Integrated Case Study: Pfizer's Strategic Acquisition of AstraZeneca

This report provides an in-depth analysis of the proposed acquisition of AstraZeneca by Pfizer, focusing on the challenges and potential benefits of the merger. The executive summary highlights the core issues, including operational disruptions and job losses at AstraZeneca, alongside Pfizer's strategic goals of market share expansion and cost reduction. The report delves into the background of both companies, their strengths, weaknesses, challenges, and competitors within the pharmaceutical industry. It explores the problem statement, research questions, and objectives, including identifying the impact of post-acquisition on business operations and employees of AstraZeneca and determining the purpose of Pfizer's acquisition. The study employs various tools and models, such as SWOT analysis, transformational leadership, Ansoff matrix, Maslow's theory of motivation, and Kotter's change management model, to analyze the acquisition's implications. The findings cover the SWOT analysis of both companies, the application of transformational leadership principles, and the strategic positioning using the Ansoff matrix. The report also examines the change management strategies needed to overcome integration issues, including an action plan and a differential efficiency model. The conclusion offers solutions to the identified problems, recommendations, and suggestions for further research, acknowledging the limitations of the study. The overall objective is to evaluate the acquisition's impact and provide insights for strategic decision-making in the pharmaceutical sector.

Integrated Case Study
Analysis

EXECUTIVE SUMMARY
The present report is based on acquisition between two leading pharmacy companies in which
one of them take an initiative talk for the same. It include Pfizer which is pharmaceutical
company of United States following a strategy to acquire other brands to achieve profits and
market share effectively in one stroke. However, the another company which is going to be
acquired named as AstraZeneca which is leading company of pharmacy in United Kingdom
having better goodwill and profit share in UK market. In addition to this, the problem statement
is about post acquisition issues which AstraZeneca faced problems related to operations as
overall operational activities and procedures get disrupted. Another issue is about large number
of job losses which is not favourable but Pfizer can gain profit by reducing cost of production
and save money on taxes. The aims of present research include identifying the impact of post-
acquisition on business operations and employee of AstraZeneca and determining purpose of
Pfizer to buy AstraZeneca Company. The given investigation will focus on problems faced by
acquired company and benefits of acquirer organisation to evaluate correct solution to facilitate
this acquisition.

Table of Contents
EXECUTIVE SUMMARY.............................................................................................................2
CHAPTER 1: Introduction .............................................................................................................5
1.1 Background of the the study.............................................................................................5
1.2 Purpose of the study.........................................................................................................5
1.3 Statement of the problem..................................................................................................5
1.4 Research questions...........................................................................................................6
1.5 Research objectives..........................................................................................................6
1.6 Structure of the report.......................................................................................................6
CHAPTER 2: Case brief..................................................................................................................6
2.1 Background of the company.............................................................................................6
2.2 Strengths of the company.................................................................................................7
2.3 Weaknesses of the company.............................................................................................7
2.4 Challenges of the company..............................................................................................8
2.5 Competitors of the company............................................................................................8
CHAPTER 3: Problem statement & tools and models to be used...................................................9
3.1 Problem statement............................................................................................................9
3.1.1 Impact of post acquisition on business operations and employee of AstraZeneca ......9
HR issues................................................................................................................................9
Operational issues.................................................................................................................10
3.1.2 Purpose of Pfizer to buy AstraZeneca company.........................................................11
3.2 Sources to be used..........................................................................................................13
3.2.1 Research Strategy........................................................................................................13
3.2.2 Research approach.......................................................................................................13
3.2.3 Data collection method ...............................................................................................13
3.3 Tools and models to be used..........................................................................................14
3.3.1 Swot analysis...............................................................................................................14
3.3.2 Transformational leadership........................................................................................16
3.3.3 Ansoff matrix...............................................................................................................16

