Many companies today are using acquisitions and mergers in order to enhance their market position. This is being facilitated by increasing competition in the market forcing companies to look for survival tactics. In this case we are going to look at two companies that are using acquisitions as a strategic tool in order to enhance their position in the market. These companies are Merck and Up-Sher Smith Lab companies.
Merck Company is a pharmaceutical company in US which was initially a branch of a German pharmaceutical company. Today this company is among top five pharmaceutical companies globally in terms of revenue and capital. This company usually major in developing, discovering, manufacturing and marketing different varieties of pharmaceutical products. This company has continued to increase its operations through research and development. In order to continue expanding its operations in future, the company is planning to acquire rival companies which they have been competing with for a long time. According to Goldman and Smith (2009), Merck Company is planning to acquire Schering – Plough Company which is a rival company within the next one year. After the new acquisition the company will still maintain Merck’s name. The new acquisition will help Merck to compete favorably with drugs giant companies such as Pfizer. According to Goldman and Smith (2009), the new acquisition will enable the two companies not only to strengthen their position financially but also help them to increase variety of drugs they deal with. These will include respiratory, anti- viral and cardiovascular drugs. The new asset acquired from Schering-plough will enable the company to do more research on animal health as well as allowing for women’s health division.
UP-SHERSMITH LAB COMPANY
Up-Sher Smith Lab Company is a drug company located in Minnesota which usually major with drug manufacturing and other services related to drugs. The company was established in 1919 and mainly deals with manufacturing of generic drugs. Up-Sher Company is committed to increasing its sales through acquisition of other similar companies. According to Health publication (2004), the company is planning to increase its sales by hundred percent at the end of year 2004. The company acquired Rosemont Pharmaceutical Company in year 2002 with the aim of achieving a target of $ 250 million sales per year.
The company has been using strategic partnerships and acquisitions in order to achieve its goals. The acquisition has enabled the company to raise its capital assets in order to meet its financial demands. For instance, the annual sale of Rosemont was hitting a mark of $ 15 million annually which means their acquisition will help the sales of Up-sher Smith lab to reach their target. The company has also signed an agreement with Unigene laboratories to market their products. These new acquisitions will help the company to build up its marketing positions through product promotion and diversification of its products.
The two companies discussed above use acquisitions and mergers as strategic tools for achieving their goals. New acquisitions are used by these drug companies to strengthen their market position in order to raise their levels of sales. Acquisitions are enabling these companies to manufacture new products which could not be possible without acquisitions. For instance, when Merck’s company acquired Schering – plough, they managed to establish women health division. This has enabled these companies to raise their sales thereby increasing their profit.
Goldman, D. & Smith, S. (2009, Mar) Merck and Schering-Plough in $41B merger. Health publication. Available at,
http://money.cnn.com/2009/03/09/news/companies/merck_schering_plough/index.htm. Accessed on February 17, 2011
Upsher-Smith Labs, (2003, Feb). Drug Store News. Available at,
http://findarticles.com/p/articles/mi_m3374/is_2_25/ai_97998976/. Accessed on February 17, 2011.