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Even our trusted doctors have a price? March 21, 2007

Posted by Meg in agency theory, Business-Society Issues, pharmaceutical, Public Interest.

A set of records from the state of Minnesota show that certain pharmaceutical companies are paying high profile doctors and making substantial donations to clinics throughout the United States. This information became apparent due to a Minnesota law stating that drug companies must disclose all payments made to doctors. Patient advocacy groups are concerned about this revelation and the influence that various drug companies may, in fact, have over doctors.

Since 2005, drug companies have paid health care workers $57 million in the state of Minnesota alone. Most doctors, however, assure the public that these payments do not influence their treatment of patients, but are merely to give marketing talks. Some even state that close ties between doctors and drug companies enable those in the medical field to be more educated about various prescription drugs and more able to advise their patients on whether or not and how to use these drugs in a healthy way.

Research exists, however, to indicate that doctors with a close relationship to various drug companies often prescribe more modern (as well as expensive) drugs that may not be in the best interest of patients. Due to public scrutiny of various pharmaceutical companies and the FDA as well as reasonable evidence indicating that numerous medications are over-prescribed, these records may concern more patients who wonder whether their doctor’s advice is in the patient’s best interest or the doctor’s.


Business Week’s 50 Top Performers March 20, 2007

Posted by Stephanie in Customer Service, Finances, innovation, Internet, Manufacturing, media, pharmaceutical, Public Interest, Retail, Technology, telecommunications.


Business Week recently announced its yearly 50 Best Performers article in the March 26, 2007 edition of the magazine. When first looking even at the title of the article I was skeptical about how these companies were selected. It seems impossible to compare every company in every sector and rank their performance. I was pleased however to find their criteria for making the selections seems to be as fair as possible.

Financially they use specific criteria and what they look for in companies when making this list. The two principal financial figures Business Week uses in its analysis are average return on capital and sales growth over the past 36 months. They also consider the importance of examining sectors separately, as factors within one particular sector may inflate or deflate the appearance of a company’s performance unfairly.

Specific quotations I highlighted when reading the article regarding what BW determines as strategies for success:

“…rewriting the rules of engagement in their industries.”

“…a deep understanding of customers, a competitive advantage that has enabled them to sell more good and services than rivals.”

“…work hard to anticipate and head off potential problems well before outsiders are even aware of these looming challenges.”

Details about all 50 companies are included in the compilation of roughly 40 pages of discussion. One particular company I had not heard of before, ranked 31 is Stryker. The company manufactures artificial joints, such as knees, shoulders and hips. Part of their success is due to the baby boomer generation who show no signs of slowing down in retirement even as natural aging takes is toll. Anther interesting aspect of the company is its preparation in changing CEO’s. As the current CEO, John Brown is planning on retiring, COO, Stephen MacMillan has had roughly 4 years to shadow and plan the transition. Both the process the company has developed for the transition and the mere fact that the CEO is not being forced out of the company it seems are two incidents not seen as often anymore.

I am still hesitant to agree that companies covering the full spectrum of all organizations and industries can not only be compared but ranked in a hierarchy. Business Week does an excellent job at attempting this challenge but I feel that some subjective factors weigh into the decision, especially between close rankings, say between spot 8 and 9.


1 Google

2 Coach

3 Gilead Sciences

4 Nucor

5 Questar

6 Sunoco

7 Verizon Communications

8 Colgate-Palmolive

9 Goldman Sachs Group

10 Paccar

11 Amazon.com

12 Cognizant Technology Solutions

13 Avon Products

14 Varian Medical Systems

15 Bed Bath & Beyond

16 CB Richard Ellis Group

17 Robert Half International

18 Chicago Mercantile Exchange Holdings

19 Adobe Systems

20 EOG Resources

21 Sempra Energy

22 Sherwin-Williams

23 Lehman Brothers Holdings

24 Rockwell Collins

25 IMS Health

26 Allegheny Technologies

27 Oracle

28 Starbucks

29 Moody’s

30 PepsiCo

31 Stryker

32 Best Buy

33 United Parcel Service

34 Apple

35 T. Rowe Price Group

36 Valero Energy

37 Constellation Energy Group

38 TJX

39 Morgan Stanley

40 Paychex

41 Coventry Health Care

42 United States Steel

43 United Technologies

44 Hershey

45 Black & Decker

46 Synovus Financial

47 Linear Technology

48 AT&T

49 XTO Energy

50 PNC Financial Services Group

Texas Mandated Vaccine February 5, 2007

Posted by Elaine in Business-Society Issues, pharmaceutical.

Governor Perry of Texas has just passed an executive order requiring school girls in the 6th grade to get vaccinated against HPV, a sexually transmitted virus that causes cerival cancer starting September of 2008. This vaccine, Gardasil, produced by Merck will be $360 a shot, boosting the company’s net income by billions if passed throughout the nation. People are lobbying against this act stating that it violates the rights for parents to make this choice for their kids. The ethical issue lies behind this question: “Does this vaccine promote premarital sex?”

