Main Subject - Business

Current Situation:

As of this writing, the MCI Board of Governors has given Verizon Communications Inc. one week to sweeten their $7.5 billion offer, otherwise they have no cho

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

ice but to accept Qwest Communications’ $9.74 billion offer to purchase MCI Inc. If the Board does not receive a counter offer from Verizon Communications by May 3, 2005, then i

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

t will recommend its shareholders vote for Qwest’s offer. From all accounts (Noguchi Washington Post, 4/24/2005), Verizon is a stronger and more stable company with $71.3 billi

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

n versus $13.8 in 2004 revenue, 210,000 employees versus 42,000. Qwest carries more than $17 billion in debt and it plans to reduce its costs by $15 billion by cutting 15,000 em

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ployees after the merger while Verizon plans to cut about 7,000 jobs.

The Problem:

The question is: Can Qwest Communications break all rules of successful mergers and still su

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

vive? The driving force behind Qwest’s acquisition is the 60-70 percent of MCI shareholders, which consists of hedge fund investors (a group of super rich investors) with a stro

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

ng interest in quick return on their investments. Since MCI just came out of bankruptcy, the bank creditors are not going to benefit with Qwest’s plan to cut 17,000 jobs and it

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

is going to be very difficult to keep key employees. When key employees depart for other companies it is highly likely that customer service will suffer leading many of them to

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

hange their service providers. It is also feasible that Verizon could use its financial resources to build new networks to attract MCI’s corporate customers located in the Nort

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

heast region where it does business.

D?j? Vu:

MCI has been here before. The year was 1997 and British Telecom (BT) was ready to acquire MCI for $21 billion. Then BT discovered

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

a discrepancy in MCI’s accounting and reduced its offer to $17 billion. Bernard Ebbers, at the time the Chief Executive of WorldCom stepped in and offered about $31 billion all

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

in stocks. At the time, BT was in the same position that Verizon is currently—very stable and debt light. It appears that history is repeating itself. During the late 1990s and

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

early 2000, several dotcom businesses failed because they did not follow proven business models. They thumbed their noses at well-established and functioning business practices.

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

Merger strategy and post merger integration:

Those contemplating the merger of Qwest and MCI must know something that the experts of mergers and acquisition do not know. Qwest

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

needs MCI to expand its long distance business and to grow. They see a synergy between the two organizations. However, they fail to admit that the major investors are in it for

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

the quick return on their investments. It has been widely reported that 60-80 percent of mergers and acquisitions fail. This is due in part to inattention to post merger integra

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

tion of two corporate cultures, loss of key employees, and inability to meet customer needs. In addition, by the time the merger is approved by the regulatory bodies, the compet

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ition can develop their own strategies to negate any possible impacts of the merger to their business.

The result is the buyer ends up losing. No other organization has been ab

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

e to survive without adherence to most of the basic principles of organizational change management. Who knows, the leaders of Qwest Communications may have some creative ways to

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

make this corporate marriage work. I wish them all the best. “Those who cannot remember the past are condemned to repeat it” George Santayana (1863-1952) Reason in Common Sense

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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