Merck-Medco

Merck-Medco

The merger between Merck and Medco can be equated with cross-breeding in animal husbandry, where a superior breed crossbreeds with another breed, more superior, to produce a hybrid breed. Merck and Medco can be seen as thrillers in the industry thus their coming together seems to be calculated moves. Due to this competition in the industry, both in pricing and market share, the need to establish Pharmacy Benefit Managers arose whose major role was to ensure harmonious coexistence of all stakeholders in the industry. This would include pricing and distribution strategies at wholesale and retail levels. They would also ensure that quality of products is observed at all times as well as acting as the Public Relations Officers in the drugs and supply management. Therefore, PMBs were justified by their ability to ensure downy running of the industry in terms of information and management regulation.

The merger

There would be two ways in looking into the merger of these two companies. Medco seems to fit very well with Merck’s strategy of retaining the largest market share in the industry. In actual fact, Medco’s convincing market share is viewed as threat to capsize Merck in the view of the Merck’s Chief Executive Officer. In addition, Medco’s motivation to offer integrated pharmacy services is a perfect fit into Merck’s vision to be world’s first coordinated pharmaceutical care company. On the contrary, a problem may loom in regard to the growth rate for the two companies. For instance, Medco’s growth per year is as high as 35% while Merck’s growth rate is unknown. In other words, Merck may take advantage of such superior growth rates and this can raise an alarm bell in regard to the merger.

Merits and Demerits

One of the greatest advantages of the merger is the advancement of shared values. The first shared value is that both companies have the same vision of offering integrated pharmaceutical services. Both companies have similar objectives of satisfying their clients with quality service, thus maintaining the largest and a commanding market share. This factors put together will provide platforms for complementing each other and forming a formidable force to cut off unnecessary costs of production and increase market capitalism. However, one major drawback to such trend remains. It kills competition. It can be argued that one of the reasons as to why Merck would merge with Medco is the threat of the latter to capsize the former. Secondly, the commanding growth rate and the range of clients of the latter are superior to the former. Killing competition in entrepreneurship is a dangerous precedence to any economy.

Benefits of the merger

Medco will be riding on the publicity of Merck as the best pharmaceutical company while Merck will ride on the growth strategies, a superior market share and a wide range of clients. Such integration is vital since it will cushion either of the parties from hard realities of market problems like inflation. Cutting costs of production and marketing is vital in such like merges. In as much as this trend can kill competition, it can be helpful to raise the standard bar in terms of production and service delivery thus prompting other companies to follow suit. Therefore, the number one recommendation is to ensure pieces of legislation that will dictate how such mergers ought to be done. Another recommendation is motivating companies on the importance of quality services as a means of creating healthy competition.