Fi561 Example: Merck Essay

Case Study: Merck Acquisition of Medco

Professor Daniel Weiss

FI561

January 23, 2011

Example: Merck Acquisition of Medco

Abstract

The purpose of the case study is usually to determine whether it would be good for merge Merck Corporation with Medco Containment Services Incorporated. The combination and purchase between the world's largest medication manufacturer plus the largest health professional prescribed benefits management company (PBM) and marketing expert of snail mail order medications in the United States will result in a successful campaign for taking over the medication industry if perhaps handled properly. As Chairman and CEO of Merck Corporation, I must consider every side of the fights, financially, advertising cultural wise and arrive to a conclusion as to whether this kind of merger will be a good idea to get the company. Like any other expense and combination, there are hazards, and I need to decide what would be best lawn mowers of the interest of this company. The details as to whether the choice to acquire or not get Medco will probably be described in this paper. Along with data that helps make that ultimate decision.

There are a few things one must take into account before you make a decision. You must look at the permanent run, whether or not the merger and acquisition will be successful. There is also to take synergy into account; it's the most important reasons why there are a lot of mergers and purchases. Synergy will be when two companies get together to create added value and cut costs that might be unnecessary. You should also have to take into account changes in causes, like technological changes, financial systems of scales, type of merger you want to include and the process it takes to create a decision in particular when it comes to a merger and acquisition well worth millions if perhaps not billions of dollars. In the case of Merck and Medco, the role of prescription benefits management businesses are to " manage the provision of prescription drugs including managing insurance claims, negotiating volume discounts with drug manufacturers and inspiring the use of cheaper generic substitutes” ( Weston, Mitchell and Mulherin, 2004, p. 124). The supervision is enhanced through prospect lists of drugs which might be compiled by committees or pharmacists and medical professionals. With Medco's database, Merck will be able to have an advantage; they'll be able to discover prescriptions that could be switched from that of a competitor's to Merck. The databases will also enable Merck to distinguish patients who fail to refill prescriptions. Medco's patient record system is likewise used a lab while using goal of proving that some of Merck drugs happen to be worth the price.

As was stated earlier, you will discover definitely a number of things to consider before the final advice is made. All of us at Merck want to expand and create a competitive advantage that will allow for longer existence and survival of the business. We know that handled care is a growing market and will maintain expanding through the years. It has been predicted that by turn of the century, 90% of Americans will have drug costs that include some sort of managed health care insurance option. It's also recently been said that 60% of all outpatient medications will probably be purchased by simply managed care programs. Some of the responsibilities that PBM companies will have when contracted could be the management of insurance claims, negotiations of discounts with drug producers and taking care of the email lists of drugs which might be gathered by pharmacists and physician committees.

The benefits of merging with Medco, which can be the largest PBM Company and marketer of mail buy medicines in america, are persuasive to go ahead with this acquisition. Simply by merging with Medco, Merck will have a very good competitive advantage in the medication industry. There are many opportunities which might be waiting for Merck if we utilize database that Medco features accordingly. That database can help identify possible prescriptions which can be switched to our drugs, when this occurs the pharmacists will be indicating doctors...

Sources: Evans, Meters. (2000, March). Course several: mergers & acquisitions (part 1). Retrieved from

http://www.exinfm.com/training/pdfiles/course07-1.pdf

Fred, J, Mitchell, M, & Harold, M. (2004). Takeovers, restructuring, and corporate governance.

Upper Saddle River, New Jersey: Prentice Lounge.

Google Fund, Initials. (2011, January 23). Financial statements for Medco Health Solutions

Incorporation. Retrieved from http://www.google.com/finance?q=NYSE:MHS&fstype=ii

Yahoo Finance, Inventeur. (2011, January 23). Financial statements to get Merck & Co Incorporation. Retrieved

From http://www.google.com/finance?q=NYSE:MRK&fstype=ii



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