1. Mergers and acquisitions are increasing in the pharmaceutical sector as companies seek to gain access to new drugs, save costs, and realize synergies. However, past M&A activity in the sector showed uneven success, with integration challenges hindering results. 2. Information technology can significantly impact whether an M&A deal succeeds by enabling efficient integration of operations, processes, and systems or causing delays and inefficiencies if not properly planned. 3. CIOs and life sciences companies should consider IT early in M&A planning to facilitate communication and collaboration from the start, standardize systems to reduce costs, and ensure flexible IT infrastructure can support both the initial transaction and long-term business strategy.

1. Viewpoint paper
Realize the
full value
Utilize IT to drive results in pharma mergers, acquisitions, and divestitures

2. Table of contents
1 M&A activity increasing
1 The pendulum swings
2 How IT can help this crucial strategy
4 Partnership considerations
5 Conclusion
Viewpoint paper | Accelerate performance

3. 1
Viewpoint paper | Accelerate performance
Mergers and acquisitions are increasing in the pharma sector.
Question is: Can your organization keep up? HP has a few ideas
about how IT can speed up your success.
M&A activity increasing
Merger-and-acquisition (M&A) activity is showing a significant upsurge in the life sciences
sector. According to the Thomson Reuters Recap, quarter-over-quarter total deal value grew by
141%, from $37.2 billion in Q1 to $90 billion of disclosed value in Q2 of 2014.
A number of those new deals were designed to take advantage of tax inversions, such as lower
non-U.S. corporate tax rates. Others were in pursuit of expanded product pipelines, extended
market reach, or to eliminate assets no longer aligned to the firm’s strategy.
Yet, as proven by the sector’s uneven history in M&As, simply making deals is no guarantee of
success. Poorly conceived transactions can be costly and time-consuming. They often divert
attention away from core competencies and can actually hinder vital research and development
(R&D). Worse still—when technology integration efforts are delayed or inadequate—even the
best merger or divestiture project can struggle.
In this viewpoint paper, HP examines the current resurgence of M&A activity in the
pharmaceutical industry. We review the three key IT elements that most often accelerate or
hinder those vital transitions.
The pendulum swings
M&A activity is once again sweeping the pharmaceutical sector. Mergers and acquisitions can
be an intelligent business lever for life sciences firms—opening a path for strategic growth,
extending market reach, and gaining competitive advantages.
In an extensive report, the Wharton School of the University of Pennsylvania describes the
major consolidation phase now under way in the global pharmaceutical industry.1
In 2014, more
than $200 billion in value is in play, constituting some 14 announced deals in just the first five
months of the year, compared to just 10 in all of 2013.
The publicly stated goals of many of those transactions are to give pharmaceutical firms access
to new drugs, save money, and gain synergies. Ideally, life sciences organizations should be
able to easily acquire and integrate companies, without disrupting their businesses or affecting
key customers.
1
Wharton School of the University of Pennsylvania,
“Trying to Recapture the Magic: The Strategy
Behind the Pharma MA Rush,” May 28, 2014—
Health Economics Europe, India, North America
Mergers and acquisitions can be an intelligent
business lever for life sciences firms—opening a
path for strategic growth, extending market reach,
and gaining competitive advantages.

4. 2
Yet, as veterans of the pharma sector know all too well, it does not always work that way.
Ten or 15 years ago, many large life science companies had the vision of expanding the
scope and reach of their businesses through diversification into areas not well aligned to core
competencies. Many bought health-related firms, as well as crop protection, animal health, and
small biotech organizations. Most invested heavily in research and development, often with
disappointing results. Industry observers say that the previous MA push was somewhat less
scientific in terms of analysis and strategic integration.
Many see the current MA push as a clear corrective to those earlier missteps. While
replenishing drug pipelines remains a key goal, the focus of today’s divestitures, asset swaps,
and acquisitions is often on a return to core strengths and capabilities. Behind this realignment
of the verticals within life sciences is a growing awareness that companies should focus on
higher-margin business and an optimized risk balance in their portfolios.
The 2014 Wharton School analysis acknowledges the shift back toward core competencies
while warning pharmaceutical companies about another all-too-common risk—inadequate
post-merger integration.
Whether they are planning their first MA effort, or if they have managed a number of
substantial transactions, forward-looking chief information officers (CIOs) understand these to
be complex logistical transformations. They require close attention to detail across the entire
business model.
The technology challenges can be substantial: consolidation of numerous systems; addressing
rigid core legacy systems in one or more companies; and managing redundant applications and
fragmented data stores. CIOs must understand the promise and challenge of these transactions.
When done well, integration can eliminate cost and redundancies while adding efficiencies and
measurable value. Poor integration, on the other hand, can reduce employee productivity and
customer satisfaction while endangering corporate security, growth, and brand value.
To realize the full potential of any MA effort, it may help to examine in detail how information
technology can impact those transformations.
How IT can help this crucial strategy
Technology integration can help, or hinder, a complex MA effort.
Less-than-ideal IT planning can add time and complexity to any integration effort. Robust IT
planning provides better visibility into interdependencies among functions, processes, and
assets—enabling life sciences organizations to better analyze and manage risk.
Because technology undergirds most business processes, insufficient planning can lead to
unexpected system restrictions, dissatisfied customers, and lower user acceptance of combined
or separated systems. Poor alignment between IT and the larger life sciences business can and
will reduce the overall return on any MA investment.
When technology is considered at tactical and strategic levels, pharmaceutical companies can
improve their governance and control of any deal. Solid IT provides the metrics needed to drive
quality and reliability, and to comply with legal and regulatory requirements.
Viewpoint paper | Accelerate performance
Robust IT planning provides better visibility into
interdependencies among functions, processes,
and assets—enabling life sciences organizations
to better analyze and manage risk.

