Case

1. POLITICAL LEGAL & ETHICAL DILEMMAS IN
THE PHARMACEUTICAL INDUSTRY
Prepared By:
1. Case Facts & Q1 – Amr Usama
2. Q2 - Mohamed Awad
3. Q3 - Kareem Alaa
4. Q4 & Q5 - Hany Hassan
International Business Administration – Group 58 – Dr.Tamer Karam

2. CASE FACTS
The Global Pharmaceutical Industry currently faces the following issues:
The high cost and years dedicated to Research and Development for new
medications.
Limited protection for intellectual property rights especially in developing nations.
Generic brands entering the market.

3. The Global Pharmaceutical Industry currently faces the following issues:
Counterfeit drugs and internet-based pharmacies.
Therapeutic Areas of Focus for pharmaceutical companies.
Public Scrutiny to include governments.

4. Q1.Specify the types of country risks that biopharmaceutical firms face in
international business. How do the political and legal systems of countries
affect the global biopharmaceutical industry?

5. Country risk- every country is characterized by diverse political and legal systems that pose
significant challenges for company strategy and performance, as managers must adhere to
business laws and regulations.
Pharmaceutical firms spend vast amounts on research and development (R&D) in creating
and marketing drugs, and must charge high prices to recover the cost of capital and
generate profits.
If political and legal systems are weak, intellectual property laws allow the production of
cheap generic and counterfeit drugs.
Without these protections, major pharmaceutical firms have few incentives to fund the R&D
that results in new treatments for the diseases that plague the world.

6. Q2.People need medications, but the poor often cannot afford them. Governments
may not provide subsidies for health care and medications. Meanwhile,
biopharmaceutical firms focus their R&D on compounds likely to provide the best
returns. What is the proper role of the following groups in addressing these
dilemmas: national governments, branded biopharmaceutical firms, and generic
manufacturers?

7. 1-ROLE OF NATIONAL GOVERNMENTS
Proactive in enforcing intellectual property protection Laws.
Provide incentives and encourage public-private partnership.
Medicine Price transparency.
Setting policy context and operating environments.
Offer stable, business-friendly regulatory environment.
Reduction of taxes and distribution costs of essential medicines.

8. 2-ROLE OF BRANDED PHARMACEUTICAL FIRMS
Adjust their business models to focus on emerging markets and developing
countries.
Adopt a Cost Leadership strategy, which builds competitive advantage
through low-cost and high-volume.
Build up reputation and trust-worthiness.
Compete with generic manufacturers by providing the same medication at
reduced prices.

9. 3-ROLE OF GENERIC MANUFACTURERS
Cooperation with branded firms and national government to establish an ideal
balance.
Establish collaborative relationships with major pharmaceutical firms.
Establishing stronger guidelines regarding intellectual property rights.
Consider specialized niches with high entry barriers.
Implement an element of differentiation (e.g. , reliability) to distinguish one generic
manufacturer from another .

10. Q3.Consult www.phrma.org, the Pharmaceutical Research and Manufacturers
of America. What steps is the branded industry taking to address the various
ethical issues it faces, such as providing affordable drugs to poor countries?

11. Affordable Prices for drugs in developing countries.
Donation for Research in developing countries.
Cooperation with NGO.
Responsibility of the global community.
Innovative medical research and development.
Companies committed to find solutions to global health problems.
Creating vaccine for diseases in low income countries.

12. Q4.Consult the TRIPS agreement at the WTO portal (www.wto.org).What are the latest
developments regarding this treaty? What types of protection does this treaty provide to
pharmaceutical firms? What enforcement mechanisms does TRIPS provide for ensuring that
these protections will be carried out?

13. WHAT IS THE TRIPS AGREEMENT ?
• The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPS) is the most comprehensive multilateral agreement on intellectual property
(IP). It plays a central role in facilitating trade in knowledge and creativity, in
resolving trade disputes over IP, and in assuring WTO members the latitude to
achieve their domestic policy objectives.
• It frames the IP system in terms of innovation, technology transfer and public
welfare. The Agreement is a legal recognition of the significance of links between IP
and trade and the need for a balanced IP system.

14. TYPES OF INTELLECTUAL PROPERTY COVERED BY THE TRIPS
AGREEMENT
Copyright and related rights.
Trademarks, including service marks.
Geographical indications.
Industrial designs.
Patents.
Layout - designs (topographies) of integrated circuits undisclosed information ,
including trade.

15. THE THREE MAIN FEATURES OF THE AGREEMENT
Standards.
Enforcement.
Dispute Settlement.

16. PROTECTION FOR PHARMACEUTICAL FIRMS
TRIPS has to deal with intellectual property rights, which include copyrights,
trademarks, patents ,etc.
The area that most affects pharmaceutical firms is patents.
Patents provide legal protection to the patent owner by preventing others from
producing, selling, or using for a certain amount of time.

17. PROTECTION FOR PHARMACEUTICAL FIRMS
 Under the TRIPS agreement, WTO members must offer at least 20 years of patent protection
to patent owners.
 Member countries must also grant patents to all inventions regardless if it is a "product (ex:
medicine)"or "process" (the steps used to create a product).
 In the past, developing nations refused to grant patents to "products"; the TRIPS agreement
prohibits these types of actions .

18. Q5-Recommend a strategy that management at a large biopharmaceutical firm should employ
to reduce the likelihood of political and legal risks that such firms face. What steps should
management take to minimize its exposure to such risks?

19. 1-INTELLECTUAL PROPERTY (IP) PROTECTION STRATEGY
To enhance IP protections and mitigate the threat of generic and / or counterfeit
drugs, exposure in developing countries should minimized. In addition, firms
producing branded pharmaceuticals might also diversify into generic drugs
themselves without waiting for the competition to do so.

20. 2-PROACTIVE ENVIRONMENTAL SCANNING STRATEGY
Develop a comprehensive understanding of the political and legal environment in
target countries.
Scanning Strategy: assess potential risks/threats to the firm- good sources of
intelligence:
Employees working in the host country
Embassy and trade association officials
Consulting firms
Then take steps to minimize exposure to country risks that threatens its
performance.

21. 3-IMAGE STRATEGY
As pharmaceutical firms target the most attractive markets- e.g., a drug for cancer
and central nervous system because as a business, must charge high prices to
recover the cost of capital and generate profits.
Setting aside a certain percentage of profits for Corporate Social Responsibility
initiatives would engender a more compassionate image than pharmaceutical firms
currently enjoy, would help develop a greatly needed stakeholder rather than
shareholder perspective.

22. THANK YOU