TO: CEO, CFO, and R&D Director of Healthy Children, Inc

! FROM: Jenny Liu - ABC Consulting Firm ! RE: Nutritional Bar patent issue and humanitarian aid ! DATE: April 19, 2014 ! !

INTRODUCTION: In this memo, I will provide facts and information on an action plan to address the critical issues that it’s facing on production of nutritional bars for malnutrition children around the world. FACTS SUMMARY: One of the main focus for Healthy Children’s mission is to ensure the company’s humanitarian effort in malnutrition children around the world. Nutriset has a patented nutritional bar call Plumpy’nut which has helped millions of children around the world and prevented hundreds of thousands of death in malnutrition children. Nutriset has expanded the authorized patent to nineteen manufacturers which are locally based in countries that have high demands of RUTF. Unfortunately, with the nineteen manufacturers in comparison to just one in 2000 which was Nutriset, the demand of RUTF still isn’t being met. Healthy Children needs to develop an action plan to fulfill its humanitarian mission. The action plan will include whether to have its R&D department to concoct a brand new nutritional bar or alternative plans to continue its humanitarian effort by working alongside with Nutriset.

!

ETHICAL DILEMMA: Healthy Children is faced with a few ethical dilemmas. First, if its R&D department develops a new nutritional bar, the many local based manufacturers that are in desperate need of these jobs will no longer be able to support their family. Because the technology and the man power that Healthy Children has will surpass the production capability of the local based manufacturers. Second, in the interim of developing a brand new nutritional bar, the rising numbers of malnutrition children will continue to grow. The demand of RUTF will not subside, the shortage of nutritional bar can be devastating because percentage of malnutrition death is soaring. Third, the cost for R&D to develop the nutritional bar may have a direct impact on its profit and expense which will also impact its shareholders. Lastly, Plumpy’nut’s patent is so broad because it essentially only consists of peanut, sugar, powder milk, and vitamins. Healthy Children must develop a nutritional bar that will not violate the patent law.

!

ETHICAL ISSUES: 1) Rights: The children that are suffering from hunger daily which is something that may be taken for granted in the United States have the rights to have a chance in life, the rights to basic human needs. Human rights consist of rights to be happy, rights to work, rights to liberty and rights to life (Andre, 1998). Children are being punished by Nutriset’s strict

patent law that prevent mass productions of Plumpy’nut. If Healthy Children does not put the rights of the children first, it is a direct violation of human rights. 2) Virtue: Healthy Children’s main mission focuses on humanitarian effort in malnutrition children. Virtue ethics focus on the dedication of actions toward common good. It allows people to develop and reflect on traits of honesty, good morals, and compassion that defines humanity (Andre, 1998). It defines the humanitarian effort and the mission of the company. To fulfill the mission of Healthy Children, the common good for the community needs to incorporate everyone which include the stakeholders-the locally based manufacturers. 3) Justice and Fariness: Even though Healthy Children is desperately wanting to continue its humanitarian effort, trying to overturn Nutriset’s strict patent on Plumpy’nut is a direct violation of justice virtue. Patent law was created to protect a company’s intellectual property of new innovations and ideas. It allows everyone to be on a level playing field. Justice and Fairness ethics provides the principle and standards to determine what people deserve and entitle on the basis of input (Andre, 1998). Nutriset patented Plumpy’nut because it is their innovation and handwork that allowed them to profit from and in the process help malnutrition children.

!

ALTERNATIVES: 1) To address the issue on the rights of the children and ensure that these children are not suffering because of the strict patent law and slow production, R&D department should start the development of the new nutritional bar. In a joint statement with UNICEF and the UN, the demand of RUFT have surpass the global production capacity (Komrska). According to Mellace, the spoke person for Mama Cares Foundation, UN’s statistics show that there are 26 million children currently suffering from malnutrition but only 1 to 2 million children are receiving Plumpy’nut or similar product (Schofield, 2010). By developing the new nutritional bar, it will provide the aid that is needed for this epidemic. It will not only ensure that malnutrition children are receiving what is needed to meet human basic needs, it will also provide Healthy Children the opportunity to become a qualified supplier for the UNICEF. If Healthy Children can qualify as one of the main supplier of RUTF, it can definitely fulfill its mission for humanitarian aid and it will increase its shareholders revenue in the process. The flip side of this approach may increase budget constraints of the company. Even thought the recipe of Plumpy’nut is a combination of just a few simple ingredients. For the new nutritional bar to not violate the patent law, time and money may cause a small setback for the company and its shareholders. 2) The mission of Healthy Children is to exercise its fullest potential in meeting humanitarian aid. Healthy Children’s humanitarian action is a direct reflection of the company’s virtue and what it stands for. A joint venture with Nutriset may be a good solution in solving the epidemic and ensure that local based manufacturer will continue their production. The plan has to be implemented strategically. A meeting needs to be set with Nutriset’s executives to discuss the joint venture. During the meeting, express the importance that Healthy Children’s main mission is to assist in the epidemic and not trying to take away their contract from UNICEF. In addition, suggestions of the joint venture may include building production plants for local manufacturers so that it can increase production locally where RUTF is

