BAYER AG: ANTHRAX AND CIPRO

"Health is the greatest gift, Contentment is the greatest wealth."

-Buddha
SUBMITTED BY:

Section A

“Nabhsparsham”

Kathan Shah p39025

Nikita Sarni p39033

Preyanshu Saini p39042

Priya Agarwal p39043

Rajat Saini p39044

Shweta Gandhe p39052

PROBLEM STATEMENT:

Dr. Manfred Schneider, chairman and CEO of Bayer AG, is the decision maker who is caught in
a tight spot –opportunity to help USA citizens in time of crisis and the stakeholders whom Bayer
must consider while publicly addressing the sensitive situation.

SITUATION ANALYSIS:

The barbaric 9/11 terrorist attacks had already gripped into the minds of the people of USA.
They were trying to come to terms with this horrific event when the trepidation got coupled with
the threat of bioterrorism due to deadly bacteria Anthrax. By end of October 2001, a total of 22
separate incidents of Anthrax contamination had been reported within the United States. Anthrax
is an acute infectious disease caused by the spore formation bacterium which can spread by
inhalation, ingestion or contact with an abrasion on the skin. Cipro, a drug developed by Bayer
AG was the only FDA approved drug that could transform the treatment of major infection of
Anthrax. Due to its low public relation and political efforts, the citizens and consumers,
government officials, generic pharmaceutical manufacturers, and the government of Canada
began questioning Bayer’s ability and motives in meeting the demand of this exigent situation.

The citizens, apprehensive of the outbreak, started procuring Cipro leading to scarcity of Cipro
with the pharmacists. The consumer advocate groups stated voicing their displeasure with the
company. The government on the hand started reassessing Bayer’s ability to act in good faith by
producing sufficient quantity of Cipro. They were pondering over the stripping of Bayer’s Cipro
patent to augment the manufacturing of anti-Anthrax drugs. Meanwhile, other drug
manufacturers began criticizing Bayer heavily on the profit margins of Cipro. The numerous
drug manufactures pledged that they would not profit from the terror of Anthrax outbreak that
has taken over the country.

CRITERIA FOR DECISION MAKING:

The decision should be made keeping in mind the following criteria:

1. Priority 1: Given the criticality of the situation saving lives of people should be one
of the major concerns of the company at this point in time.
2. Priority 2: Company’s patent should be preserved as it spends substantially on its
R&D and had previously also incurred serious difficulties related to patent issues and
government-mandated recalls of several products.
3. Priority 3: Company should understand the mental state of the citizens on account of
various incidents in recent past & present (attack on WTC, Anthrax outbreak, statements
of consumer advocate groups). All this has added to their paranoia and anxiety.
If the company is successful in addressing the above challenges, it will emerge as a hero in the
eyes of American citizens. It will be able to prove its capabilities and reinstate trust and loyalty
in the minds of consumers as well as senate.
GENERATING ALTERNATIVES:
Following are the various alternatives generated for the company’s future course of action:
1. The company should sacrifice their patent for the common good of people keeping in
mind the criticality of the situation and the outbreak of the disease.
2. The company can decide to focus on saving their patent. They should maintain their
present stance of supply of Cipro in the market and continue to keep a low profile in
terms of media and communication.
3. The company can adopt a middle way to deal with the situation. They can try to
bridge the communication gap with public by addressing them, at the same time they
can also liaison with the government to regulate the supply of Cipro at a subsidised
rate to the public.

EVALUATING ALTERNATIVES:

A. If Bayer AG chooses to give up its patent, the very incentive of devising a novel
solution would be defeated and it will hamper the future Research and Development
budgeting, contrary to the fact that Bayer AG is primarily a R&D driven company.
In the longer run it might impact future lives, as the company's R&D activities will
take a hit.

B. If the company chooses to save the patent and maintain a "Status Quo" , in such a
scenario Bayer AG ignores the Corporate Ethics and it only adds to the market
perception of company being reserved , highly structured and rigid ,exploitative of
the situation/crisis and marketing their product. Keeping a "low profile” severs the
public relations as the real intentions and action plan of the company are not
communicated to the masses .Bayer's strives to create corporate value and benefits for
communities they operate in , but , due to communication gap the ideas of the
company are not trickling down to the general public.

C. Media has made a perception that Bayer is an ultraconservative corporation. But

government should keep in mind that Bayer has been very successful corporation for
more than 100 years and in this situation of crisis, government should work with the
corporation and not against it. Bayer AG must follow a Middle way strategy which is
 mutually beneficial for all stakeholders involved. Since the public sentiment and
fear psychosis are at an all time high, the company must go public with its action
plan, production capabilities and dispel all myths floating around its inefficiency and
motives. Secondly, since the outbreaks are increasing and there is a false scarcity of
Cipro, possibly, due to hoarding, Bayer AG must bring Federal government on board
to regulate the distribution of Cipro, and negotiate a subsidy for the cost of
vaccine so that company might not loose on R&D expenses and clinical trial periods.

DECISION:

Mr. Manfred Schneider must not maintain the status quo and his first priority should be to
address the public as well as the senators who are questioning the capabilities of Bayer AG. The
message should be loud and clear that Bayer AG has the production capacities to meet the
demand and that it keeps the life of the US citizens on its first priority. He should also tell the
public and the government that the prices of the Cipro pills are high but that price is nowhere
exploitative given that Bayer AG spends so much money on its R&D to make its products safe
and reliable. So, what Mr. Manfred could do is to ask for government subsidy so that their cost
comes down and the pill becomes cheaper for the common public. Also he should ask the
government that the government themselves procure the Cipro supplies from Bayer AG and thus
in this process regulate the supply to avoid any demand crises.

ACTION PLAN:

Apart from addressing the current challenges of the company, focus should also be made to
ensure the adoption of certain preventive measure by the government to reduce the rate of
spread. For this, following measures should be advertised:

 Promote safe workplace practices. Well-ventilated workspace as well as shoes, pants,

long sleeves to cover all exposed skin should be provided.
 Personal Protective Equipment (PPE) like face mask or respirator, eye protection
equipment should be distributed.
 Cleanliness of workplaces and homes as well as personal hygiene should be promoted.