Taking the Supply Chain Pain Out of Healthcare Mergers and Acquisitions
According to a study by the Harvard Business Review, 70-90% of mergers and acquisitions fail.
It’s a disconcertingly high rate – particularly when you consider that the cause cited for most failures wasn’t technological, nancial or product-related. It was due to the process of the integration itself.
As the study notes, “The success or failure of an acquisition lies in the nuts and bolts of integration.
To foresee how integration will play out, we must be able to describe exactly what we are buying.” 1
As we’ve seen time and again, when the rubber meets the road and a company is immersed in the realities of a large-scale restructuring, the mechanics of the integration and the integrity of the supply chain are seldom primary considerations. More often than not, they’re viewed as inevitable fall-outs
of the restructuring.
It’s a phenomenon we see every day. Our core business involves helping companies manage change, so we’ve been in the trenches through a wide range of mergers, acquisitions and divestitures – in healthcare and non- healthcare sectors alike. And as a global company ourselves, UPS® acquired six companies in Europe in the last 3 years. So we appreciate the perils and pitfalls of the journey.
For companies in the healthcare sector, that process can be particularly fraught – given the nature of the products, the complexity of the supply chains and the stringent regulations involved.
Fortunately, there are practical, tactical strategies that can decisively impact the nal outcome.
What’s more, in our experience, a major restructuring is an opportunity to create transformational change that signi cantly enhances the NewCo’s long-term competitiveness and performance. In the following sections, we outline some very pragmatic, actionable strategies we’ve gleaned in our experience working in this sector.