Pfizer SAP integration looms with £2.3bn King Pharmaceuticals acquisition

Pfizer is set to acquire rival King Pharmaceuticals, targeting $200 million (£126 million) in operational savings that is likely to be greatly aided by the fact both firms share some key IT infrastructure.

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Pfizer is set to acquire rival King Pharmaceuticals, targeting $200 million (£126 million) in operational savings that is likely to be greatly aided by the fact both firms share some key IT infrastructure.

The £3.6 billion (£2.3 billion) acquisition may see the two pharmaceutical companies merge their SAP enterprise resource planning systems and business intelligence infrastructure.

Pfizer said in a statement that in addition to expanding its portfolio of drugs, particularly in the pain relief market, the merger would help it carve the costs from ongoing overheads. It had not provided comment at the time of writing on how it would achieve the cost savings, but it is expected that IT will play a significant part.

The company said it is targeting "initial cost savings from operating expenses of at least $200 million, which are expected to be fully realised by the end of 2013".

Pfizer uses SAP ERP software globally, and reportedly made a strategic decision to move the platform late last year. The company, which did not provide more detail on its systems, had already used SAP R/3 in a number of its markets, including Germany, since the early 2000s.

The company’s move to SAP globally is so significant that the German software company mentioned it a number of times in recent quarterly results presentations given to investors.

King Pharmaceuticals also uses SAP ERP as its central IT platform, an important commonality with Pfizer that may help significantly with speeding data and operational integration, in spite of the typical challenges of integrating such large systems.

Both Pfizer and King Pharmaceuticals also share business intelligence software, using the SAP Netweaver Business Warehouse system.

Meanwhile, Pfizer is also understood to be integrating SAP ERP systems with Wyeth, the company it bought for approximately $68 billion (£47 billion) last year – though system integration with Wyeth has presented some large initial costs. In May, Pfizer said it had spent $208 million (£144 million) primarily on system integration and consulting in just three months.

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