...Merck- River Blindness Case Analysis Section 1: Introduction and situational analysis: Merck is an American-based international pharmaceutical company with a history that spans almost 350 years. The company focuses on innovative research and consumer education. (Demand Media, 1999-2011 ) In 1950, George W. Merck, then the chairman of the company said, “We try never to forget that medicine is for people. It is not for the profits. The profits follow, and if we have remembered that, they have never failed to appear. The better we have remembered that, the larger they have been.” This philosophy was at the core of Merck and Co.’s values system. (Kreitner, 2010) In 1978, the World Health Organization (WHO) estimated that over 300,000 people were blind and another 18 million were affected with a disease called onchocerciasis, better known as river blindness. River blindness was caused by parasitic worms that was spread by small black flies the breed in and lived around fast moving rivers mostly in developing countries in the Middle East, Africa, and Latin America. The parasitic larvae were transferred to humans when bitten by the small black flies, at which time the parasitic larvae would infect the host. The worms would begin to reproduce producing millions of microscopic baby worms into the person’s body. This would eventually lead to gross deformity, severe itching that in some cases cause people to commit suicide and eventually blindness. At the time, the disease had...
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...Merck and Co. and river blindness MANUEL VELASQUEZ, Business Ethics. Concepts and cases 4th edt., Prentice Hall, Upper Saddle River, New Jersey, 1998 River blindness is an agonizing disease that affects some 18 million impoverished people living in remote villages along the banks of rivers in tropical regions of Africa and Latin America. The disease is caused by a tiny parasitic worm that is passed from person to person by the bite of the black fly which breeds in river waters. The tiny worms burrow under a person's skin where they grow as long as two feet curled up inside ugly round nodules half an inch to an inch in diameter. Inside the nodules the worms reproduce by releasing millions of microscopic offsprings called microfilaria that wriggle their way throughout the body moving beneath the skin, discoloring it as they migrate, and causing lesions and such intense itching that victims sometimes commit suicide. Eventually, the microfilaria invade the eyes and gradually blind the victim. Spraying pesticides to eradicate the black fly faltered when it developed an immunity to the pesticides. Moreover, the only drugs available to treat the parasite in humans have been so expensive, have such severe side effects, and require such lenghty hospital stays that the treatments are impractical for the destitute victims who live in isolated villages. In many countries people have fled the areas along the rivers, abandoning large tracts of rich fertile land. Many of them, however...
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...MERCK AND RIVER BLINDNESS 1. Think about the definition of stakeholders — any parties with a stake in the organization’s actions or performance. Who are the stakeholders in this situation? How many can you list? On what basis would you rank them in importance? People suffering from the disease or those who potentially may be infected – would directly benefit from the cure Merck employees at all levels – profitability and the economic health of the company affects current employees Merck shareholders – inability to profit from the drug might have a negative effect on shareholder’s value, but taking the stand on “doing the right thing” might have a favorable effect on company’s reputation and increase the value of the stock Various healthcare organizations – Merck is one of the leaders in the industry whose actions or inactions may affect the state of the industry as a whole One way to rank stakeholders in importance is by their level of benefit from the drug putting people suffering from the disease in the first place as they would benefit the most from the invent of the cure. Then, employees and shareholders would share the second place, provided that the company would most likely not be able to recover funds invested in the long and expensive process of developing the drug which in turn would affect company’s profitability. Finally, various healthcare organizations would rank third; the effect on them would depend on the level of their involvement in the process...
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...Merck & Company Project Selection Decision Introduction As Merck & Company’s lead project manager I have to decide whether to invest its resources in one of two projects. One project is to pursue a cure for river blindness, a disease that has plagued third world countries for a number of years now and the second project is to re-package a very popular and profitable anti-depression drug for the Western market. In this concise report I plan to look at both options through SWOT analysis. I will be drawing on other relevant project selection strategy and making an informed decision from the analysis conducted. Merck & Company was founded on “medicine for the people”. This statement from George W. Merck, the company founder’s son and former chairman has not always sat comfortably with all senior executives within the business. He had a strong sense of morality within business and that philosophy has seen the company to where it is today. Discussion The case to pursue with the project to cure river blindness raises a number of questions. When comparing the two I am going to look at what decision is best for the company to align its business strategy with the project selection. | River Blindness Project | | Anti-Depression Repackaging Project | Investment | $2,000,000 | | $500,000 | Annual Savings | $50,000 | | $500,000 | | | | | Payback Period | 40 years | | 1 year | Looking at Financial models, in this case it is clear that repackaging...
