Merck & Co. Case

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Merck & Co., Inc (A)
(The summary is based on the article in Vol. I and does not include the extra readings given by the professor) This case is a classic example of enterprises trying to balance their business of increasing profits and expected social responsibilities. This dilemma is further accentuated when the company happens to be a pharma company whose decisions directly affect people’s lives.

The Dilemma:
A possible drug for River Blindness, a disease which affects almost 85 million people in the third world countries, has been discovered as a derivative during Merck’s research on medicines for animal health treatment. But the drug needs to be tested extensively and researched further before it can be used in humans. This would require millions in investments but little financial returns, as most of the affected people cannot afford the drug.

Merck spent a lot of money on research and believed that its future success depended on inventing new drugs. The odds of developing a successful drug are rather low and entail high investments. On an average it took 12 years and $200 million to bring a new drug to market. So allocation of funds for this research would mean eating into another drug’s budget. Besides there were no US or international program to create incentives for companies to develop drugs for diseases that affected the poor in the third world countries. A possible hope for Merck was that some international organization like WHO might partially fund the program.

Merck’s researchers were the best paid in the industry and they thought of their work as a quest to alleviate human disease and suffering world-wide. Thus, refusal to fund the research might affect the morale of the team. This is the single biggest concern of Dr. Vagelos, the head of Merck Research labs, while taking a call on the matter.
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