5. 3
Strong IT planning enables pharmaceutical firms to adopt an enterprise-wide transformation
model, rather than a discrete and less-effective, project-by-project approach. Together, those
technology-driven capabilities position companies to reduce uncertainties, accelerate deal
lifecycles, and focus their energies on higher-level, value-oriented outcomes.
IT can affect MA efforts in three critical ways.
One: Immediate technology requirements
When an acquisition or divestiture event happens, those transactions are often in the works
for months—but when they are announced, most are followed by an intense flurry of legal,
business, and technology activities. During those critical early weeks, a number of small-but-
vital technology steps can greatly affect the eventual success or failure of the entire effort.
Things—such as setting up compatible email accounts, common address books, and a working
call routing system—may seem like tactical details. They are, however, the foundation for
communication, collaboration, and strategic gains. Slightly higher-level activities—including
compatible part and material designations, transactional models, and vendor or customer
management systems—also require IT-oriented due diligence.
Whether a CIO is tackling a first-ever major integration challenge, or is the veteran of numerous
MA events, current technology can vastly improve the outcome of any deal. Cloud and as-a-
service efficiencies, federated email capabilities, and other still-emerging technologies—such
as new data integration hub technology—provide the flexible, scalable systems needed to
handle a major transformation.
Putting the appropriate systems and architecture in place now, particularly as part of migration
to cloud type models, can position a pharma organization to react more quickly and effectively
to the unique IT demands of an MA event. At the same time, a well-planned technology
strategy can ease future challenges of separation and integration.
Two: Cost savings
Cost-efficiencies are often a highly touted expectation for many MA deals. IT groups are
typically expected to deliver much of those savings.
The early focus is naturally on operations, financials, and cultural change management.
Forward-looking companies also should consider information technology early in the
integration or separation process.
When IT is not sufficiently prioritized, the time and cost of integration can easily be
miscalculated, and those costs can often exceed planned expenses. By standardizing the
approach and supporting tools, IT-oriented integration or separation can reduce current
transactional and long-term ownership costs—thereby increasing the overall value of any deal.
Life sciences firms can gain measurable value by reducing the cost of operational set-up and
integration, and by leveraging nimble as-a-service models for business processes, applications,
and infrastructure. Advanced analytics and data management can provide unprecedented
insights into costs, revenue, and value across disparate organizations.
Modernized IT systems also can increase visibility and control over discretionary and
nondiscretionary spending, enabling firms to better prioritize investments while reducing the
risk of acquisitions, divestitures, or joint ventures.
Viewpoint paper | Accelerate performance
Because information technology can impact the
long-term value of any enterprise, it is worth
examining IT’s role in any major transformation.

