Corporate Turnaround of Pharmacia & Upjohn

            
 
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Case Details:

Case Code : BSTR255
Case Length : 17 Pages
Period : 1995-2006
Pub Date : 2007
Teaching Note :Not Available
Organization : Pharmacia & Upjohn
Industry : Pharma
Countries : US / Sweden

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.



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Excerpts Contd...

The Problems

Since the very beginning, the merger of Pharmacia and Upjohn failed to get on to the right track. According to Hassan, "Pharmacia was a European company that did not have a very cohesive culture to begin with; it was the product of a merger between a Swedish and an Italian company. And it was merging with Upjohn, a very conservative company from Kalamazoo Michigan."Employees from Upjohn feared that the merger would affect the people-oriented culture and family style management of the company. In Upjohn, job security was high as the company gave prime importance to the employees, even while taking business decisions. The differences between the companies were so prominent that it was beyond the ability of the management to arrive at a consensus...

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Hassan's Turnaround Efforts

Hassan's initial efforts were directed at addressing the existing problems of the company and realizing the synergies announced during the Pharmacia-Upjohn merger.

His first task as the CEO of Pharmacia & Upjohn was to address the employees. At a press conference in New York, he informed the employees that the company would be moving in a new direction under him. Hassan's next move was to visit the pharmaceutical product centers across Europe, where he interacted with the centers' employees. He held one-on-one meetings with some of the senior management personnel. These meetings helped him realize that morale among the employees was low and that there was a growing distrust among them. He found that the managers were not willing to work with employees from the other countries, and that the employees were viewed as outsiders...

The Results

By 1998, Hassan was largely successful in turning around the company. In the first quarter of 1998, the company began posting profits. In 1998, the net income grew to US$ 691 million with revenues at US$ 6.8 billion. Announcing the results for 1998, Hassan said, "Through our actions to date, we have created a new Pharmacia & Upjohn, a company that is on track to become a high performance competitor. We have now delivered four consecutive quarters of growth, and double-digit earnings for 1998 - exactly as promised. Our challenge now is to sustain the turnaround and build long-term growth."...

Exhibits

Exhibit I: Pharmacia & Upjohn - Financial Summary (1995-99)
Exhibit II: Pharmacia Corporation - Financial Summary (1999-2001)
Exhibit III: Visual of Upjohn - Friable Pills
Exhibit IV: Pharmacia - Best Managed Behaviors


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