This bill is very controversial for parents, conservatives, and religious groups. Is it telling kids that it is okay to have sex because they are now protected? Is it the same as getting a vaccine for lung cancer and telling kids they are okay to smoke? Does this violate the rights of parents and not giving them a choice to say whether they want their children to be vacinated or not?

I personally think that all girls should get this vaccine (the American Cancer Society estimates that almost 10,000 women in the United States will be diagnosed with cervical cancer this year and more than 3,670 will die). Parents don’t always know what’s best for their children. Sure they might have religious viewpoints, but they are not always shared with their children. Premartial sex may not be approved by them, but sometimes it is inevitable in this society. It is better to be safe than sorry when it deals with a life-death matter.

Do you think Texas should rescind this vaccine order?

Merck – battling over withdrawn drug January 31, 2007

Posted by silviamocanu07 in Business-Society Issues, pharmaceutical.
1 comment so far

I found this interesting article in the Financial Times – here is the link – http://www.ft.com/cms/s/573c20ec-b06d-11db-8a62-0000779e2340.html – and the issue discussed is Merck’s intention to fight lawsuits over its withdrawn painkiller drug called Vioxx.

Merck has already invested a significant amount of money into fighting lawsuits and it continues to refuse to settle any of them, despite the fact that this issue has taken a toll on their profit growth.
I think that the R&D costs that they have already invested in the drug are significant, therefore, they do not want to simply give up on such a large scale project. What do you guys think?

Given the significant expense already incurred in order to fight lawsuits brought against this one product, I think that Merck shoudl rethink their strategy and maybe try and improve the drug. In addition, this has already affected their income, particularly for the last quarter, therefore I believe that they should rethink the possibility of settling lawsuits, rather than pumping more money into them?Do you think that this the withdrawal of the drug could impact the company image as a whole or that it could take a long-term toll on their net income?

Tylenol January 31, 2007

Posted by collage9 in pharmaceutical.

I think an interesting case that deals with business ethics, and one that we recently discussed in my MGMT 312 class, is the Tylenol scare in 1982.  It is interesting to see how major companies, in this case Johnson & Johnson, handle crisises such as this one.  After learning that several deaths had occurred as a result of taking their Extra Strength Tylenol capsules, with five occurring in Chicago and one in Texas and California each, Johnson & Johnson made the decision to pull all Tylenol capsules off the shelves.  They recalled 32 million bottles of Tylenol that were worth over $100 million in sales.  This is obviously not an easy thing for a company to do, especially given the amount of sales that this product generated for the company.  But, for Johnson & Johnson, there really was no other choice.  They are a company that has always taken pride in the fact they put their customers above all else, and in this case the possibilty of more deaths resulting from taking Tylenol greatly outweighed the fact that they could lose so much profit.

I think that Johnson & Johnson without a doubt did the right thing in taking all Tylenol capsules off the shelf.  Even though it could have ended up as a public relations disaster and a large decrease in sales overall, they still had the courage to make the right decision, something that i think a lot of other companies might not have been able to do.  I think its good to see that the decision paid off for the company in the end and was rewarded for doing the right thing.  Some might say that the decision probably was made because they didn’t want to lose sales as a result of not taking the Tylenol off the shelves, but I really think that Johnson & Johnson had their customers best interests in mind.

Merck 4Q Earnings Plummet 58 Percent January 30, 2007

Posted by Jordi in accounting, Business-Society Issues, Organizational Environment, pharmaceutical.
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Merck 4Q Earnings Plummet 58 Percent – New York Times
Merck & Co. reported Tuesday that fourth-quarter profit plunged 58 percent despite higher revenues as the drugmaker took a slew of charges for restructuring costs, an acquisition and increased legal reserves, mainly for its withdrawn painkiller Vioxx.

I want to make two points about this news.

For a long time Pharmaceutical companies have built up their image as powerhouses of innovation.  And they often are, but there is some mythmkaing in with the reality.  Much of their money goes into direct to consumer advertising.  So, patients ask their doctors for a particular brand name.  Isn’t this an example of changing your environment? Who are the stakeholders  in delivering prescription drugs to patients?  Is society, reflected in ineffective delivery of most needed drugs to sickest patients, a legitimate stakeholder?  Also, much of their “innovation” comes from acquisitions.  That is fine, but it suggests that big pharma is a really a middle man between true innovators and end-users.  Like a bank, regulatory agency manager, and marketing firm rolled into one.  (Brian, you wanna weigh in here?).

Second,  and I am even further out on a limb here.  What is up with the term “restructuring costs”?  It just puzzles me.  I feel like it implies that these are “one-time” costs and nto part of “normal” business.  Financial markets and their  stakeholders (buyers, sellers, analysts, regulatory agencies) all build their tools in a world of projecting normalcy (and it seems stability) into the future to estimate NPV, for example.  But, if you are managing a global economy in a complex environment, aren’t their _always_ restructuring costs.  Is there something to be gained from dropping the linguistic and accounting myth of these costs being extraordinary and to start building accoutning and financial systems that reflect the epxectation of resturturing costs?  Ok, accountants, now you weigh in.