Name: Girish ManiRoll No: 32PGDM Finance

Q. Q Whether Merck should develop Mectizan (Ivermectin) or not?

Merck & Co., Inc. was in 1978, one of the largest producers of prescription drugs in the world. Headquartered in Rahway, New Jersey, Merck traced it origins to Germany in 1668. Over three hundred years later, Merck having become an American firm, employed over 28000 people and had operations all over the world. River blindness was a problem afflicting 85 million people in 35 Third World Developing Countries of Africa, Middle East and Latin America. Merck scientists had developed Ivermectin for treating Animal related parasitic diseases but found them to be effective against microfilaria having characteristics similar to the human virus causing River blindness. There were a lot of problems in going ahead including financial and resource constraints, lack of infrastructure, support from government etc.As the question stands in front of Dr. Vagelos whether Mectizan should be developed or not, the best solution for him would be to develop it. One of the main reasons for this is that George W. Merck, son of the companys founder made an unbusinesslike statement, we never try to forget that medicine is for the people. It is not for profits. The profits follow, if we have remembered that, they never failed to appear. The better we remember it, the larger they have been. These form their Corporate Philosophy. With such philosophy the company should not be concerned about the profits they would receive or would they even be able to get their investment back. The main idea behind to develop this medicine should be to help poor people and contribute in eradication of this dreadful disease. The company has a chance to improve its image and its brand in the Third World countries where river blindness has affected millions of people. The company will improve its relationships with local governments and international aid organizations which will help in getting support and finance. This will even be good for the sale of Mercks other drugs too as a result of improved image. It would create new revenue channels for Merck for other affordable drugs which might not have been the case previously. These alliances will also reduce the risk of faulty distribution and also some of the financial risk would be shared.

Another advantage can be that once the distribution network is established, it can be used to distribute other drugs as well opening new markets for them in the third world countries. It can be said to be a Strategic and Long term benefit .The Company can leverage its good deeds for future formulations. The decision to proceed here would also not be that risky. They had already spent a significant amount of money in the development of the animal drug; cost for developing a human formulation would be less than that for developing a new compound. Also the company had a decade of drought in terms of new drugs and its patent protection would expire. It needed new drug to sustain itself and to create a future for its present research investments. It could obtain patents if proved successful. It was also believed that the drug which was in its final development stage was likely to be successful. The only thing they need to now do is develop compound for humans. Hence, we can say that despite the few risks Merck should advance with the development of this drug development.