3.3.4 Maslow theory of motivation......................................................................................16
3.3.5 Kotters step model of change management.................................................................17
CHAPTER 4: Analysis and Findings............................................................................................17
4.1 Swot of Pfizer and AstraZeneca ....................................................................................17
4.2 Transfomational leadership............................................................................................17
4.3 Ansoff matrix..................................................................................................................17
4.4 Current position faced by U.K. pharma brand AstraZeneca and U.S. Brand Pfizer......18
4.5 Change management including models to overcome issues..........................................20
Action plan...........................................................................................................................20
4.6 The differential efficiency model...................................................................................22
CHAPTER 5: Conclusion..............................................................................................................23
5.1 Solutions to the problem.................................................................................................23
5.2 Conclusion......................................................................................................................23
5.3 Recommendation............................................................................................................23
5.4 Scope for further research..............................................................................................24
5.5 Limitations of the research.............................................................................................24
REFERENCES..............................................................................................................................25
APPENDICES...............................................................................................................................28

CHAPTER 1: Introduction
1.1 Background of the the study
The present report will focus on analysis of two pharmacy companies including Pfizer
and AstraZeneca in which one of them initiated talks regarding possible acquisition between
them. Acquisition can be described as a situation in which a company purchase another business
concern in order to take control for the same. It consist the condition when a company purchase
more than 50% or overall shares to gain ownership of other target firm to enhance their
productivity and size (Jack, 2014). In addition to this, it is necessary to analyse overall
challenges and benefits of these organisations after acquisition including the fact that Pfizer can
gain favourable benefits by acquire other company in order to improve efficiencies through cost
cutting which facilitate boost up profitability of business. However, it is essential to determine
overall consequences, challenges and benefits from the forthcoming acquisition in order to
implement the same in practical manner which is suitable for both the organisations.
1.2 Purpose of the study
The purpose of the study is to analyse overall aspects like profitability, operational
disturbance, employee disturbance, finance and other factors. It is necessary to determine
impacts of acquisition on staff members and operational activities of both companies which
provide support to make an appropriate decision for completing the same. However, the purpose
of this study is to evaluate overall circumstances of business operations, taxation rates, employee
problems and other issues faced by organisations (Kolditz and et. al., 2016). In addition to this, it
will render help to conduct meetings and make correct decision by establishing accurate contract
among both companies i.e. Pfizer and AstraZeneca accordingly.
1.3 Statement of the problem
The statement of problem is “the proposed price of deal for acquisition is undervalued its
pipeline and integration of two companies would disrupt operations and workers of AstraZeneca
face significant job losses. Herein, this statement indicates that if both the organisation merge
together than they disrupt the operation of workers in competitive market of pharmaceutical
(Nicholas and Steyn, 2017). As workers of AstraZeneca are facing many issues and problems as
they have loosed their job. Moreover, if the merger would disrupt operation and activities of

worker then their will high number of turnover of employees and staff member which lead to
create negative image in competitive marketplace.
1.4 Research questions
 How to identify the impact of post acquisition on business operations and employee of
AstraZeneca?
 What is the purpose of Pfizer to buy AstraZeneca company?
1.5 Research objectives
 To identify the impact of post acquisition on business operations and employee of
AstraZeneca.
 To explore the purpose of Pfizer to buy AstraZeneca company.
1.6 Structure of the report
The present will include the problem faced by Pfizer to buy AstraZeneca company and
impacts of post acquisition on the operations and employees of the take over firm. It include to
analyse the overall aspects related to both organisations and determine suitability in order to
make correct decision for doing the same practically (Soria and et. al., 2015). However, it will
involve brief of given case in order to analyse strength and weaknesses of selected organisation
along with determining challenges faced by firm as well as their competitors.
Moreover, it will consist literature reviews about research questions including impact of
post acquisition on operations and purpose of the same. In addition to this, the analysis collected
data is required to be done and provide discussion about findings of overall investigation in
proper way (Uhl and Gollenia, 2016). Meanwhile, the analysis of obtained solutions to specific
problems & issues and appropriate recommendations are given below.
CHAPTER 2: Case brief
2.1 Background of the company
The given investigation include two organisations such as Pfizer and AstraZeneca which
are deals in pharmacy and provide medicines for different types of health problems. Initially,
Pfizer is a US based company is known as largest pharmaceutical organisation at global level
having revenue of $52 billion along with $192 billion market capitalisation at the end of the year
(Lientz and Rea, 2016). It was founded by Charles Pfixer & Charles F. Erhart in the year around
1849 in New York and it pioneered the mas production of penicillin in 1940s. This company has

