Post-Merger Integration (PMI) in Life Sciences: Levers for Your Success
Michelle FawcettManaging Director
Mike McNeelySenior Associate
Life Sciences mergers, acquisitions, and joint ventures are complex and common transactions that organizations often struggle to navigate. From breaking into new therapeutic areas, to expanding reach into the global markets, to adopting new digital solutions to drive better patient outcomes, mergers and acquisitions are enticing opportunities with enormous potential to create lasting value.
However, successful value creation is not assured, as illustrated by the many pharmaceutical mergers that did not fully create the expected value. To maximize value capture, mergers and acquisitions need detailed strategies and PMI plans that support desired outcomes, and should be led by the right perspectives, voices, and experiences.
Successful integration requires coherent, decisive vision that allows leaders and key stakeholders to create a strategy that delivers value to shareholders, the scientific community, and patients. It’s important that both leadership teams align early on a shared identity that blends their complementary strengths. Although other players will certainly be brought in–including representation from human resources, legal, finance, research and development, compliance, medical, and commercial departments–the decision-making process must begin with the leaders who will own the outcome.
Across the Life Sciences industry, developing an integrated company culture in the early days of a PMI will ensure that change management is fluid and accepted throughout the organization. This is vital, as two organizational cultures can be truly distinct from one another, and the goal should be to come together for a common patient purpose.
Levers for a Successful PMI
It is crucial to recognize the organizational and people-centric components of PMI because such initiatives can make or break the long-term success of the transaction. It is also important to develop strategies that solve future stakeholder needs. By addressing both elements with a comprehensive change-management plan integrated into the overall PMI, organizations can ensure long-term success and extract additional value from the deal.
Acquis recommends focusing on the following four critical levers for a successful PMI:
- Cultural alignment: If a more-established pharmaceutical company with a sales and marketing focus acquires a development-focused entrepreneurial biotech, company cultures will likely differ greatly. Understanding and managing the integration of these cultures is essential, especially if there are different teams supporting diverse global markets. Cultural differences should be viewed as an opportunity, a chance to capitalize on diverse perspectives, experiences, and deep knowledge about different segments of the pre-merger ecosystems.
- HCP relationship management: Prescribers are often suspicious of acquisitions and the changes they bring. Communicating the new strategy to prescribers as soon as possible is critical to maintaining these important relationships.
- Safety and regulatory alignment: This becomes particularly important when a U.S.-based company acquires a non-U.S.-based company, as the U.S. generally adheres to more stringent laws and liabilities. Ensuring consistent policies and standard operating procedures, and providing change-management training to the acquired employees, can help mitigate any issues that arise.
- Integration across the value chain: The ability towork from molecular exploration to early stage development, to longer-term market leadership and life cycle management, can only be realized effectively within the PMI stage if the following areas are considered:
- Organizational design: Ground rules should be laid out immediately at the close of the transaction to clarify roles and responsibilities of the new management team. Often, organizational leaders believe their authority stretches far beyond what it should, and it’s important to avoid misconceptions early.
- Technology integration: Two companies that merge often do not use the same digital platforms. The IT departments of both companies should ideally understand all of the required IT business needs before the merger formally closes, and should begin integrating systems immediately following the close of the transaction.
- Transition service agreements: Transition service agreements help ensure there is no disruption in service when two companies merge. A committee should be formed to ensure that the needed services continue after the transaction.
- Supply chain: It is important to keep existing business deals active as the two companies merge. Identifying and consolidating vendors should be a priority to drive savings.
By activating these levers, the PMI team can gain insight into both the tangible and less tangible value drivers of the transaction. This will help shape a more successful and sustainable PMI plan and ensure that the softer side of the integration is aligned with overall efforts.
PMI at Acquis
We help our Life Sciences clients capture more value from merger and acquisition transactions by creating a tailored approach to your unique post-merger integration needs:
Those seeking guidance and additional information on PMI should contact us at their earliest convenience. We strive to provide the latest and most relevant services and capabilities to Life Sciences organizations considering a PMI.