The extremely regulated environment and life-altering nature of products makes the pharmaceutical industry a highly specialized sector. During an M&A deal, it is imperative to consider supply chain integration which can yield significant synergies while gaining strategic differentiation.
If not properly planned, the aftereffects of the deal could be long felt in the manufacturing and production operations. Failures in the supply chain can lead to delays in time to market, bad customer experiences, risks of noncompliance, and opportunities being lost to competitors, which can have a detrimental impact on the bottom line of both parties.
In this paper, we examine the importance of supply chain operations in the pharmaceutical industry and outline the key considerations during M&A deals from a supply chain standpoint for a successful post-merger integration. The scope of integration can be divided into four major dimensions – people, data, processes & systems.
Stakeholder management is vital during a supply chain integration or separation. It is essential to maintain supply velocity and preserve relationships with key customers and strategic vendors.
Planning and implementation efforts are required to set up new users, incorporate existing users, manage access, assign roles and responsibilities, and manage related change management.
Life sciences M&A differs from other sectors due to its distinctive supply chain and a few key factors such as
- Various large, interconnected organizations of diverse nature and interests
- Specialized IP licensing, partnering and collaboration
- geography specific contract Provisions for manufacturing
- Ties with local contract manufacturers and country specific distribution agents
- Multiple regulatory mandates right from purchasing to packaging
A deep dive into critical considerations specific to pharmaceutical industry for ensuring a fail-safe integration:
- Procurement & Sourcing
- Sales and Distribution
- Transportation and logistics
While each supply chain integration is unique and involve integrating people, processes and data, IT systems and infrastructure are vital for a smooth transition by connecting these three dimensions across the deal cycle. Rationalizing and integrating portfolios of IT systems, platforms, and applications have critical impacts on products, services, processes, and stakeholders.
Key concerns/ challenges specific to pharmaceutical supply chain capabilities integration:
Integrating people, data, processes, and the associated technology systems is a complex process, requiring considerations that are critical during mergers and acquisitions.
The key to success lies in identifying the critical factors, entanglements, and their impact, detailing the approach to integrate the entangled processes, systems and to mitigate the associated risks. Effective change management and compliance with the respective regulations and governing laws support the end-to-end integration in a seamless manner.
Deepak is a Partner in the CIO Advisory practice of Infosys Consulting and leads the M&A offerings. He has more than 23 years of extensive experience in leading large-scale M&A and business transformation programs. He has supported clients in life sciences, retail, energy and information services sector through innovative engagement models like ITaaS and service optimization. His areas of expertise include mergers and acquisitions, enterprise resource planning, IT operating models and business process automation.
Neeraj is a key part of the M&A offerings in CIO Advisory practice of Infosys Consulting. He has more than 25 years of extensive experience in managing M&A and business transformation programs, across all business functions. He has supported clients in multiple industries like life sciences, high tech, manufacturing, energy and services sector through multiple engagement models. His areas of expertise include mergers and acquisitions, enterprise resource planning, business operating models and business process automation.
Uma Bala is a senior consultant with the Infosys Consulting Life Sciences practice supporting Supply Chain and M&A engagements. She has 8+ years’ experience in Program management, Digital transformation, and process excellence with deep expertise in Pharma Serialization, Track & Trace regulations, and GxP Compliance. She is a Certified SAFe Scrum Master, Digital Supply Chain Consultant and has successfully delivered projects using agile and lean methodologies for clients across geographies.