1 / 5

Pharmaceutical Companies’ Response to African AIDS Epidemic

Pharmaceutical Companies’ Response to African AIDS Epidemic. Lorraine Gardinier Manka Johnson Kristen Ruggles March 27, 2001. Strategic Situation.

nolan-coffey
Download Presentation

Pharmaceutical Companies’ Response to African AIDS Epidemic

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Pharmaceutical Companies’ Response to African AIDS Epidemic Lorraine Gardinier Manka Johnson Kristen Ruggles March 27, 2001

  2. Strategic Situation • GlaxoSmithKline (Glaxo) & Bristol-Meyers Squibb (BMS) are receiving pressure from the international community to sell their HIV treatment drugs to Africa at a reduced price • The companies are faced with three possible courses of action: 1. Donate drugs 2. Sell drugs at a discounted price 3. Refuse to cooperate (sell drugs at full price)

  3. Long Run Implications Impacting the Decision • This chart relates to the companies’ long term relationship with policymakers (who all support discount initiatives) • There are three optimal solutions where Glaxo & BMS optimize policymakers’ goodwill given each other’s decision (highlighted in red) • The company that donates receives more goodwill than the company that discounts • But, since each company does not know the other’s intentions, it is possible that both companies would attempt to gain more goodwill by discounting • Donating is the favored strategy because it yields a higher benefit than discounting if the other company does not donate also

  4. Short Run Implications Impacting the Decision • This chart relates to the companies’ short term financial performance • There are two optimal solutions – if both companies refuse to donate or if both discount • If the companies are more concerned with short term financial performance, they will both refuse to cooperate because it has a lesser negative effect on their revenues, regardless of how the other company acts

  5. Conclusion • The optimal strategy is one that optimizes financial performance and goodwill, assuming that these are both equally important to Glaxo & BMS • Therefore, Glaxo and BMS should offer their HIV treatment drugs to Africa at a discount • This optimizes the companies’ long term performance by influencing their relationship with policymakers and simultaneously preserves financial performance • Discounting provides the best possible solution for each company regardless of how the other company responds

More Related