a credit to develop medicines and vaccines for various medical disciplines including cardiology,
endocrinology, oncology, immunology and neurology (Oxnard and et. al., 2018).
At the other hand, AstraZeneca is considered as British Swedish multinational
pharmaceutical and biopharmaceutical company. It was founded by in the year around 1999 in
Cambridge, UK and produce products of medicines for major disease areas such as cancer,
cardiovascular, gastrointestinal, infection, neuroscience, respiratory and inflammation (Kerzner,
2019). However, this company is known as second largest pharmaceutical company in United
Kingdom having sales approximately $25.7 billion and the year end market value is around
$89.5 billion. Moreover, they are selling various kinds of drugs such as Crestor (cholesterol
reduction), Nexium (acid reflux), Symbicort (asthma), Zoladex (breast cancer), Seroquel XR
(schizophrenia) and Synagis (respiratory infections).
2.2 Strengths of the company
The strengths of Pfizer is their strategy and methods in order to expand their business and
become large brand ta global levels. However, they have strategy of acquisition which provide
support to them to enhance their business and boost up the size of the organisation in respect of
increasing productivity as well as profitability. Moreover, it is one of the largest pharmaceutical
company in the country and spreading out is facilities over more than 50 countries at worldwide
(Harrison and Lock, 2017). With the help of proper research and development process they are
creating innovation and break throughout their product and services along with the merger and
acquisition with big pharma brands so that they can increase their brand name and reputation in
competitive market place of same industry line. For example, the Pfizer acquire Warner Lambert
for approximately $93.4 billion previously in a hostile take over in respect of becoming largest
pharmaceutical company in United States. At the other hand, the another strategy of Pfizer is
financial transaction which is all about to cutting more costs along with boosting up earnings of
company rather than improving the drug pipeline accordingly (Anwar, 2016).
2.3 Weaknesses of the company
The weakness of this company is that they did not focus on improvement of present
operational activities and methods which is necessary to satisfy the customers in proper manner.
It is essential for every business concern to put efforts for gaining perfection in operations in
respect of making products more effective which facilitate to attract new customers and retain
the current ones that results into improved profitability of organisation. Another weaknesses

include the tough competition from another major pharma brands means limited scope for
market share growth. Moreover, negative brand image due to involvement in largest healthcare
fraud of marketing its drug in legal manner (Ramalingam and et. al., 2018). Furthermore, its
weakness is that they are not good at demand forecasting which are leading to higher rate of
missed opportunities as compare to its competitors. They are also not highly successful at
integrating firms due to different work culture as it have to share its failure to merge firms that
have different work culture.
2.4 Challenges of the company
In context of Pfizer, there are several challenges which are required to be focussed in
order to overcome the same for profitability of company. Initially, it has a challenge to launch
new products and gain success of them because it is analysed that few of fresh goods did not
became successful in the market (Kanneganti and Synn, 2014). However, another challenges to
cope up with changing regulatory environment as it becoming more and more stringent. In
addition to this, one other challenge has been determined that economic showdown in European
markets. Moreover, these challenges should be overcome in respect of maintain better goodwill
in market and increase profitability as well. Furthermore, their biggest challenge it that they are
awaiting for the biggest approval of their eight programs such as including dermatitis drug
crossable as well as addition for cancer treatment drug lbrance in Europe. Because of high risk
factor and safety issues it could arise in clinical trial if any kind of problems occur within int.
2.5 Competitors of the company
The Pfizer company has various competitors as it is global brand then it is necessary to
make an appropriate strategies and policies in order gain competitive advantage. However, the
main competitors of Pfizer are Abbott Laboratories, Amgen, AstraZeneca, Bristol Myers Squibb,
Johnson & Johnson, Merck, Movartis, Roche Holdings and Sun Pharma Industries (Torres and
et. al., 2018). Moreover, it is important for Pfizer to analyse competitors' strategies and put
efforts to make brand more effective as compared to others to in respect of grabbing better profit
share in market.

