The Principle of the Medical Industry - Term Paper Example

Medical Industry Consultancy Abstract The medical industry is one in which there exists a great deal of competition that has a rather peculiar nature. Companies manufacturing medicines, drugs and supplements cannot and surely should not, compete with other on prices or quality of products manufactured. Novartis, Glaxo and Pfizer are three huge pharmaceutical giants in the world who know this fact and compete with each other on the strength of their ties with medical institutions and doctors. It is all a recommendation game as most of the drugs manufactured by the three companies can be used for the same diagnosis. However, an important ethical issue that exists in this industry is of stealing innovative ideas and product formulas, when they have not been patented. Further, the practice of recommendations through incentives is a major ethical issue that needs to be curtailed. It is important for the three firms to reorganize their acts and put on a higher degree of professionalism when it comes to competitiveness. It is this way that will lead to lesser unethical practices where there will be lesser stealing of product formula and incentive recommendation practices by the three firms leading to a civilized pharmaceutical industry that other firms will look up to as their model industry. Introduction The three companies selected for this discussion are: Novartis AG, GlaxoSmithKline Plc and Pfizer Inc. These companies are the three largest pharmaceutical companies in the world employing over 300,000 people across the world and sharing more than $150 billion in revenues in between them. The three firms are very innovative and compete with each other on their brand equity and image. Ethics is defined as the standards that enable one to tell the difference between right and wrong. Thus, ethics is a standard that can vary for each individual, company or entity. The ethics standards of a truthful and honest person will be higher than that of a regular liar. Ethics is what enables one to judge something as right or wrong. It is highly qualitative and as mentioned earlier, can differ greatly for two entities (Framework for ethical thinking, 2009). Ethics Issue in the Industry Focusing constantly on innovation and quality, it is not possible for any of these firms to engage in quality compromise as it would not only be detrimental to human life but would also endanger there future existence in the market. Thus, ethics is one of the most important pillars of operations in the pharmaceutical industry. However, this quality is not religiously practiced when it comes to competition. Novartis, Pfizer and Glaxo manufacture a wide variety of medicines and drugs that are cures for the same diagnosis: the only differences lie in the names of the drugs. Though the manufacture of such competitive drugs is not illegal, it is unethical to copy the formula of the medicine from a competitor if it has not been patented yet. The websites of the three companies carry a pipeline information status. This allows the visitors (primarily investors) to check projects that are currently in developmental stages. The high degree of competitiveness amongst the three companies may cause misstatement of the project stages on the websites as the company may not want its competitors to be familiar with its “actual” status of projects. Another significant issue lies in the copying of unpatented formula to produce the same medicine for the same diagnosis. If there were patents filed, then copying would have had been illegal and punishable by law. However, it is the ethics standard that bars or allows pharmaceuticals from copying their competitors’ formulae. A third ethical issue existent in the industry is of recommendations provided by medical institutions and doctors of the company’s medicines in return for undue incentives – in other words bribery and undue gifts. Though it is punishable too, it is to a major extent, an ethics issue rather than a legal one. Companies providing incentives to doctors and medical institutions in return for drug recommendations is a serious ethical issue. The net income of Pfizer is $14 million, that of Novartis is $12 million and Glaxo $10 million approximately. It can be safely assumed that a greater portion of these incomes can be attributed to incentive recommendations (Carlsen, 2008). It would be wise to assume that the three companies would have the same or even greater earnings if there would be lesser incentive recommendations practice. This is because of the lesser spending on incentive recommendations from sales employees resulting in lower costs. While one company wins incentive recommendations from one medical institution, another wins it away from another medical institution; thus it all balances in terms of the revenue gains. The revenues are highly comparable for the three companies Novartis, Glaxo and Pfizer While the three firms are socially responsible and do not engage in product, environmental and employee neglect, the