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...Name: Anila B. Merck is a very large pharmaceutical company. One of the scientists at Merck realized that Merck’s new drug for de-worming animals from parasites could also help fighting against river blindness, which is a disease that has hit places of most poverty. River blindness is a skin disease, which is transmitted by the bite of blackflies. This parasite can migrate into the eye and cause blindness. Unfortunately those who get the disease do not have the money to pay for this drug. The countries will not be able to pay for it either. So now, the ethical dilemma is whether Merck should invest in research and risk losing money, or go for profit instead. Merck believed that medicine is for the people, not for the profits. This statements, is one of the many reasons why Merck had a responsibility to develop the drug. Eliminating human suffering and curing human disease is one of the main goals for Merck. They are committed to the highest standards of ethics and integrity. Merck wants to preserve and improve human life and its quality. Coming from this it is really important to consider the ethical decision making questions. Are there other alternatives? Who will be affected? Who will benefit and who will be harmed? Let’s start with saying that yes, there is an alternative. If Merck is afraid of losing money, it should start cooperating with global donators, UNICEF, non-governmental development organizations, international foundations, as well as local communities. People...
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...Merck and River Blindness Felicia Wiggins and Julie Helling PHL 323 July 16, 2012 Dr. John Rhome Merck and River Blindness Merck Company researches and develops medications for human and animal use, to improve health and well-being. Merck is a business, driven by fundamental values motivated by a desire to improve human life, accomplish scientific quality, operate with the highest standards of integrity, expand access to Merck products and employ a varied staff that values teamwork (Merck, 2009-2012). The Problem The problem is not the production of a medication that will help thousands of people in the Middle East, Africa, and Latin America from a parasite produced by a small black fly when the person is bit referred to as River Blindness. The problem is whether to produce this medication, ivermectin, which costs several millions dollars for Merck to produce. Merck would never be able to recoup its money because the people who need this drug are small and these people would not be able to purchase the medication. Company scientists encouraged Merck to invest in further research to determine if the medicine ivermectin could be altered to be safe for human consumption when Merck could not realize a profit. Because resources limited, money and time have to go into the research and development of medications that will produce a profit for Merck. This allows Merck to further relieve human suffering and gain a profit to keep continuing to produce medicines. Rare diseases...
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...Reason III. Types of Corporate Responsibility A. Economic Responsibilities B. Legal Responsibilities C. Ethical Responsibilities D. Philanthropic Responsibilities IV. Triple Bottom Line and Environmental Sustainability V. Is Socially Responsible Business Good Business? A. The Benefit of a Good Reputation B. Socially Responsible Investors Reward Social Responsibility C. The Cost of Illegal Conduct D. The Cost of Government Regulations E. What the Research Says about Social Responsibility and Firm Performance F. Being Socially Responsible Because It is the Right Thing to Do VI. Conclusion VII. Discussion Questions VIII. Case: Merck and River Blindness IX. Short Case Teaching Notes - Discussion Questions 1. Do you think corporate social responsibility (CSR) is important? Why or why not? Depending upon the audience, many students will see the importance of social responsibility. Generally, they are conscious of some kinds of environmental concerns and have some understanding of the relationship between business and the community. But with some business school audiences, you may find resistance to the idea that corporations owe anything to society, beyond making a profit and obeying the law. So, be prepared for a debate on this one. The chapter is designed to provide students with lots of reasons to think that CSR is...
