Strategic Merger and Acquisition Plan for Healthcare Product Expansion

This report presents a detailed analysis of merger and acquisition (M&A) strategies within the healthcare industry, focusing on the expansion of personal healthcare products. It begins with an introduction to the concept of M&A and its impact on healthcare standards, specifically highlighting the HARTMANN group's interest in inorganic growth. The report delves into background analysis, discussing different types of M&A and their roles in mitigating market risks. It establishes the goal of developing an M&A strategy to identify potential target markets for the company. The analysis includes an examination of the over-the-counter (OTC) medical industry in Europe, market drivers, trends, and the use of wearable devices. Furthermore, the report incorporates a PESTLE analysis to understand the external factors influencing market growth, along with SWOT and Porter's Five Forces analyses. It also covers the identification of key market drivers and trends, along with a compilation of a long list and a shortlist of potential target companies. Finally, the report provides recommendations for Human Resources in managing the merger and acquisition, offering a comprehensive overview of the strategic process.

Running head: MERGER AND ACQUISITION
Merger and Acquisition
Name of the student
University name
Author’s note

1MERGER AND ACQUISITION
Table of Contents
Introduction......................................................................................................................................2
Background analysis........................................................................................................................4
Goal..................................................................................................................................................5
Analysis of over-the-counter medical industry in Europe...........................................................6
Identification of key market drivers and trends.........................................................................11
SWOT Analysis.............................................................................................................................20
Porter’s Five Force Analysis.........................................................................................................25
Compilation of a long list for potential target companies.............................................................31
Selection of a shortlist for the most suitable target companies and potential Follow up..............32
Recommendations for Human Resource for managing the Merger and Acquisition....................35
References......................................................................................................................................39

2MERGER AND ACQUISITION
Introduction
The current assignment deals with the concept of Merger and Acquisition (M&A) within
the healthcare industry to provide optimal standards of care services to the target population
group. The merger and acquisition have brought about a revolution in current medical standards
and services. The aspect behind the promotion of such a marketing gimmick is to provide
affordable and technologically advanced health care services. With the increasing population,
there is more pressure upon the healthcare resources. However, resource limitation often serves
as a hindrance to the delivery of required standards of healthcare services. In the current
assignment, we have taken into consideration HARTMANN group which is an international
company catering to the fields of medicine and personal hygiene.
The core area that the company had been focussing upon consists of the following such
as disinfection, incontinence management, wound management, risk prevention and personal
healthcare1. The organization has recently planned the launch of some of its range of personal
healthcare products. The proposal was made in order to provide sufficient autonomy and
independence to the ones suffering from long-term disease conditions. The range of personal
health care products launched in this regard would help the users to self-manage their conditions.
The premier products launched by the company such as a glucometer, pulse oximeters can allow
people to self-check or monitor their health condition over a long time. Recently the company
expanded its services to providing smart health care services to the in general population. Some
1Greve, Henrich R., and Cyndi Man Zhang. "Institutional logics and power sources: Merger and
acquisition decisions." Academy of Management Journal 60, no. 2 (2017): 671-694.

3MERGER AND ACQUISITION
of the recent products marketed by the company include self-test kits for alcohol, drugs and
pregnancy.
The company here wishes to expand its range of personal health care products through
inorganic growth channels. Here, the inorganic growth channel could be defined as growing
business, sales by increasing output and business reach by acquiring new businesses by way of
mergers and acquisitions2. In order to reach out to the majority audiences within the current
market, the company has selected four target segments which includes pain management,
musculoskeletal, sleep apnea, elderly and disabled assistive devices. The purpose is to provide
maximum power in the hands of the target patient population.
The assignment had been further supported with the help of sufficient research and
evidence based upon the demand and supply for non –prescription medical devices. The trends
within the current market have also been analysed which helps in expanding upon the merger
acquisition plans. However, a number of hindrances and limitations are faced within such merger
and acquisition activities. The merger and acquisition need a number of financial and legal
obligations to be met before the launch of a fully validated plan within the market. The major
limitation with M&A activities is related to dissemination of adequate share to the different
stakeholders within the merged company. An additional barrier is professed by the lack of
sufficient marketing and promotional channels.
2Brandon-Jones, Alistair, Michael Lewis, Rohit Verma, and Matthew C. Walsman. "Examining
the characteristics and managerial challenges of professional services: An empirical study of
management consultancy in the travel, tourism, and hospitality sector." Journal of Operations
Management 42 (2016): 9-24.