aforementioned issues are some of the existent issues in the industry that are applicable to all three. Though it would be unprofessional to point fingers, it should be realized that there is a certain degree of presence of all the issues mentioned above in the three companies (Homepage Novartis AG, 2009). However, it is Pfizer that is amongst the three that engages in the highest transparency program for a pharmaceutical firm. It publishes its activities to the general public not only in its annual reports but through social marketing media too. Pfizer is always offering its investors with the latest news developing in the firm and maintains a cleaner history of infringements and entanglements in the industry (Pfizer Inc. (Wyeth) Homepage, 2009). There are other ethical issues that exist in this industry that get media attention more quickly. Pollution and testing of medicines are the most important issues that exist in the global pharmaceutical industry. While most companies try to get away with low publicity, giant corporations such as these three cannot engage in pollution in other countries nor initiate drug testing on animals without consulting behavioral and ethical policies. The Bhopal disaster is one incident where a large manufacturing giant, Union Carbide, had shown its carelessness and lack of concern for the residents and the way in which the leaks affected the lives of the locals (Bhopal Gas Tragedy, 1984). Recommendations In the light of the discussion of ethics, the ethical issues that exist and the practices of the three big pharmaceuticals of the world, it would be wise to propose recommendations aimed at raising the ethics standards of the companies. Considering the financial meltdown of the global economy, it has become extremely important for each company’s salespersons to pitch the company in front of medical institutions and doctors as persuasively as possible. However, the practice of bribery and incentive-based recommendations should be discouraged at the top level. Involvement of the senior management is imperative to curb this practice and transform the industry making competition much cleaner. Product formula stealing should be highly discouraged as innovation is and has always been the key to success for all these firms in the past. Company heads to show their firm belief and trust in the expertise of the researchers and innovators providing them assurance and support in their work rather than encouraging them to follow other’s. Misstatement is an auditor’s pleasure and the only way to avoid it is by the company management itself. Since misstatement is not an easy portrayal to depict, firms should discourage the practice in the light of true professionalism and bravery (Czerwonka, 2008).The three top pharmaceuticals should set an example and be brave about their research programs having faith that its competitors would only be more well-informed if they present true information rather than being well-equipped to slam a dunk. Mutual cooperation, joint ventures and strategic partnerships are amongst the best recommendations that could be used by the pharmaceuticals to improve their ethics standards and thrive in the industry with mutual benefit (Buerstatte, 2004). Considering the ethical issues mentioned in the previous sections and the financial performance of the three companies in the recent past, it would be highly advisable for an investor to consider Pfizer as its choice. Building up from the Wyeth takeover just 45 days ago, Pfizer’s financial and ethical status if far more better than Novartis and Glaxo. It goes without saying that Pfizer, being least involved in ethical scandals and issues, is the choice for any investor wishing to maximize investment in an ethical firm that is in the pharmaceutical business. It would be unfair to say that Novartis and Glaxo are unethical firms: it is just that Pfizer is aggressive in maintaining its ethical policy without any red marks that has made its brand a synonym for pharma-ethics. References A Framework for thinking Ethically. (n.d.). Retrieved November 29, 2009, from Santa Claura University: http://www.scu.edu/ethics/practicing/decision/framework.html Anand, V. (1984). Bhopal Gas Tragedy. Retrieved November 29, 2009, from: http://www.irastimes.org/bhopal_gas_tragedy.htm Buerstatte, G. E. (2004). The E in marketing: Ethics in the age of misbehavior. Journal of Healthcare Management , 11-21. Carlsen, B. (Sep 2008). Getting Employees to go the Extra Mile. Healthcare Executive , 83. Czerwonka, M. A. (Summer 2008). Good Marketing Requires Planning. (AN 32186742). Marketing Health Services , 38. Donaldson, C. (July 2008). Marketing health, influencing behaviour (PMID: 18678105). Journal of the Royal Society of Health , 152-3. Homepage Novartis AG (2009). Retrieved November 29, 2009, from: http://www.novartis.com Pfizer Inc. (Wyeth) Home (2009). Retrieved November 29, 2009, from: http://www.pfizer.com/home GlaxoSmithKline Plc (GSK) Home (2009). Retrieved November 29, 2009, from: http://www.gsk.com Read More