Megamerger 101: Bold is beautiful

If you want to be big, be bold. That's the message in a Financial Times analysis of Big Pharma's penchant--or lack thereof--for megamergers. Pointing out that some pharma chiefs believe in the big-time deal while others don't, the FT offers some received wisdom about making a ginormous deal work. Here it is:

  • Move fast. Get a new organizational structure in place, pronto, because uncertainty just demoralizes the troops. If employees spend their time worrying instead of working, no merger will work. "You have to move quickly," Pfizer R&D chief Martin Mackay told the paper.

  • Talk the talk. "You can never communicate enough," is how the FT quotes Bill Burns, chief of Roche's pharma arm. Once again, uncertainty is demoralizing. You can move quickly, but unless you tell people you're moving quickly, then that speed is useless.

  • Radical, dude. A GlaxoSmithKline alum who ran R&D after its big merger says big, bold change is the only thing that makes big, bold mergers worthwhile. "Otherwise you will create an organization that is twice as big and just as unsuccessful," Tachi Yamada told the FT

  • Equal opportunity change. Don't just overhaul the acquiree. Both buyer and bought need to retool themselves as they combine, even though the buyer tends to have more power to dictate that retooling. "It's a big mistake if you don't use a large transaction to build a new entity," Novartis CEO Daniel Vasella said.

  • Cost-cutting isn't enough. Execs may emphasize short-term cost savings when announcing their mergers, but it's the long-term change that really makes deals worthwhile.

Do you have ideas to add? Disagree with any of this advice? Let us know.

- see the FT story

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