4MERGER AND ACQUISITION
Background analysis
There have been combining views regarding merger and acquisition within the context of
the current health industry. The M&A could be further divided into two varying types which are
full-asset mergers to varying types of affiliation. The merger type chosen is based upon some of
the factors such as size of target customer base and current economic condition of the company3.
The affiliation agreements can include sharing of management services, clinical services and
information technology, risk sharing. The merger and acquisition are often seen as a strategy for
overcoming the market risks associated with the launch of new products. In this respect, the
merger and acquisition strategies are seen as a good way of reaching out to maximum number of
audiences through diverse marketing and promotional channels. A current paradigm within the
medical industry has been brought about where more and more small health care setups are
working together with large hospitals to provide sophisticated healthcare technologies and
interventions for better assessment of individual and community health4. The M&A activities
help in gathering sufficient funds for the promotion of innovative technologies. The
implementation of the M&A activities reduces the hassles of referral within health care and
establishes a centralized pattern of care.
3Moseley III, George B. Managing Health Care Business Strategy. New York: Jones & Bartlett
Learning, 2017: pp.25-30.
4Shi, Zhan Michael, Gene Lee, and Andrew B. Whinston. "Toward a better measure of business
proximity: Topic modeling for industry intelligence." Management Information Systems
Quarterly 40, no. 4 (2016): 1035-1056.

5MERGER AND ACQUISITION
In the current scenario, the HARTMANN group of company wishes to expand its market
reach and share by promoting a range of personal health assessment devices. In this respect, the
company has chosen four target areas such as pain management, sleep apnea, musculoskeletal,
respiratory care devices and elderly disability assistance devices. The rationale behind choosing
such areas for the extension of the marketing plans could be explained with respect to the ageing
population and the need for self-medication. In this respect, one could say that advanced age
increases the tendency of an individual to develop long-term and chronic conditions such as
rheumatoid arthritis, diabetes, etc. Some of these diseases require constant clinical guidance and
monitoring. Thus, with the intervention of personal health monitoring devices, the dependency of
people over physicians and doctors could be reduced5. This further explains the growth in
demand for over the counter non-prescription health assessment and intervention strategies.
Goal
To develop M &A strategy for identifying potential target markets to grow the personal
healthcare business of the company through merger and acquisition
Analysis of over-the-counter medical industry in Europe
There has been a sharp growth in the sale of over the counter non-prescription drugs
within the European market. The non-pharmacy sector has shown considerable increase in their
5Angeli, Federica, and Hans Maarse. "Private capital investments in health care provision
through mergers and acquisitions: from long‐term to acute care." The International journal of
health planning and management 31, no. 4 (2016).

6MERGER AND ACQUISITION
retail market share and has been gradually reaching towards saturation6. As per the current
records and analysis of the German OTC market at least 46 % of the millennial have been seen to
use wearable health devices to track their wellness and fitness quotient. The rest 10 % have been
seen to use such technologies for the management of long-term conditions such as diabetes or
high blood pressure7. The millennial are the first generation users of social media and some of
the additional health apps available nowadays. Therefore, they are pretty comfortable sharing in
sharing their personal information with other online. Therefore, such platforms are often used as
a marketing platform for the emerging M&A enterprises. The HARTMANN group of company
had conducted an online survey regarding the number of people who would actually prefer
traditional and aesthetic mode of health check-up versus technological mode of accessing the
health condition of an individual.
The goal of the HARTMANN group of companies is to empower the patients by making them
able to self-track their health conditions. The wearable devices along with the smart health
assessment tools can help in receiving accurate data on a regular basis8. The monitoring and
assessment on a regular basis also motivate them in keeping a check over some of the activities
6Brueller, Nir N., Abraham Carmeli, and Gideon D. Markman. "Linking merger and acquisition
strategies to postmerger integration: a configurational perspective of human resource
management." Journal of Management (2016): 0149206315626270.
7Mas, Núria, and Giovanni Valentini. "Technology complexity and target selection: the case of
US hospital mergers." Industrial and Corporate Change 24, no. 2 (2014): 511-537.
8Denison, Daniel R., and Ia Ko. "Cultural Due Diligence in Mergers and Acquisitions."
In Advances in Mergers and Acquisitions, pp. 53-72. Emerald Group Publishing Limited, 2016

