Pharma post-merger integration : success factors and best practices in the integration of swiss biotech start-ups
Creators: name: Grubenmann, Francy Louise
Publisher: name: ZHAW Zürcher Hochschule für Angewandte Wissenschaften
Year: 2020
Subjects: 658.1: Organisation und Finanzen

description: Mergers and acquisitions (M&As) are an ongoing trend in the life science sector, and especially big pharma companies have been active buyers, acquiring, amongst others, innovative biotech start-ups. In practice, M&As often fail due to faults in the post-merger integration (PMI) phase. PMI is essentially difficult between big pharma and biotech start-ups due to organizational differences and the organic nature of a biotech 's innovativeness. Whilst extensive literature is available on the subject, there still is a need for bridging the gap between theory and practice to give tailored advice for excellence in PMI for this type of undertaking. As the trend of M&As between big pharma and biotech start-ups is likely to continue, a practical review of context-specific success factors (SFs) may help companies to master the integration task.

This thesis aimed at identifying specific SFs for the integration of biotech start-ups into big pharma. To do so, the practical applicability of theoretical success formulas as well as employed best practices were investigated for this integration scenario. Hence, selected established integration success frameworks and hypotheses on M&A trends and motives by academic scholars and industry experts were tested. The methodology consisted of a qualitative analysis of desk research and interviews, with a focus on M&As between 2005 and 2019 where the top 20 big pharma acquired Swiss biotechs. A trend analysis of such M&As was made for general contextualisation, and a case study analysis on PMI SFs was conducted, featuring GlycArt and Roche, ESBATech and Alcon/Novartis and Actelion and Johnson & Johnson.

The analyses found a strong tendency for "originators" to acquire " innovators" and that for biotech acquisitions, big pharma has the motive of accessing both innovations and innovative capacity, which confirms the established hypotheses. Moreover, the selected theoretical integration success frameworks proved highly applicable to this type of integration scenario, albeit requiring some flexibility in practical use.

The newly identified PMI SFs from best practice are Alignment & Commitment: Shared Vision for Genuine Added Value, Autonomy & Coordination: Striking the Balance, Individualism & Collectivism: Best of Both Worlds, and Entrepreneurialism & Empowerment: Path the Road to Success. These context-specific integration success factors should enable big pharma to derive the full value from the biotech start-ups' organic and unique innovative capabilities, while mastering the amalgamation process and acting as a catalyst for entrepreneurial success.

The thesis provides a comprehensive overview on the subject-matter and contributes to closing the gap between theory and practice. The verified and newly identified PMI SFs are applicable for M&As between big pharma and biotech start-ups. Further case study analyses, trend analyses, and in-practice testing are recommended to solidify and expand on the findings. As every M&A is unique, a broad array of validated post-merger integration success factors is required to fully support companies in the integration task.