Merged pharmaceutical firms seek fast-track route to savings

The pharmaceutical industry is preparing for an accelerated pace of consolidation, with the number of mergers up 39 per cent since 2017[1]. This year has already witnessed its first ‘super merger’ between two of the world’s largest pharmaceutical companies, Bristol-Myers and Celgene, valued at $74 billion[2]

The key drivers behind the latest round of mergers and acquisitions activity stem from the pressure to cut costs and achieve greater economies of scale[3] combined with the ever-increasing cost of drug development and the mounting pressure to innovate faster. Drugs typically take 12 years from the initial discovery stage until they are market ready[4], with the estimated cost of £1.15 billion per drug[5], and only 1 in 5000 medicines making it to the market[6].

As the prospect of cost savings excites the minds of business leaders operating in the sector, pharmaceutical companies are looking for new avenues to free up budget and deliver game-changing healthcare solutions faster, according to Dave Locke, EMEA Chief Technology Officer at World Wide Technology. An area attracting growing attention from the sector is Telecom Expense Management (TEM). TEM allows companies to map their existing communications expenditure and save up to 40 per cent of their current costs[7].

Dave comments: “As companies merge, it is invaluable for them to gain full visibility of their sprawling estates and the legacy of complex communications networks. This in turn can free up much needed cash to be reinvested into digital initiatives. Telecom Expense Management is one way pharmaceutical firms are able to reduce costs, invest in R&D and increase competitive advantage.

“The top priority for newly merged companies is to gain insight into their existing communications network before working on consolidating them. TEM equips firms with the ability to view, control, navigate and manage their telecom infrastructure— empowering them with the flexibility needed to access the fastest route to savings within a merger process.”

Dave continues: “It’s very easy for global firms to lose sight of the complex contracts they hold, especially when discounted deals finish and they end up overpaying for an underutilised service. Once the TEM-enabled level of oversight is achieved, contracts can be re-negotiated and any dormant links removed – allowing for instant savings which can be used to drive tangible business outcomes and competitiveness.”

[1] https://www.ft.com/content/b7e67ba4-c28f-11e8-95b1-d36dfef1b89a
[2] https://www.bbc.co.uk/news/business-46751462
[3] https://www.contractpharma.com/issues/2018-01-01/view_features/what-drives-mergers-acquisitions-in-the-pharma-industry
[4] https://www.pharmaceutical-journal.com/publications/tomorrows-pharmacist/drug-development-the-journey-of-a-medicine-from-lab-to-shelf/20068196.article?firstPass=false
[5] https://www.theguardian.com/healthcare-network/2016/mar/30/new-drugs-development-costs-pharma
[6] https://www.pharmaceutical-journal.com/publications/tomorrows-pharmacist/drug-development-the-journey-of-a-medicine-from-lab-to-shelf/20068196.article?firstPass=false
[7] IDC, Telecom Expense Management: Order in a Complex World, June 2018

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