Strategic Benefits from Acquisition
Exhibit 1a provides more information on the methods of value creation resulting fromKendle’s acquisition of gmi and/or U-Gene. Exhibits 1b and 1c outline expected synergies andeconomies of scope achieved through these acquisitions.
Synergies resulting from acquisition are reciprocal, benefiting all three firms throughvalue and cost drivers. Kendle will become the sixth largest player in Europe after acquiring U-Gene and gmi, meeting its goals of becoming a full service CRO with international presence.gmi provides a full range of Phase II to IV services, higher margins, and specific expertise inhealth economic studies. U-Gene complements Kendle by adding phase I facilities and resources.U-Gene and gmi will both benefit from Kendle’s ability to decrease time span between phasetrials utilizing “Trial Ware” software and close customer collaboration. U-gene and gmi also gainaccess to Kendle’s US market opportunities and productive labor force.
All three companies have abundant “soft resources”, which include highly talentedengineers, scientists and research capabilities. The extent of redundant resources is low sincedifferent geographic offices will continue to utilize existing resources and best practices after anacquisition.
The pharmaceutical industry is growing 10% annually while demand for CRO services is growing 20% annually. Pharmaceutical firms are looking for a single CRO tofulfill all their needs including data collection, research, and management of various phase trials.These conditions result in a low degree of market uncertainty.
Industry Attractiveness Test:
Barriers to entry are favorable due to restrictive government policies (especially in the US), dependency on highly talented scientists and incumbencyadvantages. Although the pharmaceutical industry is highly concentrated with a high influence3