needed the most. By using this action plan, Nutriset’s stakeholders can be guaranteed of its local productions and they would not have to worry about job losses which is imperative in those countries. The downside of this approach is the negotiation process especially in cost and revenue. An agreement needs to be reached where it will address supply and demand problem but also it needs to be profitable for Healthy Children. Once the agreement is reached, the budget plan would need to be approved by Healthy Children’s board of directors. 3) Patent law was created to protect the innovators of new creations and ideas. By trying to sue and overturn Nutriset’s patent on Plumpy’nut is not the solution. Currently, there are two American NGO pursuing this lawsuit, and if it is overturned, there will be no incentive for the next inventor to develop new treatment that perhaps one day may cure or save millions of lives. Because they know that their handwork and creation will no longer be protected by the patent law if competitors pursue long and hard enough to find the loop hole (Ritz, 2010). Nutriset has their heart set in the right place and so do Healthy Children but it is their right to protect their intellectual property. An official request from the directors of Healthy Children to ask for a patent lift from Nutriset so that you can develop similar nutritional bar to address the epidemic at hand. United States is one of the largest peanut industry (Schofield, 2010). By officially requesting the lift and express the intention of Healthy Children, it may create unity rather than just another competitor trying to take away their profits. The issue that may arise from this approach is the contingencies that Nutriset may put on the request. The contingency factors are unknown and unpredictable and Healthy Children may not want to be in a position where there are no negotiation power.

!

RECOMMENDATION: As a consultant for Healthy Children on its immediate response to the world epidemic, my recommendation would be alternative number two. I propose this action plan because it will address all of the concerns and issues that Healthy Children are facing. This action plan will allow the company to fulfill its mission without compromising its virtue and standard and also justice. Immediately following this memo, the CEO will need to draft a formal letter requesting for a meeting to discuss join venture with Nutriset. The letter must outline the details of profit percentage, expense budget, and implementation stages. It should also outline the building of production plants that is needed to provide local manufacturer the facility and power to increase production. Within the outline of the building proposal, it must include expense budget and how the profit will be disperse since Healthy Children will be the main financial contributor in building the plants. This plan will address the epidemic immediately because the company’s equipment and assembly line are already equipped for production. In addition, building production plant in local areas will alleviate shipping cost, adding local jobs and also increase in revenue for your shareholders and local stakeholders. The difficulties that you may face will be the negotiation process of profit dispersement. Nutriset is very protective of its intellectual property because it fulfill its mission but it is also very lucrative for their company. If an agreement can be reached, it will definitely be the right solution for all parties involved. As the ancient philosopher Aristotle stated, a person can improve his or her character through self discipline and in the process perfect honesty, compassion, and generosity (Andre, 1998). Taking

a step back by not thinking of the justice and fairness of Nutriset being the only company carrying proprietary patent of Plumpy’nut, instead looking at what Healthy Children stand for and the well being of the company will solve all of the ethical issue the company is facing.

!

FUTURE IMPLICATIONS FOR RECOMMENDATION: Healthy Children may experience some transition issues in the joint venture with Nutriset because of their patent rights to Plumpy’nut. You may also be faced with some resistance of your shareholders in insisting other avenues to address the exclusive patent rights. But I believe with due diligence, it will be an excellent plan for all parties involved because it will not only solve the impending epidemic but it will be lucrative for all shareholders and stakeholders. This action plan may trigger other companies in the United States to take similar steps with Nutriset, therefore you may have some competition with exclusivity of joint venture with Nutriset. Lastly, other vendors involve in production of similar product like Plumpy’nut may experience decrease in revenue because Healthy Children will have to follow Nutriset’s guidelines in the production of Plumpy’nut.

!

CONCLUSION: Each one of us including myself can never fathom the idea that our children, or children of someone we know are being deprived from basic needs of survival -FOOD. Healthy Children can make a difference and not sacrifice its standards, values, and mission. The number of malnutrition children are growing every second, and deaths cause by malnutrition can be prevented if everyone can just take a step back and look at the epidemic that the world is facing. By taking the first step in implementing this action plan will solve the problem in the immediate future and save many children’s lives. Healthy Children will encounter some obstacles with the joint venture with Nutriset because you have never launch a project like this. Shareholders may put up some resistance but you can ensure them that it will fulfill your mission and in the process it will increase revenue without compromising what you believe in. In the interim of the process, there may be some budget constraints, but I do believe this is the right action plan for the common good.

! ! ! !

Andre, C., Meyer, M. J., Shanks, S. J., Valesquez, M. Ethics and Virtue. Markula Center For Applied Ethics. Retrieved on April 18, 2014, from http://www.scu.edu/ethics/practicing/decision/ ethicsandvirtue.html Andre, C., Meyer, M. J., Shanks, S. J., Valesquez, M. Ethics and Virtue. Markula Center For Applied Ethics. Retrieved on April 18, 2014, from http://www.scu.edu/ethics/practicing/decision/ justice.html Andre, C., Meyer, M. J., Shanks, S. J., Valesquez, M. Ethics and Virtue. Markula Center For Applied Ethics. Retrieved on April 18, 2014, from http://www.scu.edu/ethics/practicing/decision/ rights.html

Komarke, J. Therapeutic Foods (RUTF). Retrieved on April 18, 2014, from http:// www.nutriset.fr/dowloads/pfe-ruft-increasing-acess.pdf

! ! ! !

Ritz, L. (2011). The saga of Plumpy’nut and patents. Retrieved on April 18,2014 from http:// www. bu.edu/themvement/pas-issues/spring2011/the-saga-of-plumpy Schofield, H. (2010). Legal fight over Plumpy’nut, the hunger wonder-product. Retrieved on April 18, 2014, from http://news.bbc.co.uk/2/hi/europe/8610427.stm