Corporate Turnaround of Pharmacia & Upjohn
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ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR255
Case Length : 17 Pages
Period : 1995-2006
Pub Date : 2007
Teaching Note :Not Available
Organization : Pharmacia & Upjohn
Industry : Pharma
Countries : US / Sweden
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"They (Pharmacia & Upjohn) came together because both were
outliners in a consolidating industry, and they both had roughly comparable
market values before the merger. So a merger of equals was the logical way to
survive. On paper it all made a lot of sense. The issue was the execution of the
merger afterwards."1
- Fred Hassan, Former President and CEO, Pharmacia
Corporation, in 2001.
Pfizer Acquires Pharmacia
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On July 15, 2002, Pfizer Inc. (Pfizer), one the world's leading pharmaceutical
companies, announced the acquisition of Pharmacia Corporation for US$ 58 billion
in stock2.
The deal resulted in a company with annual revenues of over US$ 48 billion and
an R&D budget of US$ 7 billion. According to Hank McKinnell, Chairman and CEO of
Pfizer, "By combining with Pharmacia, we are ensuring that our core capabilities
in the discovery, development, and commercialization of new medicines are strong
around the world."3Pharmacia
Corporation was a result of the merger between Pharmacia & Upjohn Inc.
(Pharmacia & Upjohn) and the Monsanto Company4
in the year 1999.
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The merger resulted in a US$ 37 billion pharmaceutical group.
In 1995, Sweden-based Pharmacia AB (Pharmacia) merged with US-based Upjohn
Company (Upjohn), to form Pharmacia & Upjohn. At the time of the merger,
industry analysts opined that the merger would create a major force in the
global pharmaceutical market.
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Through the merger, Pharmacia and Upjohn aimed to
achieve a leadership position in the areas of infectious diseases,
women's health, nutrition, etc. The merged entity was expected to reap
the advantages of a complementary geographical presence, with Pharmacia
gaining access to the marketing and distribution infrastructure of
Upjohn in the US and Upjohn gaining similar support from Pharmacia in
European countries.
The merged entity expected to sell its products in new international
markets and aimed at becoming the fifth largest pharmaceutical company
by the year 2000 (Refer to Table I for top five pharmaceutical companies
in the world in 2000). |
Corporate Turnaround of Pharmacia & Upjohn
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