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Wayne LeechHead of CID ANZ

Centre for Innovation and Development

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Topics Background

Animal Health Industry

Bomac

Bayer

The Acquisition Process

The Integration

Where to from here

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Bomac – NZ Animal Health Company

Consumed by

Bayer – German MNE

And survived!!

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Bomac Private NZ

Bayer German Corporate

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Bomac – No 1 in NZ, 2 in AU, 70 export markets300 staff, fully integratedManufacturing, S&M, R&D, AdminNo cashHeavily courted, PE, PF, TSBayer persistency became attractive

Ok let process begin…..

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$20B

Twist existing compounds

FAP

CAP

Regulatory Environment

Business Science interface

Create value in all ways

Animal Health Market

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Why Bomac – •Fast, decisive, flat Org•Innovative, creative, connected •Track Record, growth achieved (products and sales)•Full service•140 patents•Swot pioneer and improve, no copies•Very close to market, have to be

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Portfolio Approach•Solution provider

• Pregnancy• Anthelmintic• Wounds

R&D Approach•Target animals•Mice models•R - Universities•D - Internal

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Auckland University ProjectsBlood Milk BarrierConception ratesCell delivery

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Revenue58,000,000,000 (NZ 194,000,000,000)

BHC 27,700,000,000

(Fonterra 19,000,000,000)

AH 1,900,000,000

R&D 5,100,000,000

People 118,000

Scientists 12,000

Process oriented

Directives, Circulars, Guidelines, SOP’s

Accurate, precise, measured, perfect

Major decisions and strategy from far above

Ruthless, financial drivers for output

Bayer – Science for a Better Life

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CID

PS M&S

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Design parameters for NME

incremental change, no commercial value

step change, regulatory barriers

Twisted generics, milk life from old NME

gap left by poor LCM or refining API’s

But they are Germans

Own TLA language

Punctual, want in writing, no glam, deliver on promises

Time crucial, accurate, clean shoes, 1 month notice for appt

Predictable, when you know how to predict!

Bayer – Science for a Better Life

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The Acquisition Process

•Courting•Dating•Relationship building•Key Decision Point•Information Memorandum•Offers•DD•Binding Offer•Completion, settled 6 Jan 2011

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The Acquisition Process

Bayer - delighted with speed and efficiency of a fast close

Ex Bomac / MacQ - longest, slowest, tedious, most inefficient process ever!

Welcome to German Corporate world!

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Integration time!

Press releases, legal, financial, restructuring in backgroundStaff securedUpgrades announcedIntegration process laid out6 months to reach one face to customer12 months for Bomac to disappearFew staff lost, either by plan or attritionSales substantially maintained

Did the zipper jam?

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Of course!!

Remember the different organisational strengths

Remember the corporate cultural differences

Remember the country cultural differences

Remember the time zone difference

Remember the operational standards differences

But miraculously it is coming together

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M&S now operating like a Bomac team (dominant)PS heavily corporatized, GMP SOP’s Global Compliance

CID has maintained its autonomy while capturing a doubling of budgetmore new products to more countries, fasterwe are in a hurry to get products to marketbut not reckless either as we/market always insist on good Science

Mutual influence has been very healthy for CID

Infrastructure, approach, centring concepts

Global support on tap not on top!

CID ANZ firmly established as only 3rd Bayer R&D Hub

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• Is there a time to hand over, yes

• Market driven science is all that matters

• Get your project in the strategic plan of the potential acquirer

• It will take forever, include incubation time – don’t rush it or you will chase them away

• Not invented here is very strong in Global R&D groups

• How big a potential do you really need to chase? Is global domination of a little market as good/better than chasing a star without your feet on the ground.

• Bayer moved smartly to understand how other parts of the market work and have listened, sometime by insistence

• You can shift the momentum, bit by bit.

The Lessons

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Was it all worth it?

•Bomac had out grown its infrastructure and was starting to creak

•R&D and Regulatory costs were ever increasing

•Market entry costs becoming higher

•Hard for privately funded coy to grow through the next level

•Merging 2 diverse cultures requires the presupposition of mutual respect

•Integration needs time and resources and cannot be rushed where significant thought process changes are needed

•Good science is stronger than the owner

The Learnings

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Thank you!