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Business Ethics: Merck - Case Study Example

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Merck & Company is being accused,under relative ethical beliefs and values,of putting profit before the health and human safety of global citizens.Merck was attempting to put more financial and labor resources into developing new drugs since the business was about to lose patent protections for two highly-profitable drugs that provided Merck with billions of dollars in profitability…
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Download file to see previous pages Merck & Company is being accused,under relative ethical beliefs and values,of putting profit before the health and human safety of global citizens.Merck was attempting to put more financial and labor resources into developing new drugs since the business was about to lose patent protections for two highly-profitable drugs that provided Merck with billions of dollars in profitability. Merck began to investigate the prevalence of the disease onchocerciasis, known as river blindness. This disease injects parasitic worms that are carried by black flies in Latin America, the Middle East and Africa. Symptoms of this disease include severe itching, a variety of monstrous sores that appear on the flesh, and even blindness. The main problem with this disease is that it had affected 18 million people across the world and had caused permanent blindness for over 300,000 of those afflicted by 1978. Merck recognized an opportunity to dedicate millions of dollars to researching and developing an appropriate drug to combat this growing epidemic. However, after conducting an analysis of potential revenue growth by creating a new innovative drug cure for onchocerciasis, Merck was concerned that the capital resources provided for development could not be recuperated as there would be very few buyers interested in or financially capable of purchasing the drug upon its release. Merck faced a very difficult dilemma: to create the drug and take significant financial losses for its development and distribution or to secure the health and well-being of millions of global citizens in desperate need for a cure for this problem. Businesspersons would likely support Merck if the company decided to forego development of a cure, while general citizens in society would believe that Merck was in a position to provide socially responsible behavior as a primary mission of the company. In the late 1970s, competition in the pharmaceutical market was intensifying on the heels of changing legislation that opened the doors for new market entry. The Medicare system in the United States, additionally, was interested in providing more Medicare patients with generic drugs, which maintained the long-term potential of jeopardizing further Merck profits for its name brand drugs (UNSW, n.d.). Therefore, pressure from the external market and changes to established government health care systems were applying additional concerns about the sustainability of Merck’s business model during this time period. It costs the company approximately $200 million and 12 years of research and development in order to launch a successful and approved innovative drug. In the 1970s, taking inflation into account, this dollar total was equivalent to over $704 million in today’s economy (davemanual.com, 2012). This conversion between the 1978s economy and that of today sheds light on the substantial investment that would have been required of Merck to create a cure for river blindness. Milton Friedman, a respected business theorist and economist, believed that the first duty of a corporation is to ensure profitability (Friedman, 1970). This would seem to apply significantly to the Merck case, as an investment that, in today’s economy, would represent nearly a billion dollars could cause substantial problems with ensuring business longevity. Without putting profit as the primary goal, Merck could jeopardize its future which would, in the long run, have negative consequences for global society that relies on cures and drug innovations from this pharmaceutical company. Whether Merck put profit first or the health of individuals facing river blindness symptoms was essentially a lose-lose situation for the whole of society as if Merck allowed itself to experience profit risk through this new drug development venture, the business might not survive. At the same time, companies that are in high profile positions and ...Download file to see next pagesRead More
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