Abstract

The case details the merger of two major pharmaceutical companies - Sweden based Pharmacia and the US based Upjohn. It details the cultural and other problems faced during the merger and the subsequent turnaround of the merged entity under the leadership of Fred Hassan. In the year 1995, Pharmacia and Upjohn merged to form Pharmacia & Upjohn and the merger was expected to create a major force in the global pharmaceutical industry due to synergies and complementary products of both the companies. However, the merger ran into problems due to cultural differences between the European and the American entities, which resulted in drastic fall in the revenues of the merged entity. With the deteriorating financial position, analysts opined that the company would be a target of a hostile takeover. At this juncture, Fred Hassan assumed the responsibilities of CEO of the company in 1997. After implementing the transformational plan put forth by Hassan, the company's revenue grew and it recorded profits from the fiscal year 1998 onwards. In 1999, Pharmacia & Upjohn was merged with Monsanto forming Pharmacia Corporation. In 2002, Pharmacia Corporation was acquired by the pharmaceutical giant Pfizer.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand the importance of cultural issues in cross-border mergers
• Appreciate the role of a leader in reviving the fortunes of a loss making company
• Evaluate the strategies adopted by Hassan in turning Pharmacia & Upjohn around
• Examine the changes brought in by Hassan in Pharmacia & Upjohn

Keywords

Pharmacia , Upjohn, Merger and Acquisition, Cross Border Mergers, Cultural Mismatch, Corporate Turnaround, Merger Costs, Cultural Problems, Hostile Takeover, Zyvox, Reorganization , Product Portfolio, Best-Managed Behaviors