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Alternative Buyer Research Report and Acquisition Road Map 1 Brian Nossokoff MBA-699-Q2843 Strategic Opportunity Mgmt 23TW2 5-1 Milestone Three: Alternative Buyer Research Report and Acquisition Road Map January 11, 2024 Dr. Robert Shindell

Alternative Buyer Research Report and Acquisition Road Map 2 Alternative Buyer Research Report Introduction An acquisition is not a business item to be expedited. There are many things to consider for a company to be absorbed successfully, and not least of which is understanding the company that is going to completing the purchase and its history. Things like its Compound Annual Growth Rate (CAGR), state of the market, and its financial status are of paramount concern. Merck & Co. Inc. seems to hit all the right thresholds to be the frontrunner to purchase our company. Current Market Merck & Co. Inc. has their foothold in many different industries such as vaccines, biologic therapies, animal health, but the most notable aspect is their spot in the pharmaceutical industry. The company was established in 1891, and though their history is arguably tainted due to its Vioxx-related lawsuits that had the company paying out $4.85 billion dollars to settle the claims made citing increased disposition to heart attacks and strokes in patients taking it for a year and a half or more (Krauskopf, 2007), has rebounded quite admirably to become the pharmaceutical giant it is today. Research and development is of utmost importance to the company. Merck & Co. Inc. has even compiled a staple of most doctors’ bookshelves, The Merck Manual , which is composed of a massive listing of human ailments and their treatments. Even in the 1960s, Merck was commonly churning out more substantial medications than any of its rivals in the industry, setting the standard for the pharmaceutical industry, and often resulting in their staff being pried away due to the prestige of the company (Hawthorne, 2004).

Alternative Buyer Research Report and Acquisition Road Map 3 Merck & Co. Inc. boasts an impressive portfolio of pharmaceutical products for both animals and humans, and arguably the most groundbreaking medication of which being Keytruda. Keytruda is one of the oncology pharmaceuticals that Merck has produced that has earned them noteworthy responses, even from the Johns Hopkins Kimmel Cancer Center researchers at the 2015 American Society of Clinical Oncology annual meeting, where value is always the biggest focus. Merck understands the importance of having options for treating cancer, and they do not shy away from researching to ensure that patients have appropriate value in their treatments, as studies show that it is one of the most effective pharmaceuticals, posing minimal risk to its patients (Raedler, 2015). Merck’s other products include products such as Januvia (for type 2 diabetes), Zetia (for high cholesterol), Remicade (for rheumatoid arthritis, Crohn’s disease, ankylosing spondylitis, and plaque psoriasis), Gardasil (human papilloma virus vaccine), and Ivermectin (an anti- parasitic medication that has been used to treat river blindness and in some cases, though no recorded proof of efficacy, has been used in the treatment of COVID-19 (Popp, et al , 2021)). As you can see, Merck has their presence in a wide array of ailments for their patients. This coincides with the strategy of Merck to improve the health and wellness of both humans and animals by expanding the access to medications and vaccines, providing value for their external stakeholders in times when they need it the most. Merck sports a positive Compound Annual Growth Rate (CAGR) coming in at 14.9%. CAGR details the mean annual growth rate over a period of time longer than a year and is one of the most commonly used ways to determine the Return on Investment (ROI) (Wayman, 2023). A rate of 14.9% shows long-term sustainability. Additionally, market share is a substantial consideration as well. Market share signifies the percentage of sales in a market that a

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Alternative Buyer Research Report and Acquisition Road Map 4 company’s business makes up. This helps to determine if the ROI is worthwhile, as well. Market share is commonly viewed as one of the biggest indicators of profitability, and Merck is certainly no slouch, coming in at 13.39%. Financial Situation and Recent Developments Even with all its controversy surrounding the Vioxx lawsuits, Merck experienced third- quarter revenues that surpassed expectations, mainly due to the sales of Keytruda, Gardasil and the Covid medication, Lagevrio. In a time in which the public expected assistance in the form of a cure for Covid, Lagevrio was able to exceed expectations, causing Merck’s revenue to hit approximately $60 billion dollars for the year, and $15.96 billion for the quarter, surpassing estimates by nearly $1 billion dollars (Erman, 2023). The aforementioned items should more than prove that the organization is fiscally sound enough to endure this transaction. Buyer Rationale Additionally, with the massive presence that Merck & Co. Inc. has in the pharmaceutical industry, it can help expand R&D opportunities in the newly formed organization. R&D opportunities seem to be finely engrained in the foundation of Merck, and being acquired by this powerhouse would be of great success for the organization. Acquisition Road Map Since becoming part of the strategic planning team, determining what would make a proper transition has been of paramount focus. The first step was establishing a guiding coalition as a way to have a controlling entity oversee the process of the acquisition, should take a . The next point of concern was to examine the causes of why staff members could be inclined to leaving the organization and how to thwart the trends.

