ANIMAL HEALTH BUSINESS

 

SITUATION

  • $650 million business resulted from acquisition of animal health units of five global pharmaceutical companies over four years
  • Operations consisted of 21 manufacturing plants in ten countries, six R&D operations in four countries and country businesses operated independently
  • Strong brand equity was offset by lack of strategy, improper investment decisions, fiefdom culture and generally weak management
  • After significant losses versus profit projections for three consecutive years, parent inserted a new CEO charged to turn company around

RESULTS

  • In 100 days operations and organization blueprints were agreed upon and implemented
  • 15% of total employees were reduced
  • A $50 million new manufacturing site (emerging technology not commercially viable) was closed prior to its completion and commissioning
  • Over the next nine months the balance of the rationalization plan was implemented resulting in the closure of 13 manufacturing sites, seven distribution centers and five R&D centers, and a reduction of an additional 20% of the workforce
  • Annual revenues dropped to $600 MM, but pre-tax profits of $55 MM in the first year and $65 MM in the second year were achieved

ACTION TAKEN

  • Streamlined product offering and rationalized customer base
  • Developed and implemented regional shared-service support functions to replace inefficient country structures
  • Consolidated R&D and structured capabilities around a focused product development strategy and project management process. Implemented multiple plant productivity initiatives requiring no capital investment
  • Consolidated manufacturing into eight best-practice facilities organized by core competency, with each serving global demand. Outsourced manufacturing of non-core products
  • Rationalized distribution facilities maintaining and/or improving customer service levels