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Merck Case - Business Ethic

In: Business and Management

Submitted By wjang
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Q1. What are the stakes for Roy Vagelos as CEO and for Merck as a company in deciding whether to invest in Dr. Campbell’s idea?

The stakes for Roy Vagelos as CEO would be the high level of risk to succeed, the strong change to have a low level of profitability even after the success, and the advantage of Dr Campbell’s project, less investment needed and government aid in tax. And the stakes for Merck as a company would be the corporate ethic it has pursued and Merck’s need to develop another new successful prescription.

Q2. How does Merck pick from among the many ways to “do good” and many drugs to invest in?

Merck took 12 years and $200 million to bring a new drug to market on the average. And thousands of scientists worked on new ideas and following new leads. It uses various methods to choose the project through extensive review and analysis on the basis of the likelihood of success, the existing market, competition, potential safety problems, manufacturing feasibility and patent.

Q3. How much of its research budget should Merck invest in drugs that will likely produce a substandard return on its investment?

The research budget should be considered in research/development expenses, expected income with the tax benefit from the government, and mostly the effect and impact based on the corporate ethics and morale.

Q4. What should Merck tell a shareholder who might complain about a decision to invest in research on river blindness?

The overall corporate philosophy of Merck is based on the idea that medicine is for the people and never for the profits as the profits follow. And the profits would get larger as the company remembers the idea better. With the corporate philosophy, Merck should tell the fact that the amount of the investment would be less than the usual for that ivermectin in the final development stages being likely to be very...

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