MASTER OF BUSINESS ADMINISTRATION AWARDED BY NOTTINGHAM TRENT UNIVERSITY

ASSIGNMENT SUBMISSION FORM

Note: Students must attach this page to the front of the assignment before uploading to WECSERF. For uploading instructions please see the help file online Name of Student: ZUBAIR SALEEM Student Registration Number: KL102047

Module Name: THINKING AND MANAGING ETHICALLY Module Number: WEC-MBA-08-0106: Thinking and Managing Ethically Assignment Title: Discuss ethically the act of CIPLA, GlaxoSmithKline at el companies on sell of Aids Drugs Submission Due Date: June 14, 2009 Students Electronic Signature: Zubair Saleem

Plagiarism is to be treated seriously. Students caught plagiarizing, can be expelled from the programme

Assignment Form MBA Jan04

EXECUTIVE SUMMARY

The context of everything tells you more than its contents.

Ethics and its application to business and organizational decision making always become conflict and have created many problems for human being and as well for the organizations.

Many of the focuses have been made to solve these conflicting concepts but each case is different from each other and most of the organizations have adopted the practice of making decisions on the basis of past experiences.

The given case study of GlaxoSmithKline, Bristol Meyer Squibb, CIPLA and others is also to understand the basic concept of ethics and its practical application in business environments.

To evaluate this first of all we have viewed this case from the basic ethical concepts given by famous philosophers like John Locke, Adam Smith, David Ricardo and Karl Marx.

There is difference between all theories given by these philosophers but we will see this case from each perspective that how these philosophers will see right or wrong in this case.

After having a view of basic theories we will look it from two opposite theories having different concepts. It is like looking the cassette from both sides that if one think right/good for anything then how it is wrong/bad for the other.

Ethical decisions are always said to be right or wrong on the basis of four main principles of Ethics. We will see this practical business case from the perspectives of these four main principles i.e. Utilitarianism, Rights, Justice and Care.

Following whole this analysis of the GSK, CIPLA and others conflicting case of antiretroviral, we will conclude that from the general ethical perspectives and theories which action was right and which one was wrong.

CONTENTS

Executive Summary........... 1.0 Introduction.......

02 04

2.0 View from different Ethical Theories 05 2.1 John Lockes Theory Of Free Rights and Free Market. 2.1.1 View Point of John Locke to GSK-CIPLA Case 2.2 Adam Smiths Theory of Utility and Free Market. 2.2.1 View Point of John Locke to GSK-CIPLA Case 2.3 David Ricardos Theory of Free Trade and Utility.... 2.3.1 View Point of John Locke to GSK-CIPLA Case 2.4 Karl Marxs Criticism on Free Markets and Free Trade 2.4.1 View Point of John Locke to GSK-CIPLA Case 3.0 View of Property in GSK-CIPLA case. 3.1 Lockes View of Property in GSK-CIPLA case.... 3.2 Karl Marxs View Of Property in GSK-CIPLA case 4.0 The act of GSK and CIPLA (Right or Wrong). 4.1 Utilitarianism.. 05 05 07 07 08 09 09 10 11 11 12 13 14

4.2 Rights.. 15 4.3 Justice. 16

4.4 Care..... 17 5.0 Conclusion. 18

6.0 References.. 19

1.0

INTRODUCTION

In 2004, United Nations Organization (UNO) analyzed HIV (AIDS) infected people throughout the world and announced that the number of AIDS infected people was increased by 5 million more and the number reached to 40 million people.

From this number 70% population of infected people was living in sub-Saharan African region.

The companies of GlaxoSmithKline and Bristol Meyer Squibb were the leading production and selling companies of that time but they refused to supply antiretroviral to African countries because of less medical facilities to follow the course.

Also people of Africa were not able buy these drugs because of its high price from $10,000 to $15,000.

CIPLA as an Indian company announced the same quality drugs in a very cheap price of $350 to market and GSK at el put many allegations on these drugs of CIPLA and claimed attack on their patent and intellectual property rights.

But due to clause in intellectual property rights that in situation of life hazards companies are not bound for these laws, UNO and WTO permitted CIPLA to supply the drugs to the global market including African infected countries.

Here in this peace of work we will analyze that according to business ethics which action from both of these companies was right and which one was wrong.

2.0 VIEWS FROM DIFFERENT ETHICAL THEORIES

Ethical theories are being derived from human nature or from the previous experience and practices which people have done/seen in past and they given some concepts to give a right way of living.