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...What are the basic facts – event, history, stories? * Merck & Co. Inc. which is a the largest producers of prescription drugs has created a medicine called Ivermectin for treating animals for such as horses, sheep’s, pigs and others against many intestinal worms, mites, ticks and insects. While they were doing clinical testing Dr. William Campbell who is a researcher found out that it was effective against a parasite in horses that was similar to the parasite that causes river blindness. * River blindness is cause by a tiny black fly near river banks in third world countries that could bit humans with a parasitic worm (Onhocerca Volvulus) that could grow to two feet inside which releases a microscopic offspring’s (microfilariae) which swarm thru the body tissue that cases a very irritating itch that led to some people committing subside. Some 85 million people are infected by this. After many year in the system the microscopic offspring cause skin depigmentation of skin eventually invading the eye causing blindness. What are the ethical issues, concerns, problems? * The ethical issue with this is that the Merck & Co Inc. Dr. P. Roy Vagelos has to decide to either fund the Iermectin drug to be made for humans that have been brought up by Dr. Campbell to cure river blindness. The drug could cure the river blindness but it would not make enough profit to even pay off for the fund invested for research, it is because most of the people who need the drug are...
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...Merck& River Blindness Merck& River Blindness Research suggests that a new vaccine that worked for animals would help to kill the parasite that caused river blindness. The resource could take an enormous amount of time and money to develop a new vaccine. At the same time, there is no guarantee that the drug would have a buy in value in the market that could affect the company’s name and the shares. One reason for the difficulty to sell the product is that this vaccine is the animal version of vaccine. Despite the company’s loss, Merck and company were obligated to study and produce the human version of the vaccine. The company’s chairman stated that the medicine is for people and not for the profit of the company. The company was aware that the vaccine will not produce enough profit for the company, but yet the company wanted to develop ethics. Merck and river blindness are a good example for Utilitarianism theory because the results brought happiness for both the company and the people. Utilitarianism is an ethical framework that focuses on the outcomes or results of actions. In fact, its name comes from the Greek word Telos, which means “end.” The two most influential developers of the utilitarian viewpoint were Englishmen Jeremy Bentham (1748–1832) and John Stuart Mill (1806–1873). Under this framework, acting ethically means making decisions and taking actions that benefit people by maximizing “good” and minimizing “bad.” Outcomes, results, or goals are the focus—not...
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... Consider the AIDS and River Blindness cases. Merck ultimately decided to distribute the drug themselves instead of making the patent available for generic use (as suggested in the AIDS case). According to UNICEF, they have donated over 2 billion Mectizan pills and over 80 million people are treated annually. Given that Merck is using corporate funds for this program, is Merck's donation of these drugs morally acceptable? Morally required? Explain. Do Merck's stockholders have any cause to complain when Merck spends their money on these ventures which are not aimed at profit? If this action is morally acceptable (or required) for Merck, then would similar charitable actions be acceptable (or required) for other companies that produce products which would benefit impoverished people? (Ex. food companies, clothing companies, water filtration tech companies, etc) Explain. Answer As a pharmaceutical company, Merck saw an opportunity when the River blindness epidemic first arose and focused their attention on countries most affected by the parasite. At the time of the breakout, Merck had become part of the Fortune 500, giving them credibility and an obligation to reach out to people most affected by River Blindness. As many companies focus on profit, Merck saw an opportunity to earn some prestige instead, by treating patients over seas. To morally justify the companies decision, managers looked back on what the founders of the company believed in. Former president of the company...
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...Latin and South America. Onchocerciasis which is also known as “river blindness”, an insect-borne disease, caused by a nematode worm , Onchocerca volvulus affecting both a person’s skin and eyes and is transmitted to humans by the bite of blackflies. Symptoms of this disease range from irritating and intense itching, to disfiguring dermatitis and skin and eye lesions, and ultimately can lead to sight impairment and blindness. Onchocerciasis has been classified as the “second leading cause of infectious blindness” (Water Related Diseases, 2011). During the development of the veterinary drug ivermectin, research scientist William C. Campbell, speculated on the potential the drug would have for human application; ivermectin was being developed to combat parasitic worms in livestock which are very similar to the worms that caused onchocerciasis. Campbell wrote a letter to the head of Merck’s research laboratories, who at the time was P. Roy Vagelos, requesting development of ivermectin for human use. Campbell's request causes a dilemma, the only viable uses for the drug would be for people who living in some of the poorest countries in the world; how could Merck underwrite the development of such a product for which there would most likely be of no economic value? On average it takes 12 years of research and development to bring a drug to market and costs in the neighborhood of $200 million. Merck would likely never recoup this investment cost and it would never...