CHAPTER 3: Problem statement & tools and models to be used
3.1 Problem statement
The problem statement is that AstraZeneca would face several problems after
forthcoming acquisition by Pfizer including price of this project of deal is significantly
undervalued its pipeline. It also include that post acquisition integration of these two
organisations would disrupt operations as well as staff members would face significant job losses
which is not favourable (Park and et. al., 2016).
3.1.1 Impact of post acquisition on business operations and employee of AstraZeneca
The acquisition of AstyraZeneca by Pfizer is beneficial for acquirer company but it
would impacts negatively on several aspects in context of AstraZeneca. As per view point of
Katsanis (2015), it includes that they did not get proper value for this project and it effects on
operational activities which results into inappropriate outcomes of production procedures.
However, there are several post effects of acquisition on AstraZeneca regarding business
operations and employees in which few of them are explained here.
HR issues
Loss of jobs – The employees of AstraZeneca would face job losses which is not suitable
as workers are backbone of an organisation whose efforts are responsible for overall brand image
and profitability of business. However, job loss of workers in large number increase the
employee turnover of an the organisation which increase cost of hiring which facilitate to
improve overall cost of business and reduce expected profits respectively. According to opinion
of Ertürk (2015), the old employees were trained but after job losses, the company is required to
further invest on training and learning programs and spend duration on that to make new workers
able for performing properly. Overall, job losses is not beneficial and it is necessary to retain
previous employees of AstraZeneca for achieving more benefits from acquisition by Pfizer.
Integration issues – In context of post acquisition, the people belongs to different culture
and nation work together then it will create conflicts and issues between them which impacts
negatively on overall atmosphere of organisation (vom Brocke, Zelt and Schmiedel, 2016). It is
necessary to maintain better employee relations for completing operational tasks in proper
manner regularly. However, it takes time to establish desired relationship among staff members
by implementing effective policies or rules for maintaining peaceful working environment.

Moreover, integration of acquired organisation can bring several challenges including
undercurrents of anxiety and anger among employees which impacts on productivity of business.
Operational issues
Operations disruption – In context of acquisition, company may faced various kinds of
challenges in order to conduct regular basis operational activities and processes due to stretching
of completion of project of acquisition (Kerzner, 2018). It include the the distraction of staff
members from their own tasks and roles because the managerial focus get diverted away from
internal development as well as daily operations accordingly. AstraZeneca would face these
problems which impacts negatively in their productivity and profitability of business which is
appropriate for future growth and success. In addition to this, operation are key to production to
supply product in market for completing demands of customers but disruption in operations
directly impacts on supply and profits.
Diseconomies of scale – The acquisition impacts negatively as the company face
diseconomies of scale from the increased size and workers of acquired firm feel uncomfortable
for performing with new managers. As mentioned by Papadimitrakopoulou and et. al. (2018), it
may results into lack of same degree of control and struggle to encourage employees for
improving their work efficiency as well as productivity on daily basis. Moreover, motivation of
workers is very important and make them feel secure wile working in an organisation is an
important aspects for retaining employees with better productivity as it is favourable for
achieving more profits of business. Additionally, it is essential for new company authorities to
focus on several diseconomies of scale in respect of maintaining the effective brand image for
increasing profitability.
Marketing issues
Communication challenges: Communication factor is one of the top factor that caused in
case of acquisition. Herein, it is necessary for an organisation to communicate to about
acquisition to its employees, staff member and customers so that they have proper knowledge
regarding mergeR. Herein, communication is one of the key term in merger and acquisition as it
is necessary for an respective organisation to inform about minute details to general public so
that each and every one are informed about its project of acquisition (Milosevic and Martinelli,
2016). Moreover, in such case general people can also help them to take right decision in taking
such decision-making process so that they can achieve their gaols and objectives respectively.