To discuss this case we will take some of these ethical concepts as given below;

2.1 JOHN LOCKES THEORY OF FREE RIGHTS AND FREE MARKET

John Locke (b.1632, d.1704) was a British philosopher, who given the idea that Every human has natural rights of his life, liberty and possession of private property.

According to John Locke if there is no government or third party influence than a human will feel in the state of nature. He stated that God has given moral principles to every human whom he can identify by his own God-given reasoning power. Also his property belongs to him and no any third party can interfere in his private property.

From the business perspective his theory was modified by many authors Friedrich A. Hayek, Eric Mack et al. in 20th century as Free market and free rights having no third party influence.

He addressed free market as the market where everybody has right of free entry and free exit.

2.1.1 VIEW POINT OF LOCKE TO GSK-CIPLA CASE

Complication of GSK and CIPLA case was because of GSKs at el resistance for CIPLA to enter in the market, sell the same drugs in cheaper price and claim of copying formulae and attacking patent of GSK at el.

FREE RIGHTS

From the perspective of this theory of John Locke every individual have right to do whatever he want and any government or third party can not influence his natural rights. From this perspective CIPLA was not liable to GlaxoSmithKline or Bristol Meyer Squibb.

John Locke does not focus on the rights of individual person from the point of view of Socialism i.e. Every human have same rights on his life and people can not be divided or differed because of their race, religion, culture, country, color, age or any other societal concept. But Locke determined that every individual can set his rights by himself according to his natural norms and beliefs.

This theory indicates that CIPLA had right to enter into the market freely whenever it wanted or can leave whenever it wants.

FREE MARKET

Free market refers to free entry and free exit which rejects any third party influence in which sellers can come on their own will and price is also set by the seller but in the competitive market sellers or companies can enter at will but prices are set by the market competition.

GSK at el were keystone species of the free market and they were the only source of drugs and according to them CIPLA has attacked on their legal property rights. But at the same time CIPLA must have the same opportunity to enter the market according to Lockes theory but GSK at el were creating barrier for Indian companies like CIPLA.

Lockes perspective on patent (intellectual property rights) of GSK and CIPLA is discussed below in his view of property section.

2.2 ADAM SMITHS THEORY OF UTILITY OF FREE MARKETS

Adam Smith (b.1723, d.1790) was named as Father of Modern Economics by giving the first experimentally proven concept for the economics (Study of production, distribution and consumption of products and services). The concept he given was Utilitarian view of free market.

Adam Smith suggested that When private individuals are left free to seek their own interests in free markets, they will inevitably be led to further the public welfare by an invisible hand.

In his theory of utility of free market he addressed market as a competitive place by giving the concept of market invisible hand which obviously is market forces and market competition. In a competitive market the seller is not only forced to follow the rule of supply on demand but also to reduce the price to sell the product as soon as possible to its real costs or best product at best price for consumers when other sellers enter into the market. Adam suggested selling the products and services to benefit the society.

2.2.1 VIEW POINT OF ADAM SMITH TO GSK-CIPLA CASE

Smiths perspective of utility was seen to be right by the philosophers but his theory of price controlled by the market forces was not completely acceptable because at his time producers might have same level of investments and could compete to each other and could cause first investor to reduce the price as market forces but later condition were changed. Market was challenging and innovated as well investors were like giants and market had chances of monopoly.

These giant industries could be keystone species and could create barriers for small industries. So his theory was thought to be unrealistic for all times.

Like in this case CIPLA was the challenging company and it focused the combined market instead of one segment of market. The success of CIPLA product only became possible because of rejection of GSK high price product and providing maximum utility. But situation always doesnt remain same and for all products this was not possible to leave price on market forces except some cases like CIPLA-GSK anti-HIV supply case.

From the view point of Adam Smiths theory GSK Company was the one who entered into the market before CIPLA but GSK opposed CIPLA that can be taken as market forces applied on GSK to reduce the price because of high demand of the drug in a cheaper price.

The action of CIPLA to offer cheap anti-HIV drugs was in the favor of the society and was also benefiting the public more than GSK which is also promoted by the theory of Adam Smith. In other words from the view of maximum utility the action of CIPLA was right and must not be challenged by GSK at el.

