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.