6. 4
Three: Long-term value
Because information technology can impact the long-term value of any enterprise, it is worth
examining IT’s role in any major transformation. Most pharmaceutical acquisitions are driven by
the desire to own a promising drug or other IP, or to leverage a demonstrably successful RD
program, a strong pipeline management system, or some other valuable process.
Companies cannot have two of everything, so optimization is often a key IT objective. Reverse-
engineering systems require speed but care must be taken not to damage critical business
processes. At the same time, concerns about making a wrong decision can sometimes lead to
analysis-based paralysis during a key transition.
Organizations must confront immediate options, and cannot wait two or more years to make
those vital technology decisions. The key is to have an IT environment and an infrastructure
that are flexible enough to drive near-term results and long-term success.
Partnership considerations
As noted, one of the key questions facing any CIO is whether the organization has the in-house
expertise to handle an MA event, and to gain maximum benefit from the transition. Given the
natural complexity of these efforts—and the time and resource constraints under which most
are undertaken—most pharmaceutical firms work with external partners to handle at least
parts of a merger, acquisition, or divestiture.
Those relationships typically span four key areas:
1. Strategic business advice, basically how to design a new combined supply chain or
manufacturing network
2. IT advice, such as how to design IT infrastructure and application landscapes for combined
companies
3. Project management office services
4. Implementation and execution support
Potential partners in each of these four categories offer specific capabilities and solutions.
For a CIO, the key is to understand the pharmaceutical firm’s internal capabilities, the demands
of a given MA transition—and how best to match those requirements to meet the company’s
near- and long-term objectives.
Not surprisingly, many companies choose to work with a top-tier IT partner to analyze their
current situation, and to establish a solid foundation for a new consolidated or separated
enterprise. Such a partner can bring globally consistent processes and methodologies to
improve the speed, agility, and long-term success of these crucial transformations.
When evaluating potential IT partners, life sciences organizations may wish to consider
allies that combine pharmaceutical-specific experience with broad MA capabilities. This
combination includes:
• IT-related advisory and consultative services
• Program management office services to support merger, acquisition, and divestiture efforts
• IT integration and separation services—including application, service desk, hosting, storage,
networking, and ongoing support services
Viewpoint paper | Accelerate performance

7. 5
Conclusion
MA and divestitures can yield very positive results in the pharmaceutical sector—including
cost reductions, efficiency gains, and access to new drugs or markets. Yet all too often,
shareholder value is lost when companies fail to efficiently integrate their cultures, operations,
and technologies.
The early focus is naturally on operations, financials, and cultural change management.
Forward-looking companies, however, should also consider information technology early in the
integration or separation process.
HP recommends a logical, proven approach to MA that is based on careful strategic
consideration, detailed planning, and close attention to integration/separation. This model
starts with the assessment and rationalization of existing IT systems. It leverages a scalable,
service-based architecture to deliver the needed agility and efficiencies.
Finally, companies must gain the transformational expertise needed to handle complex
transitions—with as little disruption as possible. By fully addressing these integration or
separation requirements—from the smallest details to the enterprise-level strategies—
pharmaceutical firms can realize the full value of the next major transaction.
Viewpoint paper | Accelerate performance
Ask the tough questions
When considering a complex MA challenge,
C-level pharmaceutical leaders should ask:
• Going forward, which legacy systems or
technologies should be retained?
• Which should be retired?
• Which should be replaced with outsourcing or
new systems?
• Where do I need TSAs (acquisitions)? Where
can I offer TSAs (divestitures)?
• Which systems need to be changed,
reengineered, or reverse-engineered?
• Or is the answer not to integrate, but rather to
maintain multiple systems?
• Do we have the scalable, service-based
architecture needed to support our future
business model?
• Does our organizational model embrace change?
• Do we have the transformational capabilities
to address this transition, avoid negative
disruption, and realize the value this deal is
intended to achieve?

8. This is an HP Indigo digital print.
Authors
Steve Figman
Americas Strategic Business Development, Healthcare Life Sciences Strategist
Steve Figman is the Healthcare Life Sciences strategist for HP Enterprise Services, focused
on identifying, recommending, and facilitating decision-making for enterprise-wide growth,
transformational vision, and leadership strategies. He utilizes “practical innovation” and
thought leadership to address strategic high-impact business issues, and leverages HP’s
expertise and intellectual property assets to drive alignment with future trends in business and
technology. Through his 20+ years in healthcare leadership roles, he has worked on some of
the largest and most profitable brands in U.S. Healthcare, for organizations including Johnson
Johnson, Wyeth, BSN Medical, and Premier, Inc. Figman’s extensive experience fueling growth
and profitability for many industry-leading brands includes business development and strategic
alliances, product positioning, sales direction, competitive intelligence, contracting, and
marketing communications.
Jordan Rechis
Chief Technologist, U.S. Life Sciences
Jordan Rechis is the chief technologist for the U.S. Life Sciences industry. Rechis provides
innovation, thought leadership, and architecture expertise to HP clients within the industry. For
more than 20 years, he has worked with the world’s largest and most complex organizations to
apply innovative solutions to business problems. He led the services implementation for the
industry’s first storage utility almost 10 years before cloud became an industry buzzword.
Other innovations include authoring custom software to manage the world’s largest Windows
domain and designing a cloud-based process to replatform applications with minimal business
impact. For approximately 10 years, he has been focused on the Health and Life Sciences industry
working with research-based pharmaceutical companies. He has been engaged to work with
some of the industry’s largest companies to work on the unique challenges such as MA
related-change, new collaboration models, and use of emerging services to enable the business.
Viewpoint paper | Accelerate performance
© Copyright 2014 Hewlett-Packard Development Company, L.P. The information contained herein is subject to change without notice. The only
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4AA5-5815ENW, November 2014