On Synergy From Pfizer’s Acquisition Of Wyeth

Pharmaceutical companies contributes a lot to the human health.However,for pharmaceutical companies,they will encounter a series of problems during their expansion.How breakthrough in the bottleneck time has become an inevitable problem on the road of the development of pharmaceutical companies.Therefore,many pharmaceutical companies choose to develop by mergers and acquisitions.They hope to expand their own business through mergers and acquisitions,and integrate the resources of both parties to achieve complementary advantages and win-win situations as well.That means,to achieve synergy.Synergies exist in many aspects and can be divided into three types: financial synergy,operating synergy,and management synergy.If someone want to get a comprehensive and fair view of the synergy effect of mergers and acquisitions,the financial ratio evaluation method can no longer meet the demand.At this point,a tool that combines financial indicators and non-financial indicator is needed to evaluate the synergies of mergers and acquisitions.The balanced scorecard is a good fit for both financial and non-financial indicators.This paper takes case analysis as the research method,and selects Pfizer’s acquisition of Wyeth’s as the case.Based on the multi-dimensional thinking of balanced scorecard,the synergy effect of M&A is evaluated.The acquisition was of great importance to Pfizer,everyone hoped a lot at that time.First of all,this paper introduces the literature,synergy theory and the balanced scorecard theory,and explains the relationship between the three synergies and the balanced scorecard,which laying the foundation for the following.Then the article reviews the background,motivations and processes of Pfizer’s acquisition of Wyeth.After reviewing the background of the case,this paper sets the corresponding evaluation indicators of three synergistic effects according to the four dimensions of the balanced scorecard and considering the characteristics of the pharmaceutical enterprises.Finally,based on these indicators,the synergy effect of Pfizer’s acquisition of Wyeth was evaluated and judged.Through the study of the case,this paper finds that after the acquisition,Pfizer has obvious financial synergy and operating synergy effect.Pfizer successfully achived the growth of sales and assets,together with broadening the product line and business scope.However,the research and development capabilities in managing synergies have not been greatly optimized.In response to this shortcoming,this paper puts forward some suggestions that Pfizer can consider in the future development: First,the innovative medicine company’s survival is based on its research and development capabilities.Although M&A can quickly obtain ready-made varieties,Pfizer needs self-reliance and strengthens R&D compared to tokenism.Second,for existing products,Pfizer should take advantage of its marketing to increase sales to avoid single drug dependence.Third,although the continuous integration of assets has enabled Pfizer to grow freely,it has also affected Pfizer’s research activities,capabilities and employee morale.In the future,Pfizer should carefully consider these issues when integrating and divesting its business.