As the biotechnology sector grows year after year, so does the amount of mergers between companies. According to Investor’s Business Daily, in 2017, $50 billion was spent on those biotech deals, and that number isn’t expected to decrease in 2018.

In just the first few of months of 2018, Celgene and Sanofi already have announced plans to spend more than $25 billion to acquire three different companies. Each company involved in such a massive merger must be able to swiftly manage operations in order to transition into one operating entity while keeping their systems and people in place.

Contract Pharma spoke with Mark Holenstein, chief operating officer of Signavio, about what needs to happen after a merger from a process management perspective so that companies can thrive.

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Contract Pharma:What is the first thing a company should prioritize after a merger is completed?

Mark Holenstein: The primary focus of any company post-merger should be a strategic implementation model. The most important factor after a merger depends on a dynamic management system that can quickly align both organizations to bring changes into immediate results. Specific to the biotech industry, mergers often take place between entities with separate holding statuses, one being privately held and the other public. Lab processes that are different between organizations must come into alignment, along with any procedures dealing with pharmaceutical development. What’s more, pharmaceutical sales strategies must be branded as one. Merging companies want to ensure that their ideas are unified immediately and quicker than before, enabling the companies to meet immediate demands without delay. Product-based and clinical trial stage companies have at times been reluctant to merge due to varied interests, making the implementation model more critical. The communications process is also an important factor, ensuring the correct information is relayed to the right person. Often times post-merger, companies spend more time focused on systems rather than the people utilizing the system within the organization. Pharmaceutical firms should apply processes and procedures that bring consistency across all channels resulting in a smooth transition. 

CP: How can a merger positively impact business processes, and how does a company decide what type of new processes will be needed?

MH: Smart organizations recognize that great processes can exist in both companies. The key is to be able to capture, compare, and contrast the difference between the alternative processes and only then decide what a new process should be. The organization can decide to enforce one of the two existing processes, or use them both as inputs to develop a third option. From a process perspective, successful mergers are likely to occur when the new merged organization blends all three types. This type of investigation and analysis is ideally suited to business process management, which enables a unified view for all parties and makes is easy to visualize differences and generate action plans.

CP: Some people think mergers automatically will be cost cutting. Can you elaborate as to what a company can do to ensure it?

MH: Often times, companies merge for two specific reasons, both being financial. One reason is when a business is lacking growth in the marketplace, and feels that a merger would provide them with stability and a safe financial solution. The other is when a company feels that combining forces will allow them to compete more effectively, particularly against new entrants in the space. An example here would be a in the pharmaceutical industry. A large pharmaceutical company may purchase a smaller research lab for their inventions, joining forces to compete against another brand and eliminate competition. Another phrase of the merger acquisition may be to reevaluate company portfolios of products and target markets. Standardization will help to eliminate any “waste” and thus increase profits without damaging the underlying organizations. Implementing a process management system ensures that the two companies can keep any losses to a minimum, and can increase their production for a seamless transition. Ultimately, business process management (BPM) helps the two new brands speak the same language for all employees. 

CP: What is the most important factor in a smooth-running merger that doesn’t affect customers?

MH: When two pharmaceutical brands unite as one, they need to think customer experience first, then get processes aligned to deliver that experience. BPM technology assists in ensuring that customers don’t experience the usual hiccups and growing pains that occur when multiple processes create turbulence at the consumer level. Ordering and replacing prescriptions, for example, must become a smooth process at the customer level so that the pharmacy isn’t confused by two separate fulfillment procedures.

CP: How can companies see clear ROI from the implementation of streamlined process management systems?

MH: The right process management system will help capture key data on process metrics and visualize that information, thus making it possible for management to gain insight into what may have been hidden previously. Such systems are also likely to support the ongoing monitoring processes, identify deviances and ensure compliance. In the Pharma and Bio-tech industries, compliance with certain procedures can mean the difference between life and death or the difference between maintaining or losing FDA approvals. More generically across industries, it is not unusual for 5%+ savings implementing a typical process such as Procure to Pay with the potential savings of many millions of dollars on an outlay of $100-250k. This could mean an ROI of 50-100 times the investment.

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Mark Holenstein, COO of Signavio, has worked in the hi-tech sector for several years, specializing in  helping organizations to optimize their customer journeys and the underlying operations that deliver them. Signavio is a provider of business process management solutions for businesses in all sectors. For more information please visit www.signavio.com.