STUDY - “Daimler and Chrysler: lessons from a merger”. This case study is about the merger occurred in 1998 between two big companies in the auto industry: German company Daimler-Benz and American auto manufacturer Chrysler Group. At the end, this merger appeared to be a failure because of different types of problems. Chrysler benefited from Mercedes while benefits to Daimler were harder to find, so that Daimler decided to sell 80% of

Utah Symphony and Opera Merger Task 1

1827 words - 8 pages Utah Opera and Symphony Merger Utah Opera and Utah Symphony merger is an organizational plan to combine the two art-based organizations with an aim of increasing their effectiveness and efficiency. It involves fundamental changes that are beneficial to the operations of both companies. This documental analysis will assist Ann Ewers, General Director of the Utah Opera; make an informed decision concerning the merger process. The analysis

Jft2 Task 1

4861 words - 20 pages Task 1 Organizational Management [N.B. the red font writes up is the questions and Black font writes up are the answer. Please do modify if you need to change any font style and color.] Introduction: In this task, you will review and comment on the various human interactions, cultural and organizational, that come into play during the merger process in the “Utah Symphony and Utah Opera: A Merger Proposal” case study. You will explore

Case Questions

1071 words - 5 pages case for the merger? GE’s acquisition of Amersham PLC 1. Why and how does Amersham fit in with GE’s growth strategy? 2. Does GE’s 800 pence per share offer price for Amersham make sense? Use multiple methods (e.g., book value per share, valuation by multiples using peer transactions, valuation by multiples using peer firms, current share price assuming efficient markets) to inform your assessment. Also, consider the value of any potential

Gsk- A Merger Too Far?

7591 words - 31 pages GSK - A MERGER TOO FAR? Bernardo Bátiz-Lazo This case was prepared by Bernardo Bátiz Lazo, London South Bank University. It is intended for class discussion rather than as an illustration of either good or bad management practice. Research assistance from Alicia Arribas and comments from Simon Ling, Stella Richter and MBA graduates of the Open University are gratefully acknowledged. ã B. Bátiz-Lazo, 2005. Not to be reproduced or quoted

Jft2 Task 1

2459 words - 10 pages JFT2 Task 1 A. Create an analysis document (suggested length of 3–5 pages) in which you do the following: 1. Illustrate how Bill Bailey, chairman of the board of the Utah Opera Organization, might use one theory of motivation to oppose or support the merger. It is understood that the merger of the Utah Opera and the Utah Symphony has several positive factors. However, Bill Bailey, chairman of the board of the Utah Opera, strongly opposes the

Heinz Sdsgdaghagh

4268 words - 18 pages Revenue Code of 1986, as amended (the “Code”) (including the ability to grant make-whole payments to employees, including executive officers, who are impacted), subject in each case to the terms and conditions agreed upon by Heinz and Kraft. On June 22, 2015, in recognition of their strong leadership of Kraft during the transitional period prior to the Merger and significant contributions with respect to the transaction, Kraft’s Compensation Committee

Cash Flow

917 words - 4 pages ASSIGNMENT #2 Application of Cash flow formulae [problems 1-5], Depreciation [problems 6-8] and Break-even Analysis [problems 9-10] Total Marks: 100 Problem #1 [5] What amount would you need to pay each January 1 into a savings account if at the end of 15 years (15 payments) you desire RM 30,000? Annual interest is 7%. (Note: The last payment will coincide with the time of RM RM 30,000 balance.) Problem #2 [5] A future amount, F, is

Case Study

1494 words - 6 pages upper segment even though the bulk of customers were the middle class. The Company had less variety of products to respond to various tastes of the consumers. Slow decision making led to the further penetration and popularity of competition in the market. Merger Analysis Strengths These are the attributes that were present in the merger which gave the organization a competitive edge over similar players in the Scooter-moped

Ge Antitrust

2831 words - 12 pages Merger and Acquisition Case 2: The Eu investigation of the GE Honeywell merger. Questions : 1) What are the key players and their motivations? 2) What are the antitrust concerns raised by this merger? Be specific: which type of antitrust issues in which market? Would your analysis change if you used a broaded definition of the market? A narrower definition? 3) What are the reasons for the US-EU discrepancy? 1) What are

Merck Acquisition of Medco

903 words - 4 pages % dilution in 1995. Analysis shows that Merck should reach a break-even in 1996 (Weber & Shoretz, Augu). In this vertical merger, Merck will be eliminating the middle man. For Merck, acquiring Medco gives primary access to the largest pharmaceutical distributor with the largest mail-order operation. Medco currently has access to 90% of U.S. pharmacies. Medco receives access to Merck’s products and a tremendous market presence. With this

Related Essays

Hewlett Packard And Time Warner Merge Comparison

1037 words - 5 pages 2000, it was announced that AOL and Time Warner would attempt one of the largest corporate mergers in history. The deal was valued at a massive $350 billion. It was also considered to be the biggest failure in corporate history. Prior to the merger, co-founder of AOL Stephen M. Case said, “This is a historic moment in which new media has truly come of age.” On the other side, philosopher chief executive Gerald M. Levin said the Internet will

Reverse Merger Of Sino Forest Essay

998 words - 4 pages 1. Prepare a financial ratio analysis of Sino-Forest’s 2008-2010 financial statements. How would you assess the company’s operating performance and financial condition? Introduction and background 1. Financial analysis 2. Reverse merger One of the key words in this case is “reverse merger”. According to historical statistics, it is shown that the reverse merger one time had been a boom in the market all over the world. But

February 13, 2014 Essay

1362 words - 6 pages enhances the growth of the new company. This may however provide the company with diseconomies f scale, which leads to an increase in unit of production costs due to an increase in coordination costs. This is common among mergers that involve two huge companies as in the case of the American Airlines. Moreover, the consumer perceptions pertaining to the merger may identify a pertinent element to be considered (Kinget et al. 2008). This is whereby

Daimler Chrysler Post Merger Integration Essay

930 words - 4 pages oriented In the end they announced Back-End merger! All initiatives were not supported by senior leadership teams and not supported by overall willingness to adjust the individual strategies of the two companies. DaimlerChrysler finally adopted a “back-end” merger. How do you evaluate this kind of merger in this case? Let’s go into detailed analysis for “hard” and “soft” issues in the integration... (See appendix) Hard issues