7MERGER AND ACQUISITION
which could aggravate their present ill health condition. The over the counter non-drug medicinal
assessment tools has a huge ocean of opportunities with respect to the current market. In this
context, some of the factors such increasing health awareness, increased growth of favourable
marketing channels such as social networking sites along with strong brand image can strongly
favour the growth of innovative and measurable healthcare technologies.
The stats for the pharmaceutical market share differentiation shows that over the counter
(OTC) have a market share of 12 % and more. The order channels of the medicine market had
been tracked to see that pharmacy mail order accounts for almost 78 % of the total number of
orders placed9. The growing dependence on technology for daily health assessments of people
could be attributed to a number of causes. Some of these are busy schedules of most of the
people nowadays which leave them with little or no time to visit doctors. Therefore, the hands-on
health assessment tools can be sufficiently productive in reducing the chances of hospital
admissions. On analysis of the market segments, the medical devices claim for almost 44 % of
the present market share. Some of the OTC non-drug medical devices such as orthopaedic
apparatus, disposables, and apparatus for breathing makes up for major quotient of the orders
placed. In this respect, further future analysis shows that by 2035 almost 31 % of the population
will be 65 years or older. The chronic and long-term diseases account for 80 % of the German
9Witt, C.M., Pérard, M., Berman, B., Berman, S., Birdsall, T.C., Defren, H., Kümmel, S., Deng,
G., Dobos, G., Drexler, A. and Holmberg, C., 2015. Using the framework of corporate culture in
“mergers” to support the development of a cultural basis for integrative medicine–guidance for
building an integrative medicine department or service. Patient preference and adherence, 9,
p.113.

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health care spending. The German non-pharmaceutical market is supposed to grow by 3 billion
European dollars by 201710.
However, a number of challenges are faced in the marketing and promotion of non-
prescription medical assessment tools. The funding cuts often restrict the propagation of such
tools and interventions within the market. With respect to medical technologies, people are more
prone to use cost-effective intervention plans and health care services. The provision of increased
competition from a number of healthcare channels can also restrict the personal healthcare
marketing plans of the HARTMANN group of companies. However, with the advent of mobile
phones, the ever extending horizon seems to have been limited where each and every individual
wants all the information relative to them available at the single touch of a hand.
In this respect, a PESTLE analysis could be conducted of the current industry for
understanding the effect of the various political, economic, social, technological, legal and
environmental factors which affects the market growth and survival of the emerging business
ideology.
Factors attributes
Political  Reduction of donation to non-pharmaceutical based companies by
government
 Change in taxation laws and policies
Economical  Sudden inflation rate raising the price of the non-drug based medical
10Groves, Peter, Basel Kayyali, David Knott, and Steve Van Kuiken. "The'big data revolution in
healthcare: Accelerating value and innovation." (2016): p25.

9MERGER AND ACQUISITION
services and technologies
 Lower return on investment due to insufficient marketing and
promotion
Social  Increased dependence of people on modern technologies
 Services easily accessible from home or remote locations which the
reduces the waiting time
Technological  The devices are more accurate thus enabling one to record their exact
sugar levels
 The devices are compact, portable and could be carried by one
anywhere
Legal  The merger and acquisition activities require a lot of legal settlements
 The legal disputes often arise with respect to distribution of proper
ratio of shares within the stakeholders
Environmenta
l
 There is increased competition from similar market players
 Negative publicity about high cost and maintenance charges of the
non-drug technical interventions.
Table 1: PESTLE Analysis of non-drug based biomedical companies
(Source: Author)

10MERGER AND ACQUISITION
Figure1: European medical device market11
11Fischer, Shira H., Daniel David, Bradley H. Crotty, Meghan Dierks, and Charles Safran.
"Acceptance and use of health information technology by community-dwelling
elders." International journal of medical informatics 83, no. 9 (2014): 624-635.

11MERGER AND ACQUISITION
Identification of key market drivers and trends
Some of the key market drivers and trends have been analysed over here which promotes
the growth and development of non-drug intervention tools within the current market scenario.
The brands are focussed upon the development of hardware technologies which could be
integrated within the systems and software for improvement of health assessments12. The OTC
brands help in maintaining equity within the target customer segments. The key market drivers
and trends could have been discussed with respect to the following areas of health assessments
such as – pain management devices, musculoskeletal market, respiratory devices market,
diabetes care devices and sleep apnea devices. Another crucial market puller in this regard is the
disabled assistive devices market. The US Pain management market is expected to grow by 1.17
billion by the year 202113. In this respect, a number of pain managing medications are available
in the market. However, the long-term term use of such medicines can have adverse health
outcomes or side effects. Some of the bestselling products in this range are- spinal cord
stimulation devices, transcutaneous electrical nerve stimulation devices. The key driver in this
respect could be high prevalence of diabetes globally resulting in increasing cases of diabetic
neuropathy. Therefore, the advent of such technologies can provide additional support to the
chronically ill patients. Additionally, pain management in end of life care along with occupation
associated pain are other common forms of pain encountered by the people globally. Moreover,
12Rabbitt, Sarah M., Alan E. Kazdin, and Brian Scassellati. "Integrating socially assistive robotics
into mental health care interventions: Applications and recommendations for expanded use."
Clinical psychology review 35 (2015): 35-46
13Trichterborn, Anja, Zu Knyphausen‐Aufseß, and Lars Schweizer. "How to improve acquisition
performance: The role of a dedicated M&A function, M&A learning process, and M&A
capability." Strategic Management Journal 37, no. 4 (2016): 763-773.