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Acquistion Strategy

Essay by   •  November 7, 2011  •  Essay  •  468 Words (2 Pages)  •  901 Views

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When businesses and organizations don't have or are not adequately equipped with an abundance of much needed supplies and resources, owners as well as management often looks towards merger or acquisition strategy in an attempt to try build and strengthen their company. The acquisition strategy serves as a checklist for owners to ensure that all of the important issues are addressed and possible alternatives are considered thoroughly before initiating a merger or acquisition strategy.

"An acquisition is a combination in which one company, acquire, purchases and absorbs the operations of another, the acquired." "Acquisitions are and can be complex and risky - they can affect your stakeholders, reputation, brand, and productivity - yet they're also a powerful tool for accelerating growth" (Gamble, J. & Thomas, A. pg. 119). Before a company decides to acquire another they should really think about whether its in the best interest of all concerned and weigh all the cost and take the proper steps be taken to help understand when and if this acquisition will be beneficial to the company. Acquisition strategies can be very profitable if the proper research has been conducted; however, not all companies that utilize mergers and acquisitions have been successful.

The two different industries that are using acquisitions to strengthen their market positions that I will discuss will be the pharmaceutical industry and technology industry. The pharmaceutical industry has endured a tremendous amount of reconstruction, high drug prices and the availability of generic drugs during the past decade that has caused a surge in mergers and acquisitions among drug companies. Most of the big pharmaceutical companies are already facing or likely to face patent challenges for their blockbuster products, the companies have been looking towards Mergers &Acquisitions (M&A's) and in-licensing activities to make up for the loss of revenues that will arise with key products losing patent exclusivity. According to the websites www.jnj.com and www.zacks.com major pharmaceutical companies like Johnson & Johnson have diligently sought to boost the sales of its pharmaceutical company by striking several deals in combining its product line with other companies who could help make it's company's medical portfolio more pleasing. Johnson & Johnson is seeking the acquisition of medical devices maker Micrus Endovascular Corp. , the company Synthes ; a orthopedic device manufacture, Cougar Biotechnology, whom J & J seeks to help make an impact in the areas of prostate and breast cancer, Elan to help in the fight against Alzheimer's Disease, Gilead, to help with the development of an once daily pill for HIV, as well as looking to purchase the rest of a Dutch biopharmaceutical company Crucell NV and Merck KGaA's acquisition of Millipore Corporation.

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