Subject category:
Economics, Politics and Business Environment
Published in:
2002
Length: 16 pages
Data source: Published sources
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Abstract
American Pharmaceutical is a US corporation with a long history in the pharmaceutical industry. Although it sells pharmaceuticals throughout the world, most of its sales and profits occur in the United States. The pharmaceutical market is divided into two basic sectors (retail sales and hospital sales) however, over 80% of American Pharmaceutical''s sales are in the retail sector. During the past several years, the company has performed reasonably well. However, it appears that some lean years may be on the horizon. For instance, the patents soon will expire on two of its leading antiretroviral drugs. Further, the HIV/AIDS crisis has spurred growing demands for cheaper substitutes for these antiretrovirals, suggesting that more and more countries may permit the sale of cheaper substitutes even before the patents expire. While the company may legally challenge such activities, it is not clear if the challenges would be legally successful or if they would be politically or commercially prudent. If American Pharmaceutical sells its antiretrovirals at considerably lower prices in poorer countries where the HIV/AIDS epidemic is the greatest, there is no guarantee that the drugs will reach those who need them most. There is a high probability that they will be redirected to other countries where they will undercut the company''s present pricing structure. The company is facing related problems as well. In the past several years, American Pharmaceutical''s research laboratories have not produced any prospects for strong financial returns. Further, since the company has begun looking outside the United States for research scientists and clinical testing, it is facing greater communication and cultural problems, which create new hurdles for its R&D and strategic planning efforts. This case was sponsored by the Indiana University CIBER Case Collection.
About
Abstract
American Pharmaceutical is a US corporation with a long history in the pharmaceutical industry. Although it sells pharmaceuticals throughout the world, most of its sales and profits occur in the United States. The pharmaceutical market is divided into two basic sectors (retail sales and hospital sales) however, over 80% of American Pharmaceutical''s sales are in the retail sector. During the past several years, the company has performed reasonably well. However, it appears that some lean years may be on the horizon. For instance, the patents soon will expire on two of its leading antiretroviral drugs. Further, the HIV/AIDS crisis has spurred growing demands for cheaper substitutes for these antiretrovirals, suggesting that more and more countries may permit the sale of cheaper substitutes even before the patents expire. While the company may legally challenge such activities, it is not clear if the challenges would be legally successful or if they would be politically or commercially prudent. If American Pharmaceutical sells its antiretrovirals at considerably lower prices in poorer countries where the HIV/AIDS epidemic is the greatest, there is no guarantee that the drugs will reach those who need them most. There is a high probability that they will be redirected to other countries where they will undercut the company''s present pricing structure. The company is facing related problems as well. In the past several years, American Pharmaceutical''s research laboratories have not produced any prospects for strong financial returns. Further, since the company has begun looking outside the United States for research scientists and clinical testing, it is facing greater communication and cultural problems, which create new hurdles for its R&D and strategic planning efforts. This case was sponsored by the Indiana University CIBER Case Collection.