Pharmaceutical Companies, Intellectual Property, and the Global Aids Epidemic

MGMT 405-001: SUMMER 2011

INTERNATIONAL and COMPARATIVE MANAGEMENT

Case Assignment

In-Depth Integrative Case 1

Pharmaceutical Companies, Intellectual Property, and the Global AIDS Epidemic

California State University, Long Beach

By Group H

Members: Cai Nating, Tina (008592543)

Kanisorn Dilokkullanan (008

Submission Date: July 29th, 2011

1. Q: Do pharmaceutical companies have a responsibility to distribute drugs for free or at low cost in developing countries? What are the main arguments for and against such an approach?

A: We agree that pharmaceutical companies do have a responsibility to distribute drugs at low price in developing countries. The corporate social responsibility model emphasis on the fact that companies should go above and beyond the maximization of profits. It is their responsibility (with other organizations) to help people in need as it will not change dramatically their sales and profits. Companies should sell at a lower price in poor countries to respect morality rights as well.

The arguments against such approach will argue that companies need to strive for profits. How can a company survive if sells do not help recover from research and development (R&D) cost? The creative destruction principle is to find resources to fund innovation. By consequence, pharmaceutical companies need to pay close attention to their income statement and sales to be able to keep being efficient and competitive. Without sales income, the company will not be able to invest in R&D, and will automatically be left behind by other competitors. Shareholders are pressuring managers to increase profits as well. Thus, corporate governance plays indeed an important role in setting the price of AIDS medicine.

2. Q: What are the principal arguments of pharmaceutical companies who oppose making exception to IPR laws for developing countries? What are the arguments by NGOs and others for a differential treatment?

A: The principal...