Name: Girish Mani

Roll No: 32
PGDM 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.

Name: Girish Mani

Roll No: 32
PGDM Finance
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.