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Merck's Mectizan Donation Ethics

The Merck Mectizan Donation Program is morally justifiable because Merck prioritized human health over profits in line with its values of integrity and ethics. Milton Friedman would disapprove because the program did not put shareholder profits first. However, Merck clearly stated its values publicly, so investors accepting Friedman's view would reluctantly accept the decision while expecting future profits. While an ideal model, replicating the program would be difficult for most companies due to barriers like lack of funds and profit-focused values and goals.

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Chaima Ghodbéne
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72 views5 pages

Merck's Mectizan Donation Ethics

The Merck Mectizan Donation Program is morally justifiable because Merck prioritized human health over profits in line with its values of integrity and ethics. Milton Friedman would disapprove because the program did not put shareholder profits first. However, Merck clearly stated its values publicly, so investors accepting Friedman's view would reluctantly accept the decision while expecting future profits. While an ideal model, replicating the program would be difficult for most companies due to barriers like lack of funds and profit-focused values and goals.

Uploaded by

Chaima Ghodbéne
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Merck case study

Salma Fathallah

Strategic management Case study report

Merck & co case study

MSB - Mediterranean School of Business 2019-2020


Merck case study

1. Given the fact that Merck is spending corporate resources to manufacture and

distribute Mectizan, is the Merck Mectizan Donation Program morally justifiable?

Explain.

Merck was faced a dilemma where it already invested into research to find a cure for

the disease and had to figure out whether or not to provide and produce more for the sake of

human health improvement. In absence of government funding, it was really challenging for

the company to cover the costs with no benefits but due to its values, the directors of Merck

felt entitled and obliged to pursue the production and ensure the recover of millions of people

from several countries. It couldn’t do the same as Louis Vuitton, where if any piece of

clothing wasn’t sold before they would change the setting due to seasonal and trend changes,

it would be burned them to ensure it won’t end up in thrift shops. This seems a bit unethical

or uncalled for, but it doesn’t go unaligned with their values emphasizing on excellence,

luxury, uniqueness and savoir-faire. Merck’s values were more about integrity, ethics and the

betterment of human life and health. Therefore, people are way more of a priority than profits

according to their values and that should be apparent in their decisions.

2. Would Friedman approve of the Merck Mectizan Donation Program? Explain.

Milton Friedman is an economist who have very systematic views and beliefs about

these kinds of issues; he believes profit should always come first in a business. According to

his perspectives, corporate values should always, in a way, be profit-based. He bases his view

on the fact that your responsibility should be more oriented to the shareholders investing for

the development of your company than to the people and Corporate Social Responsibility in

general that should be limited. Therefore, he would be completely against this strategic

decision of Merck’s.
Merck case study

3. Should the fact that Merck's values are clearly stated in corporate publications that

are widely available to investors make a difference to someone who accepts

Friedman's position? Explain.

Any investor is seeking profit as they don’t really aim for the corporate’s values and

decisions alignments but only tend to focus on the gains he could get out of this international

successful corporate. Moreover, most of them tend to disregard the value statement as strict

application is rarely executed when it comes to major losses for the company like this one.

They would, therefore, be against this decision, but would unwillingly accept it since that was

very clearly stated beforehand to the public. However, they would expect the company to

make up for these losses and provide gains like any “secure” global company is supposed to

do.

4. Should the Merck Mectizan Donation Program serve as a model for other

pharmaceutical companies who are in a unique position to facilitate the eradication

of other diseases in the developing nations? Explain

In a utopian world where people always come before profit making, it would.

However, we are in a very capitalist era where a corporate’s only aim is to survive and

develop even when it has as much of responsibility towards humans as pharmaceutical

companies. Moreover, there are a lot of factors and barriers that is making the survival of

these corporates with this additional high standard nearly impossible; not all companies have

as much abilities, funds and NGOs alliances to make it possible. Also, it depends on how

people-oriented your values as a pharmaceutical company are. For example, GSK isn’t as

involved in this dilemma since it very clearly stated that its three top strategic priorities and

directions are to grow a diversified global business, deliver more products of value and to

simplify the operating model; its goals are also mostly about profit making through ensuring
Merck case study

excellence and is therefore not entitled to sacrifice that for the sake of the people. And finally,

if it was ever to happen, this would develop a scarcity of investors in this field and therefore

less opportunities and capabilities for elaborate research and betterment.


