Merge & Acquisition in the healthcare sector

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Merge & Acquisition in the healthcare sector

Category: Classification Essay

Subcategory: Business

Level: College

Pages: 2

Words: 550

Merge & Acquisition in the healthcare sector
As most organizations in the heath care are struggling with various issues of costs of compliance and technology and reimbursements, the idea of mergers and acquisitions have become common. The mergers and acquisitions are being used to generate revenue and also increase market share which is often small in size for most organizations. The drive behind mergers and acquisitions is currently driven by the inevitably high costs of operations, the idea of the Affordable Care Act (ACA) and the favorable conditions of credit markets.
Most manufactures of drugs are currently buying while selling other business units to ensure the surplus in their accounts and also to control their overall costs in an economy that is dynamic. Most mergers are also happening because of different tax strategies, the stock market that is coming up rapidly and the interest rates that are low. The idea of cost pressure has however been cited as the main fuelling factor of mergers and acquisitions, while others follow after the desire to energies their different portfolios in hot segments like in the provision of drugs for hepatitis C and cancer. For example, Merck & Co. recently signed a deal of $4 billion with Idenix Pharmaceuticals Inc. to take up their hepatitis C segment and join it with their operations.

The idea of taxes has also fuelled most M & A, as most big pharmaceutical companies, medical equipment and biotech companies are trying to get their rival’s businesses from overseas, and this often allows them to take their headquarters to those regions where taxes are low, which increases the buyers profits, in the long run, which can also be used for research and development, without the need to take the profits to their home countries and pay taxes on them as required by law. A good example of such a merger is Medtronic, which acquired Covidien, which is situated in Ireland
The consumers of those products from such industries often benefit from such mergers and acquisitions as various devices and medicine reach them on time, while using those products that are new in the market. This is because large organizations often have enough amounts of money to spend on treatment developments, and also know how to maneuver the tedious process of getting their products into the market from the regulators. However, such occurrences might lead to few doctors and health facilities because of the combinations done to ensure reduced costs.
Employees can also lose their jobs during mergers and acquisitions, and this often happens in the administrative departments like sales and administration. Those workers who provide health care services never lose their jobs as the demand for their services is often high.
Job losses for some employees are some of the cons of mergers and acquisitions while their pros involve the reduction of costs and overall benefits to customers who get better services due to improved nature of operations. The level of taxes also goes down making most organizations to increase their profit levels, and this can be advantageous to their R & D provisions.
In conclusion, the industry has currently made an announcement of more than $438 billion worth of mergers around the globe. The capabilities of M & A are currently at their best after the financial crisis period. Mergers are important because they increase share prices and also help consumers get better and convenient services and products.


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