Managerial Analysis and Communication

BAYER AG: ANTHRAX AND CIPRO

Situational Analysis

The World Trade Centre and Pentagon, located in New York, were attacked by terrorists using
hijacked civilian airlines. While reeling from the 9/11 attacks, the USA was hit by a bio-weapon
named ‘Anthrax’: a new form of terrorism. This induced a general sense of panic among the
citizens of the country.

Cipro, a medicine produced by a German pharmaceutical company Bayer AG, was the only
medicine approved by the U.S. Food & Drug Administration as the cure for Anthrax. This
sense of panic among the citizens led to a surge in demand for Cipro in the USA, fuelled
partially by the paranoia that was created around Anthrax. There are also some societal &
political factors, which led to a setback for Bayer AG, regarding the patent of Cipro. Dr.
Manfred Schneider, Chairman and Chief Executive of Bayer AG, soon found his company in
a challenging situation.

Problem Statement

The panic caused by Anthrax across the United States has heightened the anxiety levels of the
people in the nation. Dr. Schneider is faced with a challenging situation as to how the company
can solve the problem of scarcity of Cipro and with that also retain the patent of Cipro while
still maintaining the trust of Americans.

Criteria

1. Retention of patent.
2. To maintain credibility all over the globe.
3. To maintain good relationship with the ruling government.
4. Saving the cost (like Legal, R & D etc.)

Alternatives

 Plan A: To retain a patent by increasing the efficiency of supply & operation functions
of Bayer AG. Through this, they can produce more of Cipro and minimize the scarcity
of Cipro in market.
 Plan B: Giving up the patent of Cipro for it to be launched as a generic patent and by
this means other pharmaceutical companies can also produce the Cipro medicine and
minimize the scarcity of Cipro in market.
  Plan C: Bayer AG has manufacturing plants all over the world so it can produce Cipro
in the production plants of different companies other than USA and can import the
Cipro drug. By this means the balance between supply and demand of Cipro drug is
established.

Analysis of alternatives:

Plan A

Pros Cons
Global credibility will increase by means of Being the only manufacturer of Cipro, is
increasing efficiency and meeting demand. some accident happens in manufacturing
plant then there are chances of more scarcity
of Cipro in market.
Patent is retained so by this means there is no Public will think that in the time of
substitute in market and more revenue can be emergency also Bayer AG is seeking profit
generated. by not generalising the patent and by this
means it can hurt the public sentiments.
If in future this type of situation occurs then
public trust will be developed.

Plan B

Pros Cons
There would be more manufacturers of Cipro More producers so more competition.
and hence more production of Cipro, which
will balance out the scarcity.
Relationship with government will More competition so profit & Revenue will
strengthen. be less so it will badly affect the balance
sheet of the company.
Trust of public will increase. It suggests the incapability of Bayern AG.

Plan C

Pros Cons
Bayer AG can retain the patent. It will create more complex operations inside
Bayer AG’s group companies.
Bayer AG can balance out the supply- It can be expensive due to govt. approval and
demand gap. import-export expenses.
Trust of public and relationship with
government will increase.
Plan of Action

Although it seems that plan B gives you more leverage by increasing trust in public and
maintaining good relationship with government, while giving up patent and creating more
competition for your own patented product, we would like to follow the combination of plan
A & plan C because as a chairman and CEO of company it is your duty to work in the direction
which benefits the company while helping the society in the time of crisis and emergency. As
demand is not so high in market right now, we can cope up with the demand by increasing the
productivity and efficiency of production of Cipro drug. By this means we will retain the patent
and also balance out the demand market gap and if the demand will further increase than we
will import it from the other production units of company from different countries. We will
also sell it with less profit margin so people will get it in less price and by this means we’ll also
help people in the time of crisis and emergency and gain the trust of public.

Submitted By:
 Arjitkumar Patra (P40114)
 Arsal Khan (P40115)
 Garima Gulati (P40124)
 Dilavkumar Patel (P40122)
 Nitin Chandock (P40135)
 Harsh Modi (P40130)