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...for Vagelos as CEO and for Merck as a company in deciding whether to invest in Dr. Campbell’s idea Although Dr. Campbell’s idea of a drug (Ivermectin) that could cure River blindness was a path-breaking opportunity for Merck, the company was faced with a number of ethical, financial and moral issues that forced its CEO to undergo deep thought and contemplation before investing in this idea. * Feasibility: There were concerns about the use of this drug on humans and the potential adverse side effects, if any. * High Costs: The high costs associated with research and development coupled with the fact that the drug was to be used by lower income groups meant that it showed little or no economic promise. * Cannibalization: From a pure business standpoint, Merck worried that this drug could cannibalize profits from the animal version of the drug through the creation of possible black markets in the affected countries. Percentage of research budget that Merck should invest in drugs that will produce a substandard return on investment As a company that produces drugs to cure diseases in both humans and animals, Merck operates in a complex dynamic that requires it to take decisions that may not lead to profitability. Further, its corporate philosophy always revolved around the fact that the company’s first priority was the safety of people and only then did profits follow. I, therefore, believe that Merck should invest a large amount...
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...Intro River blindness is a disease that mostly affects people living in remote areas near river banks in tropical regions of Africa and Latin America. The disease is caused by a parasitic worm that travels through a black fly that breeds in the rivers of these areas. The black fly bites individuals and worms grow inside of the affected persons skin cause the skin to show unsightly nodules. After the birth of a few worms these worms then multiply inside the affected person and cause intense pain. The initial defense against was pesticides, but the flies built an immunity to the pesticides. In many areas people were forced to leave their areas, but many of them returned because the found it was hard to survive in more distant areas. In 1978 Dr. Campbell made the discovery of ivermectin, a new ant parasitic compound under investigation for use in animals. Campbell felt that ivermectin was the answer to the disease river blindness that plagued millions in the Third World. In order to find out if Campbell's hypothesis held true, Merck would have to spend millions of dollars to develop the right strain for human use, conduct the field trials in the most remote parts of the world. Even if these efforts produced an effective and safe drug, virtually none of those afflicted with river blindness could afford to buy it. Dr. Ray Vagelos, originally a university researcher but by then a Merck executive, was faced with decision of investing in research for a drug that...
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...Stakeholders There are many, including employees, stockholders, people with river blindness, the communities where those people live, those with other diseases, governments, the media, perhaps competitors, etc. Cost & Benefit This is difficult, as always, because once again we have no crystal ball. The potential to discover a drug for this terrible disease certainly exists and the company’s research scientists think it is possible. The outcomes for those with the disease would be very positive and there could also be very positive media attention and reputational effects. But, there is also the potential to invest years and millions of dollars, and come up empty handed. Employee morale is a potential cost or benefit. Scientists are extremely important to pharmaceutical companies and Merck’s research scientists wanted to pursue this. Allowing them to do so, might make them feel good about themselves and their work. Finally, there are opportunity costs. What drugs might “not” get discovered, because scientists were working on this one The choice That Company has: Distribute New Medicine Protect Veterinary Business Merck Should Develop Companies do not justify every investment to shareholders, so we are not convinced that they would need to justify this one. But, they certainly would not be able to justify it in terms of the financial bottom line. They would have to justify it in terms of goodwill, or some other more difficult to measure criterion. ...
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...Ethical Leadership in Organizations Lisa Hunsucker MGT 380 April 19,2010 Leadership is by all means a special talent that not all people possess. A leader must also have ethics to be effective for the long term in the corporate world. These leaders generally implement ethical programs in order to influence an organizations climate (Yukl, 2010). I will evaluate the importance of ethical leadership and the role it plays into today’s organizations. In addition, I will discuss the repercussions a company may have when its leadership allows and even rewards unethical business practices. Lastly, I will apply my personal leadership perspective. My perspective will include the path-goal theory and ethical practices that I find important to leadership in an organization. Ethical Leadership In the midst of making money in a business, when do ethics come into play? In any organization an effective leader must have people that will follow him or her. Generally speaking people will follow someone that is ethical and moral over a leader that is dishonest and immoral. This is just my observation through years of working. I know for me and many others the leaders I have followed, they were highly ethical in their business practices. The most effective leaders were those who empowered their employees to follow the same model of integrity. Velasquez (2006) states “when employees believe an organization is just, they are more willing to follow the organization’s managers, do what managers...
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