As M&A activity in the pharmaceutical and life sciences sector picks up in 2023, you’ll want to add value and flexibility with an affordable ERP for life science that accommodates the unique regulatory requirements of the industry.
After a challenging year for mergers and acquisitions (M&A) in the pharmaceutical and life sciences sector, analysts at PwC are expecting deal value and volume to bounce back in 2023.
As the drive for shareholder returns zeroes in on “promising science that addresses unmet medical needs,” PwC’s 2023 deal outlook expects to see increased M&A activity in oncology and immunology, central nervous system disorders, cardiovascular diseases, vaccines, and medtech.
Services will also become increasingly active. According to PwC:
“Achieving scale will be critical in the various subsectors,
for example in differentiated contract development management
organizations (CDMOs) and contract research organizations (CROs),
and M&A is a means to that end. Private equity (PE) is expected
to continue to be a driving force on this front. PE acquisitions of
underperforming public companies in market areas that benefit
from secular growth trends will also be a theme in 2023.”
The Need for a More Flexible ERP For Life Science
As small pharmaceutical companies, biotech firms, and medical device companies get absorbed by larger corporate entities, and as private equity (PE) firms purchase assets like manufacturing plants from pharmaceutical companies, acquirers should think strategically about implementing the right enterprise resource planning (ERP) system for their new businesses.
Let’s say that a conglomerate using legacy, on-premises ERP system purchases a medium-sized life sciences company. Executives may expect to simply implement its existing ERP system for the new business, but it’s not that easy in the regulated world of life sciences.
For an existing life science ERP system to be viable for a firm, time-consuming and expensive customizations must occur. This, along with the complexity of ongoing validation work, typically makes such legacy ERP deployments prohibitive.
Similarly, let’s assume that a private equity firm purchases a small contract development and manufacturing organization (CDMO) that doesn’t have an ERP system. The last thing this acquirer—who has likely paid as much as 18X earnings for the company before interest, taxes, depreciation, and amortization (EBITDA)—wants to do is invest in an expensive new enterprise application.
This is shortsighted, however, because adopting an ERP for life science that’s scalable, secure, and preconfigured to accommodate regulations, the PE firm in this example could dramatically increase the value of its asset, whether it decides to keep it or divest it.
The Case for Microsoft Dynamics 365 ERP for Life Science
For the best value in these types of M&A situations, Microsoft Dynamics 365 is often the best ERP for life science option. The solution is easy to implement, secure, and scalable, and is typically less expensive than other Tier 1 ERP systems.
Best of all, the ROI on Microsoft Dynamics 365 is impressive. According to Forrester Research, a Microsoft Dynamics 365 deployment for finance and supply chain management generally pays for itself in about six months.
The analyst firm found that companies implementing Microsoft Dynamics 365 achieved savings of $10.6 million in IT-related costs, such as legacy licenses, maintenance, hardware, and system administration. Real-time data analysis, automation, and streamlined processes also drove a 10% savings in the cost of goods sold and a 2.4% improvement in gross margins.
The Only Preconfigured Life Sciences ERP Solution for Microsoft Dynamics 365
One of the strongest reasons why acquirers of life sciences companies should look at STAEDEAN is the partnership Microsoft has forged with us. We offer a native ERP solution for life science that’s preconfigured to cover all aspects of life sciences operations without needing any customization.
Adopting the STAEDEAN Life Sciences ERP solution quickly modernizes processes and essentially supports the compliance burden that’s unique to pharma, biotech, and clinical supplies industry. As the business runs more efficiently on a foundation of real-time data analytics, costs are reduced, quality is improved, and medicines and medical devices go to market faster.
A Blueprint for Success with ERP for Life Science
STAEDEAN has extensive M&A experience in the pharmaceutical and life sciences sector. What’s more, because the solution is preconfigured, STAEDEAN can work with acquirers—especially PE firms—to develop a blueprint that can be quickly applied whenever a new manufacturing plant or other life sciences asset is acquired.
Massimo Crudeli