Merck case study

References:

 Hwang, J. J. (2012). Is Merck’s corporate social responsibility good for the global health?

Retrieved from

[Link]

Common questions

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The ethical implications of the Merck Mectizan Donation Program in addressing global health issues highlight a commitment to human welfare that sets a benchmark for other industries. Unlike industries primarily focused on consumer goods, Merck’s initiative emphasizes prioritizing health over profit, challenging other sectors to redefine their social roles while balancing market demands. It underscores an ethical responsibility for corporations to contribute positively to societal health, influencing policy and corporate governance across industries .

Financial challenges of CSR initiatives like Merck's can constrain pharmaceutical companies' ability to innovate and conduct research due to reduced investor interest and financial resources being diverted from R&D to social programs. This pressure might lead companies to seek innovative funding models, such as partnerships or tiered pricing strategies, to sustain research while fulfilling social commitments, thereby maintaining a balance between ethical responsibility and innovation .

Milton Friedman would likely disapprove of the Merck Mectizan Donation Program because his belief centers on profit maximization as the primary duty of a corporation to its shareholders. According to Friedman, corporate responsibilities should focus more on generating profits for investors rather than on broader social responsibilities, which would discourage supporting a program like Merck's that lacks direct financial returns .

Merck can balance ethical commitments with financial sustainability by integrating corporate social responsibility into their business model, ensuring CSR initiatives align with strategic goals that provide indirect financial benefits, such as enhancing brand reputation and customer loyalty. This could involve collaborative efforts with governments or NGOs for shared funding and visibility, thus allowing Merck to sustain efforts like Mectizan without jeopardizing financial health .

Investors may accept Merck's value-driven decisions if they are already clearly stated in corporate publications that are widely available, even if they align with Friedman's profit-first approach. These investors might tolerate the decision because the transparency allows them to make informed decisions, and even though they disagree, they might view it as part of a long-term corporate strategy that was clearly communicated .

If pharmaceutical companies widely implement programs like the Merck Mectizan Donation Program, the long-term impact could include a shift in investor behavior, where investors may become more selective, fostering support for companies that align with ethical practices. However, there might also be a scarcity of investors interested solely in profit, leading to less capital available for research and development unless these efforts can be proven to yield indirect financial benefits or align with a company's broader strategic goals .

Merck’s approach with Mectizan contrasts significantly with companies like GSK, which prioritizes profit-oriented strategies. While Merck emphasizes corporate social responsibility and ethical imperatives by providing Mectizan to those in need, GSK focuses on strategic priorities such as growing a diversified global business and maximizing profit, thus not committing resources that could detract from financial goals .

Merck’s decision to donate Mectizan underscores the broader debate on corporate responsibility versus profitability by placing human health ahead of profit maximization. This decision highlights a conflict between shareholder expectations for financial returns and broader ethical obligations. It reflects a growing narrative that corporations must weigh social responsibilities equally with or above profitability, potentially influencing corporate policies towards more sustainable and ethically responsible strategies .

The Merck Mectizan Donation Program is morally justifiable as it aligns with Merck’s values of integrity, ethics, and the betterment of human health. Despite the lack of government funding and absence of direct profit, Merck’s decision to produce and distribute Mectizan prioritizes human health improvement over financial gain. This reflects a commitment to corporate social responsibility and ethical standards, emphasizing the importance of human life over corporate profitability .

The Merck Mectizan Donation Program is unlikely to serve as a sustainable model for other pharmaceutical companies due to economic pressures. In a capitalist environment, the primary goal is often profit rather than altruism, and not all companies have the resources or alliances to support such initiatives without compromising their financial stability. Factors like survival in competitive markets and investor expectations make it challenging for all companies to adopt similar programs without significant external support or redefined corporate values emphasizing social responsibility .

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