Burroughs Wellcome Company
In 1982, the Center for Disease Control and Prevention (CDCP) labeled the acquired immune deficiency syndrome (AIDS) and began to warn the public of the disease. In 1983 and 1984, the virus that causes AIDS was isolated and in 1988 it was named the human immunodeficiency virus (HIV).
Burroughs Wellcome Company is a subsidiary of Wellcome PLC. Wellcome
PLC is a pharmaceutical firm that employs 20,000 people in 18 countries. Wellcome
PLC produces both ethical and over the counter medication. Zovirax, which treats herpes infections, accounted for $492 million in sales in 1989 (Kerin & Peterson, 2013).
Retrovir, an AIDS treatment, was the second largest seller with $225 million in sales
(Kerin & Peterson, 2013). Wellcome PLC also produces over-the-counter Actifed and
Sudafed with $253 million in sales in 1989 (Kerin & Peterson, 2013).
In 1981, there were 305 reported cases of AIDS, and by 1989 there were 35,198 reported cases of AIDS with numbers expected to continue to rise, although at a much slower rate (Kerin & Peterson, 2013). The majority of victims, almost 90%, were gay men or intravenous drug users, and almost one half of reported cases were in major metropolitan areas, such as San Francisco, Los Angeles, Houston, and New York. Not enough was known about the disease in the early 80’s to create a reliable way to predict its’ rate of growth.
Economically, treating AIDS patients was proving to be very expensive, averaging between $70,000 and $141,000 per patient according to a 1987 study by the
RAND Corporation (Kerin & Peterson, 2013). Treating some forms of cancer averaged less than half of that cost. Since the income level of many AIDS patients was low,
Medicaid covered treatment costs for approximately 40% of the patients, resulting in an
Burroughs Wellcome Company, Case 6 estimated annual cost to the Medicaid system of between $700 and $750 million in 1988
(Kerin & Peterson, 2013).
References: Kerin, R.A & Peterson, R.A. (2003) Strategic Marketing Problems: Cases and Comments England: Pearson Education Limited 10