2.3 DAVID RICARDOS THEORY OF FREE TRADE AND UTILITY

David Ricardo (b.1772, d.1823) was a British economist. He suggested for the free trade and utility.

David Ricardo explained free trade and benefit for majority by giving the example of England and Portugal specialized in their respective product manufacturing. He addressed that if one country has absolute advantage to produce everything, it is better for it to specialize and trade.

Ricardo states about globalization and free trade by giving example of two countries that if England has specialty to produce cloth and Portugal has specialty to produce wine, then it is better for both to trade which according to him will benefit majority of the concerned people.

He also suggested that the labor, equipments, factory etc must not move from one country to another and also the numbers he used in his example are only possible in an ideal condition but not in practical market of nowadays.

2.3.1 VIEW POINT OF DAVID RICARDO TO GSK-CIPLA CASE

In this case Ricardo theory of free trade and utility would promote the GSK Company because of specialization in a product but GSK was not following maximum utility as well as the concept of trade to other demanding countries.

CIPLA offered the anti-HIV product in a very cheap and affordable price and this referred to maximum utility, provision of rights of poor nations as like rich nations and did care and justice with all global nations without keeping any level, color and race in sight.

David Ricardo promoted the specialization and globalization of goods but he never said that specialization can only refer to one country or to only that country who invented the product.

From Business Ethics point of view also now companies can not compete and sustain in the market if they are not offering products with maximum utility, equal rights to all, justice without keeping any race, color etc in mind and care of all human as well other creatures of this universe.

2.4 KARL MARXS CRITICISM ON MARKETS AND FREE TRADE

Karl Marx (b.1818, d.1883) was an eye witness of Wrenching and exploitative effects of industries on labor classes of England, Europe and other countries.

He wrote in detail that Capitalist system of industries offers on only two sources of income: sale of ones own labor and ownership of means of production. He further stated that As workers can not access without means of production, so they are forced to sell their labor to the owner in return of the wages. The owner however does not pay the full value of their labor.

Karl Marks further wrote that The difference (Surplus) between the value of their labor and subsistence wages they receive is retained by the owner and is the only source of owners profit.

Based on this theory Karl Marx criticized the Markets and according to him free trade is further encouraging capitalism and injustice with the labor.

2.4.1 VIEW POINT OF KARL MARX TO GSK-CIPLA CASE

If we see this perspective of Karl Marx from human perspective, it shows that all human are equal and all have rights like others. GSK at el fixed the price according to the American and European markets and people of developed nations were able to buy and use the products but African people who were poor but they also had same rights and they must have opportunity to use drugs and for that CIPLA helped them and in this case GSK at el were practicing wrong.

This refers to injustice with African people which also had same rights to live a healthy life and shows the Karl Marx criticism of free markets and free trade which creates inequalities due to wealth and power.

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3.0 VIEW OF PROPERTY IN GSK AND CIPLA CASE

Every inventor or introducer has some rights on his property or invention. These rights on any book, writing, essay, website, etc are called copyrights. The copyrights forbid others to copy the same without the permission of that copyright holder. In manufacturing industries, if an industry or person produces or invents any product, then the property rights of that person or industry on the product is referred to as the patent or the intellectual property rights over that particular product.

In a business atmosphere, these intellectual property rights of a product gives the patent or rights to that person/company and no other person or company may copy or produce the same product without the permission of the patent holder. The patent remains with the patent holder for a specific period of time and not forever.

According to GSK at el CIPLA has stolen their formulae but their was no proof came in existence and in that case CIPLA was on right but John Lockes theory can be criticized from the perspective of positive rights and negative rights.

If CIPLA really had stolen the formulae then also the CIPLAs action to enter into the global market was right according to John Lockes theory because of no clear description of positive and negative rights in this theory.

3.1 LOCKES VIEW OF PROPERTY IN GSK-CIPLA CASE

According to John Locke Whenever a person expands labor and efforts to create or improve anything, that person acquires legal rights on that thing.

From this view of thoughts GSK at el were the inventors of anti-HIV drugs and they had legal rights on that drug. According to them CIPLA had violated their legal property rights and CIPLA must take permission from GSK at el before it enters the market or produce same goods.

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This view shows that CIPLA action of entering the market was not wrong and as GSK was making a profit of 20% of their overall revenue for more than 3 years and they must have covered their R&D expenditures which refers CIPLA as right.

