Post-Acquisition Integration & Rapid Operational Improvement for a Bio-Tech Diagnostic Device Manufacturer

Client Context

A publicly traded manufacturer of Point-of-Care (POC) molecular diagnostic devices acquired a business unit of a major pharmaceutical company in 2018.

The acquisition target specialized in rapid diagnostic healthcare products for cardiometabolic diseases, infectious diseases, and toxicology. Following the acquisition, the company aimed to:

• Double revenues to $500 million.
• Achieve cost synergies of $18 million by the end of 2019.
• Expand its portfolio with promising new testing devices.

To ensure a smooth transition with minimal disruption and maximum value capture, the client engaged EFESO to lead the integration process in operations and supply chain.

Key Challenges

• Manufacturing inefficiencies leading to high process variability and low yields.
• Suboptimal supply chain operations, increasing inventory levels and cash flow constraints.
• Decentralized procurement, limiting supplier negotiation leverage.
• Redundant distribution and logistics infrastructure, leading to unnecessary costs.
• Need to quickly integrate operations while maintaining quality and regulatory compliance.

Approach & Key Success Factors

EFESO conducted a five-week deep-dive analysis to confirm value capture opportunities and define a structured eight-month implementation plan.

1. Process Optimization & Yield Improvement

• Reduced process variation and restructured product inspection and validation.
• Addressed manufacturing inefficiencies to improve First Pass Yield (FPY) of key cardio diagnostic devices.

2. Supply Chain & Procurement Optimization

• Streamlined supply chain processes, eliminating excessive inventory levels.
• Identified $54 million in procurement spend consolidation opportunities, leveraging common suppliers.

3. Logistics & Distribution Consolidation

• Analyzed and redesigned distribution footprint, consolidating two largest DCs to save $3 million annually.

4. Leadership, Execution & Change Management

• Installed a Command Center to track progress daily and weekly through a visual performance methodology.
• Developed structured performance metrics and accountability mechanisms.

Results

$11.2 million

EBITDA improvement through operational enhancements.

$13 million

Cash flow impact from supply chain and logistics optimizations.

Significant

Reduction in process variation, leading to improved manufacturing stability.

Successful

Consolidation of warehouses, reducing logistics costs by $3 million.

Procurement synergies captured, improving supplier contract terms.

Strengthened position in the testing device sector, with a tripled stock price post-acquisition.