Case analysis 3 (Group no.

C10)
Name Roll No
Hargunjot Singh p42126
Neepa Agrawal p42135
Rishabh Choudhary p42147
Samar Singh p42152
Saransh Agnihotri p42155

BAYER AG: ANTHRAX AND CIPRO

Executive Summary

Bayer AG, a German pharmaceuticals company has faced a situation in confrontation with the
United States Government who has been struggling with a Bioterrorism disease ‘Anthrax’ after
the 2001 World Trade Centre Terrorist attack. There have been 22 cases of casualties reported
with the disease while the bigger problem stays with the fear of the disease among the public.
This has led to increased demand for the drug. The diverged option deals with dissolving patent
Cipro, owned by Bayer AG to combat Anthrax in the United States. As in the position of Dr.
Manfred Schneider, Chairman and CEO of Bayer AG we have generated a total of three
alternatives and critically evaluated them with reasoning. We finally chose the first alternative
of increasing production by increasing capacities and making some changes in the company to
deal with the situation. If this does not work, we can go with the second alternative provided
which may lead to loss of patent.

I. Situation Analysis

Introduction
Bayer AG invests a lot in research and development and has the patent to manufacture the drug
under the brand name of ‘Cipro’. Ciprofloxacin is the drug of choice against Anthrax that can
control the spread of the disease which was approved by the FDA. America was under the
terrorist attack on September 11, 2001, where around 3000 innocent lives were lost and created
a panic among the citizens. To make the matter worse, terrorist groups had also unleashed
another attack through biological warfare in the form of “Anthrax”. At that time the company
was not in a position to supply the required quantity of drugs and the American Government is
contemplating revoking the patent on the drug allowing other pharma companies to produce
generic medicine of Ciprofloxacin. On the other hand, due to initial reports of inadequate
supply of “Cipro” by Bayer AG Canadian Government allows other companies to produce the
drug under the Canadian law” in times of emergency”.

Statement of objective
1. To produce Cipro drug at a larger scale so that the market demand can be met keeping
the prices low provided that the death rate remains low.
2. To protect the business interest of Bayer AG in the US market.

Decision Problem Statement

One of the major problems with Bayer AG is to victoriously address the unexpected increase
in the demand for drug Cipro and meet the expectations of the US government and citizens
successfully in a way that reputation is maintained and profitability of the firm is also
maintained in the long run.
Criteria for Decision Making
1. Ensuring enough supply of Cipro to US federal Govt. and pharmacies, in general, to
prevent panic among the citizens.
2. Maintaining and safeguarding the patent rights for the Cipro drug.
3. Safeguarding the image and reputation of the firm among its customers, stakeholders,
and US Federal government.
4. Addressing the issue of the high price of Cipro among customers and the US
government.
5. Changing the perception of Bayer AG as a profit-making company.

II. Decision Process

Generating alternatives

Some of the alternatives generated are as follows alternatives Bayer AG as the firm to move
forward in these scenarios are-
1. Increase production of Cipro drugs by increasing the capacities of the production line
of the firm in Cipro. The formation of a separate department to handle PR and political
affairs will bring information to the Public. An open feedback system to receive
concerns regarding the safety of drugs. Reducing the price of Cipro in the market.
2. Voluntarily give up the patient rights and allow the market as a whole to produce the
drug of the patients and customers.
3. To tie with the other companies in the drug manufacturing sector to increase the
production of Cipro drugs to meet the unexpected increase in the demand in the short
run.

Evaluation of Alternatives

Plan 1- This plan will help to reach the current market demand in the US arising due to
biological terrorism. If Bayer AG meets US market demand, then it will help Bayer AG to
handle political affairs better and protect its patent right. Protecting patent rights can increase
the revenue of the company by many folds in the coming years. The issue of handling public
relations and political affairs needs to be addressed so the formation of a public elections
department or purpose-specific department should be made. Price negotiations can be made as
competitors of Bayer AG mentioned the margin of 1.47 $ and it might reduce trust among
consumers for Bayer AG.

Plan 2- This plan will increase suppliers in the market and thereby demand can be met. It will
also increase trust among consumers. This move can be projected as an hour of need. But this
alternative has few cons as Bayer AG has withdrawn drugs namely Phenylpropanolamine,
Lipobay, etc. from the market in the past and yet it didn’t change perception based on cultural
differences.

Plan 3- This plan can be adopted as it will help to meet the rising demand of the market due to
biological terrorism. But this will have loopholes because teaming up will make customers and
the US federal government think that Bayer is not able to meet the demand for Cipro. This in
turn will give reasons to governments to take away the patent right of Cipro from Bayer AG
and increase the number of producers for Anthrax.
Choice of Alternative

Plan 1 should be chosen as the first approach from Bayer AG. It is an old and powerful
company that has shown the world its mettle after producing Aspirin and many other
antibiotics. We are assuming that Bayer AG is capable of increasing production. This approach
will take some time but market demand can be met and it will protect patent rights as it will
improve the image of Bayer AG in the US market and nullify questions raised on its capacity.
The public relations department will help in better communicating with the public. The price
of Cipro should be reduced as it will give an impression that Bayer AG is not making a profit
in case of an emergency.

III. Implementation

Plan 1 should be implemented first by bringing attention to increasing production. An

important meeting should be arranged to take decisions on how to increase the production line
and release necessary funds. New Price should be discussed by bringing professionals from all
the departments. After tackling the situation properly, a public relations department should be
made in the company to handle political affairs and public relations in the future.

Contingency Plan

Plan 2 is the contingency plan. If Bayer AG is not able to increase production, then it should
give up the right of a patent for CIPRO and allow other producers to meet market demand for
Cipro. This move will improve perceptions related to Bayer AG in the US and will generate
trust in international markets.