Q11. One of the scientists working in the R&D laboratory of a major pharmaceutical company discovers that one of the company’s bestselling veterinary drugs has the potential to cure a currently incurable liver disease which is prevalent in tribal areas. However, developing a variant of the drug suitable for human beings entailed a lot of research and development having a huge expenditure to the extent of Rs 50 crore. It was unlikely that the company would recover the cost as the disease was rampant only in poverty-stricken areas having very little market otherwise.
If you were the CEO, then (20 marks) (250 words)
(a) Identify the various actions that you could take.
(b) Evaluate the pros and cons of each of your actions.
A private company has to make profit to survive in business. If the company spends Rs 50 crore to develop the drug for a disease, it can’t hope to recover even its cost. The management has the following options in the given situation.
1: Drop the plan to Develop the Drug
This option may help the company save the cost, but it is not good for the society. It would be unethical to not fulfil its moral responsibility towards the society.
2: Develop Drug using Own Money
Company may develop the drug using its own resources. This would lead to loss for the company in the short run. However, such an action may boost the image of the company and may lead to more sale and profit in the future due to better brand image.
3: Use the CSR Fund
They may invest 2 per cent of their profit under Corporate Social Responsibility (CSR) to develop the drug. If their own resources are not sufficient, they can collaborate with other big companies and develop this drug jointly. This approach will however require the cooperation of other companies.
4: Approach Government or a NGO
They can approach the government organizations and the many NGOs in India and abroad seeking financial assistance to develop the drug. They may, however, face problems with the government, if the research does not succeed in the development of the promised drug.
They can approach the media or other social networking platforms and appeal to people to donate small amounts for the noble cause. This may help generate the resources, but will put pressure on the company to produce quick results. (271 words)
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