Alternative Buyer Research Report and Acquisition Road Map 5 This road map would best be served in sixteen to eighteen months, as it is crucial that this transition goes off seamlessly, while maintaining steady progress. It is important that we reach out to Merck to review this proposal within the three months. After reaching out to Merck to evaluate the interest, the strategic planning team should come equipped with appropriate quantitative and qualitative data that can supply enough information to entice Merck. This phase should last approximately five months. After supplying the pertinent information to Merck to make an educated decision comes the negotiation stage. Merck should be afforded ample time to gather an appropriate assessment of our organization, which may present some variation on timeframe depending on the speed that Merck can draw their conclusions, but ideal estimate would be approximately four to six months. After these preparatory stages are complete, now involves the legalities of the transaction. Each entity’s legal teams will create the appropriate documents and aspects of the transaction, which should not go any longer than three or four months. Simultaneously, during the latter stages of this timeframe, the acquiring organization should also objectively evaluate their financial status, which should not exceed the legal stage timeframe, at most should take a few weeks to complete. By conforming to this proposed timeframe, a pristine transaction will occur of the two businesses. The next page will indicate the proposed road map, depicted as a Gantt chart.

Alternative Buyer Research Report and Acquisition Road Map 6 Acquisition Road Map: Merck & Co. Inc. Select a period to highlight at right. A legend describing the charting follows. Period Highlight: 1 Plan Duration Actual Start % Complete Actual (beyond plan) % Complete (beyond plan) ACTIVITY PLAN START PLAN DURATION ACTUAL START ACTUAL DURATION PERCENT COMPLETE PERIODS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Establish a guiding coalition 1 2 months 1 2 100% Evaluation of issues driving staff out of the organization 2 2 months 2 2 100% Outreach to Merck to review proposal to purchase company 3 3 months 3 3 100% Evaluation of proposal, supply all pertinent data for Merck to make well informed decision 4 5 months 5 5 100% Negotiation stage 5 4-6 months 9 5 100% Legalities - each entities legal teams will draft appropriate legal documents 6 3-4 months 14 4 100% Evaluation of finances 7 2 weeks 17 0.5 100%

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Alternative Buyer Research Report and Acquisition Road Map 7 References Erman, M. (2023, October 26). Merck Quarterly Profit Tops Expectations on Covid Pill Surprise. https://www.reuters.com/business/healthcare-pharmaceuticals/merck-3rd-quarter-profit- tops-expectations-covid-pill-surprise-2023-10-26/ Hawthorne, F. (2004). The Merck druggernaut: The inside story of a pharmaceutical giant . John Wiley & Sons. Krauskopf, L. (2007, November 9). Merck agrees to pay $4.85 billion in Vioxx settlement. https://www.reuters.com/article/idUSL09297266/ Popp, M., Stegemann, M., Metzendorf, M. I., Gould, S., Kranke, P., Meybohm, P., ... & Weibel, S. (2021). Ivermectin for preventing and treating COVID‐19. Cochrane Database of Systematic Reviews , (7). Raedler, L. A. (2015). Keytruda (pembrolizumab): first PD-1 inhibitor approved for previously treated unresectable or metastatic melanoma. American health & drug benefits , 8 (Spec Feature), 96. Wayman, R. (2023, September 29). Compound annual growth rate: What you should know. Investopedia. https://www.investopedia.com/investing/compound-annual-growth-rate- what-you-should-know/

mba699_milestone3 (1)

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