3.2 KARL MARXS VIEW OF PROPERTY IN GSK-CIPLA CASE

Karl Marx was basically against the problems faced by labor due to employers negligence and he gave thought to protect the labor from employers action.

His books revealed many cases and a new thought came in front of us that gave birth to a new better and healthy society.

From Karl Marxs perspective if we conclude the drugs produced by both companies were the property of labor and its consumers.

He gave thought that all human are equal while GSK was not following this and GSK act was showing a reflection of discrimination of color and wages. This was not right from Marxs view of property.

The act of CIPLA was to provide equal facility and healthy people of whole the globe and this tends to indirect provision of equal rights to all people as Marx said and this was right in Marxs perspective.

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4.0 THE ACT OF GSK AND CIPLA (RIGHT OR WRONG)

Ethics basically suggests keeping the human life in mind rather keeping any business or organization goals in sight. But in business Ethics, organizations and their employees are not always able to take affirmative actions (decisions/selection of entity on quota basis) or any other action which helps and justifies the principles of ethics.

To evaluate the organization decisions ethically that if organization takes a decision ethically without keeping organization goals in mind we can use Ethics Dilemma Grid as given below. To evaluate the benefit or risk of the decision taken must need some pure financial figures or organization profit and loss statements or pre-determined budget of the organization but as in GSK and CIPLA case we dont have complete figures so we can only assume the action from ethical point of view rather than using any perfect analysis like this.

Source: http://www.gordoworld.com/gblog/2008/10/ethics-incentives-and-enforcement.html To evaluate ethically the action of GSK, BMS, CIPLA and others we will discuss it from four main principles of Ethics i.e. Utilitarianism, Rights, Justice and Care as given below.

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4.1 UTILITARIANISM

The concept of Utilitarianism itself was introduced by Jeremy Bentham (b.1748, d.1832). Jeremy suggested Utilitarianism as, An objective basis for making value judgment that would provide a common and publicly acceptable norm for determining social policy and social legislation

Utilitarianism can easily be understood as profits or benefits for majority of the society.

In the case of GSK and Bristol Meyer were though inventors of the AIDS medicine and had more trustworthy product than CIPLA who was claimed to copy or steeling the formulae of GSK.

But market and consumers always doesnt focus on the quality and in the case of life saving drugs which are offered by two Companies, people must go for better product.

Though this will be a sensible decision but in the society where people are earning $500 per month and from that they can only eat and serve for their family. The sub-Saharan African society whether contains 70% of total AIDS infected people but if they can not afford the product of $10,000 or $15,000.

Then only to serve 30% infected people with very high rates are obviously not a UTILITARIAN action.

GSK was whether inventor and first introducer of such life saving product but it was not following the maximum utility and tried to be one of keystone species but market is always challenging and CIPLA taken the benefit of their weakness and take over the market with cheaper price. But CIPLA was serving for all nations without having any differences in humans, so GSK was unable to prove that CIPLA has attacked his intellectual property rights.

Even in intellectual property rights inventor have the rights of the product that nobody can copy or produce same product without agreement of first inventor but this is not long time and

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according to different products the time is set that after a time period, the inventor can not bound anybody to produce the same product.

4.2 RIGHTS

German philosopher Immanuel Kant (b.1724, d.1804) is thought to be the founder of the first satisfactory theory of rights. He gave two main versions of his theory.

Immanuel Kant claimed in his first version of categorical imperative that Duty to respect human dignity could be expressed in several ways. One version directs us to act according to those rules that could be universally agreed by the people

In another less abstract version he suggested that Treat people as subjects capable of living their own lives and not as mere objects that exist for our purposes

In this case of GSK was providing the antiretroviral to people of rich countries but forbid supplying to African countries because of price rates and less medical facilities. These were pure business problems of an organization and company was whether not able to avoid from its R&D expense calculations and success of the drugs.

But because of any reason human life can not be avoided and according to Kant also act of GSK was not accepted universally. Whether GSK at el made a good step by inventing such a life saving drug which served for many people but GSK could not treat people as mere objects and use them only for company profits and losses.

CIPLAs act of introducing cheap antiretroviral was appreciated by WTO as well by UNO which shows that it was accepted universally. But GSK at el companies were also part of the universe and the CIPLA action was claimed by them and not appreciated.

But here we must think about the positive and negative rights of humans/companies and GSK was using its negative rights to support its business and brand image.

