Case Study On Merck's Acquisition Of Medco

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Case Study of Merck's Acquisition of Medco Merck-Medco Acquisition Analysis By Samuel Boru Masters of Business Administration Keller Graduate School of Management, 2015 Professor: Gene Smith FIN 561- Mergers and Acquisition Fall Semester Keller Graduate School of Management Online Table of Contents 1.0 Face Page……………………………………………………………………...1 2.0 Table Contents………………………………………………………………...2 3.0 Executive Summary…………………………………………………………...3 4.0 Industry Overview………………………………………………………….....4 5.0 SWOT Analysis ................................................................................................4 6.0 Impact on Marketing and Sales…………………………………………….…6…show more content…
Merging two segment leaders in the pharmaceutical industry will give Merck a strong competitive advantage, as it will control the entire process from manufacturing to purchasing. The combined efforts of Merck and Medco will also rid the process of overlaps and/or excess. The savings realized will result in lower prices for consumers which will drive purchase quantities, as well as profits, higher than Merck would be able to realize independently. Weaknesses: One of the issues will be the integration of the two companies seeing as they are operating in two dissimilar segments within the same industry. Our Chief Operating Officer is quite concerned that the synergy of the two company’s operations and cultures won’t be realized and believes that the acquisition will result in an expensive experiment that will undermine shareholder value. I share his concerns and feel that this issue must be addressed if the integration of our two companies is to be successful.…show more content…
As previously mentioned, regulations have already been enacted by Congress in an attempt to manipulate the health care markets and drive prescription drug prices lower. Should we move forward with the acquisition of Medco I am concerned that those in Washington will view our actions as a direct challenge to their legislative efforts. Additionally, there is the potential for a number of current Medco clients to question the ability of the company to provide unbiased services, post-acquisition, which could cause a modest to significant runoff. Lastly, there is always the possibility of our competitors mimicking our actions, which may ultimately cause a price war to ensue, driving profit levels down across the

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