Digital M&A Series: Part II – Integrating Smart Manufacturing and Digital Supply Chain

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 Part 2 of our four-part series, 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.

1.     People

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.

2.     Manufacturing Data

3.     Processes

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:

1. Manufacturing

2. Procurement & Sourcing

3. Sales and Distribution

4. Transportation and logistics

4.     Systems

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:

Conclusion

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.

Read more from this series:

Part 1: Research and development considerations during mergers and acquisitions

Part 3: Managing IT infrastructure separation during divestiture

Part 4: Digital playbook for accelerated integration