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Also Karl Marx stated that all human are and they can not be treated in different manner due to their race, origin, religion, culture, wages etc but GSK did not thought about the social and legal rights of African people who must also be provided same opportunity to live a healthy life.

What people did and how they were infected that point is also considerable because they used their own right and they were surviving because of that. But many of them also survived because of anybodys mistake of injecting or from his/her father or mother. But those could not be avoided because they had same right to live a healthy life and GSK must provide them same right according to their earnings and expenses.

4.3 JUSTICE

Justice can be simply referred as Fairness to all or in simple words can be said as benefits and losses must be shared equally by all the humans.

It is now a universally believed truth that every human/company has his legal rights on his belongings and his life. But because of ones rights no other human/company should survive.

GSK was selling drugs in the market as keystone species but they were too much expensive. In market segmentation he targeted only prestige pricing market but in the duration past those people who were not able to buy such an expensive drugs had either died or were surviving with a deadly virus.

This decision GSK made because of its patent to the product while CIPLA gave opportunity to the people of Africa who were 70% of the total infected people by the virus of AIDS.

CIPLA did not took GSK in consideration and did injustice with it in terms of its losses or in other words less profits but it saved many lives and universally it was appreciated and because of that CIPLA was fair with all humans while GSK was not.

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4.4 CARE

The concept of care leads us to think about not only people but we should care all the belongings and creatures of this universe.

This concept or basic principle of Ethics tells us that we must exercise special care of those with whom we are concerned and we must keep their needs, values, desires, norms, believes in sight. Before taking any decision treating to anybody we must think from his own perspective keeping the above important factors in sight.

GSK had to keep in sight the personal factors of all the infected people in sight before fixing the price of product or launching the product in market. If GSK at el were not aware of the situation at the time of launching then must not refuse to supply later to Africa when they knew that AIDS infected people reached to 70% of the total number in Africa.

GSK had to make financial decisions on the basis of their own business and profitability of the organization but that must not deny the human lives. They were right in the starting days to retain their R&D expenses but they must reduce price or at least follow the price reduction rule of competitive market.

CIPLAs act directly or indirectly was right because it was following the concept of care and was trying to preserve and help the human creature of this universe.

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5.0 CONCLUSION

For companies to select the segments of markets, fixing the prices and their change through out the life cycle of product is very important and is made very calculated.

The act of GSK was also bound because of its organization goals and they made decision of not supplying the product to African countries because of threat of losses even though they knew that this may highly damage their brand image but they took this action.

But here the case was completely different, people were dying and drugs supplying companies were refusing to supply the drugs which as we analyzed from the theories of John Locke, Adam Smith, David Ricardo and Karl Marx which have different concepts but almost all reflects the act of GSK, Bristol Meyer Squibb at el as wrong.

From the perspectives of Utilitarianism, Rights to all, Justice with all and care of universe also the act of GSK and other inventing companies not to reduce the price and refusing to supply was analyzed as wrong.

While CIPLA took an action which according to GSK at el was attack on their patent but it was not true because of the consequence of Intellectual property rights that they could supply because of life saving problem which was accepted by all.

The act of CIPLA was right because it was on majority benefits, accepted by whole world, justice with all without any discrimination and care of these universe belongings (human Lives).

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6.0 REFERENCES

Hartman & Desjardins, 2008, Business Ethics, McGraw-Hill International Edition, McGraw companies. John R. Boatright, 2005, Ethics and the Conduct of Business, Pearson Prentice Hall.

2006, Business Ethics, Pearson Prentice Hall.

Manuel G. Velasquez,

Milton Snoeyenbos, 2001, Robert Almeder & James Humber, Business Ethics, Prometheus Books. Williams, B. 1973 A Critique of Utilitarianism in J.J.C. Smart and B. Williams (eds), Utilitarianism, For and Against, Cambridge: Cambridge University Press. White, J.E, 2003, Contemporary Moral Problems by James E. White (7th Edition). Belmont,CA.

Practice. Frankfurt, 1973.

Habermas, J. Theory and

http://ww2.it.nuigalway.ie/staff/h_melvin/prof_skill/L2_handout.pdf http://www2.sfasu.edu/polisci/Abel/ConstitutionalLawII/RightsTheory.htm http://en.wikipedia.org/wiki/Ethics_of_care#Theories http://www.gordoworld.com/gblog/2008/10/ethics-incentives-and-enforcement.html

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