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Answers - Intercultural Synergy in Mergers & Acquisitions
Economic pressures developed within the framework of a global marketplace have led to unprecedented numbers of mergers and acquisitions over the past decade.
The number of mergers and acquisiti
The number of mergers and acquisiti
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
ons involving US companies alone in 2004 reached 376 with an aggregate total paid of US$22.64 billion. In comparison, in 2003, the total amount paid was US$12.92 billion.
However, statistics sh
However, statistics sh
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
ow that the failure rate of most mergers and acquisitions lies somewhere between 40-80%. If one were to define ‘failure’ as failure to increase shareholder value then statistics show these to be
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
at the higher end of the scale at 83% (Cnnfn.com 1999). The facts highlight a worryingly poor success rate for international mergers and acquisitions. Why?
Many business commentators are now ac
Many business commentators are now ac
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
knowledging that failure does not have its roots simply in financial, monetary and legal issues but in lack of intercultural synergy. Research suggests that up to 65% of failed mergers and acqui
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
itions are due to ‘people issues’, i.e. intercultural differences causing communication breakdowns that result in poor productivity.
A recent example of such intercultural failure has been that
A recent example of such intercultural failure has been that
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
of DaimlerChrysler. Both sides in the partnership set out to show that intercultural hurdles would and could be overcome in their global merger. Recent articles in the Wall Street Journal and
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
Business Week suggest however that DaimlerChrysler underestimated the influence of culture, and due to culture clash, almost two years later is still struggling to become a unified global organ
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
zation.
Such discourse is highlighting the need for more intercultural training both within the framework of mergers and acquisitions and for key personnel such as managers and HR departments.
Such discourse is highlighting the need for more intercultural training both within the framework of mergers and acquisitions and for key personnel such as managers and HR departments.
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
In both instances culture is being ignored rather than being embraced and used positively.
Piero Morosini, author of Managing Cultural Differences: Effective Strategy and Execution Across Cultu
Piero Morosini, author of Managing Cultural Differences: Effective Strategy and Execution Across Cultu
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
es in Global Corporate Alliances, emphasizes that "misunderstood national cultural differences have been cited as the most important factors behind the high failure rate of global JVs [joint ven
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
tures] and alliances."
Morosini argues that when intercultural differences are ignored during the evaluation and negotiation stages of a merger, integration inevitably fails. He adds that the
Morosini argues that when intercultural differences are ignored during the evaluation and negotiation stages of a merger, integration inevitably fails. He adds that the
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
manner in which an organization handles intercultural challenges is directly correlated with the performance of the merger in the post-integration stage and can mean the difference between long-
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
erm success or failure.
If intercultural understanding is to be recognised within the systems of processes of mergers and acquisitions, staff training is critical. It is the leaders, managers a
If intercultural understanding is to be recognised within the systems of processes of mergers and acquisitions, staff training is critical. It is the leaders, managers a
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
nd HR personnel of companies that must have intercultural competency. However, it appears that companies are not investing enough in intercultural, or for that matter any, training.
In the Busi
In the Busi
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
ess Energy Survey, October 2004 (Adecco and Chartered Management Institute) where 1,500 managers were surveyed only a third had received training in the last 12 months. If management are receivi
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
ng such low levels of support one can assume that other functions are receiving as much or even less.
Companies must start to become more aware of these deficiencies and their possible future i
Companies must start to become more aware of these deficiencies and their possible future i
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
mpacts. If the mergers and acquisitions of the future are to prove fruitful , companies must design and implement comprehensive intercultural training programs for staff; assess and tackle possi
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
le areas of intercultural difficulties prior to, during and after mergers and put into place mutually agreeable intercultural frameworks of understanding to act as guidelines for post-merger syn
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
ergy.
These tasks should not be seen as reactive, damage limitation exercises but as a positive, proactive means of creating cohesion, maximising efficiency and building a competitive advantage
These tasks should not be seen as reactive, damage limitation exercises but as a positive, proactive means of creating cohesion, maximising efficiency and building a competitive advantage
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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