Essays on Pfizer and Pharmacia Merger Assignment

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The paper "Pfizer and Pharmacia Merger" is a wonderful example of an assignment on business. Pfizer Inc. and Pharmacia Corporation merged on April 16, 2003. The partnership produced one of the fastest-growing organizations in the pharmaceutical industry. The move was prompted by internal and external reasons. Although Pfizer is one of the leading pharmaceutical companies, it has to compete with GlaxoSmithKline for market share. The acquisition was informed by the need to address several challenges affecting the organization.   The partnership gives Pfizer a significant competitive advantage over its rivals.

The merger enabled Pfizer to attain full control of two drugs that the companies had worked on together. The drugs are Celebrex and Bextra (Herper 2002). The two drugs have a huge potential to become one of the bestselling pharmaceutical products in the world.   Furthermore, it strengthens its ability to compete with generic drug companies. The organization would make merger-related savings after the move. The move is important in an increasingly competitive pharmaceutical industry. It is noteworthy that they would access a significant R & D portfolio that could enable them to keep producing quality products (Pfizer 2015).

For example, Pfizer received a significant cancer treatment portfolio. Consequently, it can compete aggressively in the crucial cancer drugs segment. The merger was also prompted by the need to strengthen its position due to events in the industry. The organization was about to lose patent protection on many products. The move ensures that it can sustain its growth in revenue though competitors are likely to produce drugs using the information contained in the patents. In addition, it would cushion it from the increasing demand for reduced drug prices around the world.   Question 2 The management of the merger had both good and bad elements.

The merger was considered over a long period. The talks began during spring when the Pfizer leadership suggested an acquisition to their counterparts at Pharmacia. The deliberate approach ensured that the legal implications of the merger were considered effectively. The merger would not raise mistrust issues. In addition, the two companies worked out an effective reorganization plan. Fred Hassan would join Pfizer while Mr. McKinnell would be the Chief Executive Officer of the new company (Robert & Scott, 2002).

Many mergers are done in a poor manner leading to the loss of talented business leaders. Fred Hassan emerged as a successful business leader in the industry. He managed to grow Pharmacia into a huge player in the industry though it started as a combination of two weak companies. The merger was conducted at a time when the shares of both companies were at a stable price range. As a result, they did not have to worry about any significant changes in the share value of one company.

They could negotiate a share swoop based on figures that were reliable. Furthermore, the merger was structured in a manner that benefited both companies. Pharmacia shareholders would own about 23% of the new company (Robert & Scott 2002).   Their Pfizer counterparts would own 77% of the new organization (Robert & Scott 2002). The share division correctly reflected the capital contributions of both companies. In addition, the movie did not undermine Pfizer’ s adjusted share income. Question 3          Although mergers are prompted by the belief that they could bring significant value to both companies, some mergers lead to failure.

Business leaders and students can draw many valuable lessons from the merger. However, it is important to remember that different mergers involve unique business dynamics. Consequently, the lessons may not be universally applicable. The first lesson is that due process must be followed. The merger was a success because both companies had many similarities. In addition, they had worked together on some projects. As a result, their management had a good understanding of the other party. The managers ensured that the organization would not face mistrust challenges before approving the deal. Another important lesson is that mergers should be informed by a clear strategic goal.

The merger has clear internal and external benefits for Pfizer. In addition, it positions its drugs in a unique manner that enables them to reach a wider market (Pfizer 2015). The employees of both organizations would benefit from a strong performance of the new company. A strong performance would not only ensure their jobs are secure but would also enable them to receive pay increases. The move is particularly important given the declining revenue growth in the industry. In addition, Pfizer integrated Warner-Lambert in the merger (Robert & Scott, 2002).

The move ensured that the market accepted the deal. The purpose of corporations is to maximize shareholder value. Consequently, it is important to ensure that the merger is structured in a manner that makes the new organization more valuable for all the shareholders. In conclusion, the new organization should ensure that it retains talented managers. Most managers are forced to leave after a merger. Although they should not be kept if the organization can find better candidates, it is important to ensure that those with a strong record of accomplishment are incorporated into the new organization.

The move ensures continuity and makes a new organization more competitive.

References

List of References

Herper, M 2002, Pfizer Buys Pharmacia for $60 Billion. Forbes. [Online]. Available at

http://www.forbes.com/2002/07/15/0715pfe.html. Accessed 15 February 2015.

Pfizer 2015, 2003: Pfizer and Pharmacia Merger. [Online]. Available at

http://www.pfizer.com/about/history/pfizer_pharmacia. Accessed 15 February 2015.

Robert, F & Scott, H 2002, Pfizer to Buy Pharmacia for $60 Billion in Stock. [Online]. The Wall

Street Journal. Available at http://www.wsj.com/articles/SB1026684057282753560 Accessed 15

February 2015.

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