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Merck Case Solution

In: Business and Management

Submitted By ronvinet
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Stakeholders
There are many, including employees, stockholders, people with river blindness, the communities where those people live, those with other diseases, governments, the media, perhaps competitors, etc.

Cost & Benefit
This is difficult, as always, because once again we have no crystal ball. The potential to discover a drug for this terrible disease certainly exists and the company’s research scientists think it is possible. The outcomes for those with the disease would be very positive and there could also be very positive media attention and reputational effects. But, there is also the potential to invest years and millions of dollars, and come up empty handed. Employee morale is a potential cost or benefit. Scientists are extremely important to pharmaceutical companies and Merck’s research scientists wanted to pursue this. Allowing them to do so, might make them feel good about themselves and their work. Finally, there are opportunity costs. What drugs might “not” get discovered, because scientists were working on this one

The choice That Company has:
Distribute New Medicine
Protect Veterinary Business

Merck Should Develop

Companies do not justify every investment to shareholders, so we are not convinced that they would need to justify this one. But, they certainly would not be able to justify it in terms of the financial bottom line. They would have to justify it in terms of goodwill, or some other more difficult to measure criterion. Cost of development of human drug is less as when they had to find for new drug

That if other organizations decided to go on their own and produce and distribute Mectizan without Merck, the cost of production would be significantly higher for them than for Merck due to the need to invest in production facilities. To be conservative, we assume that their cost savings in distribution are

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