Cultural challenges: In toady's context merger and acquisition usually occurs due to
financial crises or else fail to raise up the cultural implication that may occur within the
organisation (Hwang, Zhu and Tan, 2017). Culture is long standing implicitly shared values,
beliefs and assumption that influences influences behaviour of employees and customer towards
an organisation. In case of AstraZeneca they were facing problems within an organisation of
employees so they decided to adopt the strategies of merger which leads to create negative
implication on competitive marketplace. Herein, both the companies will face cultural problem
as both their cultural of working place differ from each other. Thus, cultural can create problem
in merger of a particular company in competitive market place.
Leadership issues
Leader play's an effective role in effective role in acquisition such as they have to
managed both current task as well as post task after merger. Their main goal is to eliminate those
negative internal and external factors before they become of the significant problem. Herein,
some of the issues face by a leader within acquisition are that they need to listen keenly about
each and every activities so that they do not misplace any king of communication which may
lead to bring out any kind of fault with process of merger. For such purpose they need to
communicate on regular basis to general public as well as management so that effective decision
can be taken with stipulated period of time (Batkovskiy and et. al., 2016).
3.1.2 Purpose of Pfizer to buy AstraZeneca company
The Pfizer initiated talks regarding acquisition in order to acquire another pharmaceutical
company named as AstraZeneca which is a pharma brand of united Kingdom. However, Pfizer
has an old strategy to buy other firms to expand their business along with increase profitability
and competitive advantage (Sherry, 2018). Meanwhile, it include the purpose of Pfizer for
acquire other company in respect of bringing better products to market faster with the help of
combining the drug development pipelines of two leading companies to attain better outcomes in
business. This acquisition is beneficial for Pfizer as they want to acquire AstraZeneca to improve
their operations and expand brand along with achieving better growth ans success of business
respectively. The purpose of Pfizer for acquisition to gain various benefits in which some of
them are described below.
Reduce cost of production – This refers to reduce the overall costs of production which
facilitate to increase the profit margin on order to boost up profit achieved by business

organisation (Cardona and et. al., 2017). It include to focus on every purchasing and expenses of
operations which can be reduced by Pfizer through completing acquisition with UK based
pharma company through which they expand size of organisation as well as improve the
profitability. However, it will provide support to acquirer company for reducing the overall cost
of manufacturing which they can save as their profit margin in order to gain further growth in
business respectively.
Save on corporate Taxes – Every organisation is required to collect particular amount of
as taxation and required it to government according to set regulations of taxes. As er views of
Gutiérrez-Gutiérrez and et. al., (2017), it is necessary for each business concern to focus on
legislation related to taxation in respect to pay appropriate amount on time for running business
in proper manner. In context of Pfizer, they become capable to improve efficiencies of cutting
the cots in terms of saving amount on taxation which provide support to boost up profit margin
of company. In addition to this, by acquiring UK brand of pharma, Pfizer can reduce their
taxation and save money for improving profitability.
Grab more profit share – This include to make effective strategies and take actions in
terms of grabbing more profits share of market and make strong position in front of competitive
firms (Bourne, 2016). Meanwhile, it is necessary to make improve brand image and expand the
product demand which facilitate to improve profitability and company can increase their position
in top pharma companies at global level. However, acquisition of Pfizer with AstraZeneca
provide support to reduce competition and increase customers are one stroke which helps to
enhance business for increase brand at global level to achieve more profits share.
Market power – The given acquisition is helpful for Pfizer as it will facilitate to quickly
build market presence of new company which provide support to increase market shares
effectively. However, it is also favourable in terms of reducing the competition's strong hold
which helps to attract new customers along with retaining the current ones in respect of
increasing profit share in market and improve market power of company as well (Geradin, 2014).
New resources and competencies – Considering the acquisition by Pfizer, they become
capable for gaining new and effective resources and competencies which were not holding by
organisation previously. It is favourable for improving efficiency of overall organisation which
facilitate to boost up production of pharma products which results into increase effectiveness of