Contents

Introduction.................................................................................................................................................2
Company overview......................................................................................................................................2
The Nurofen case........................................................................................................................................2
The ethical issues.........................................................................................................................................3
The affected parties.....................................................................................................................................3
Point of view................................................................................................................................................4
Conclusion...................................................................................................................................................4
References...................................................................................................................................................5
Introduction
Ethical conducts have been on the rise as the most concerned topic by lawmakers in requiring
businesses of any scales to stay in the compliance with domestic and international regulations, as
well as in the interest of social public (Singh, 2017). However, from time to time, it has been
proven that laws created by humans can be loopholed, and businesses taking advantage of these
gaps can freely conduct their unethical practices without the attention of law enforcers, leading
to irrecoverable damages to the community.
In this report, the researcher will be analyzing such progress in the case of Nurofen, a pain killer
that misled consumers with their specifications in 2015-2016. The report aims to provide a
general picture of this case, including the details, the ethical essence, the affected stakeholders
and personal opinions of the author.
Company overview
Nurofen is a product of Reckitt Benckiser (RB), an international consumer goods company
specialized in providing health, hygiene and home products. The company was formed and
headquartered in England in 1999 after a merge from two smaller companies. After 20 years in
operation, the company has grown to reap over £12 million in total revenue with approximately
20% profit margin; in 2007, the company was recognized as one of the fastest growing
businesses by Business Week, when RB increased their revenue by 40% in three years through
essential product launches (Scott, 2008).
Regarding scandals, RB is not totally a clean slate. The company has been charged with several
suits regarding environmental pollution (the rodenticide ban in 2008), child labor (the
procurement of palm oil facilities in 2016), improper management of equipment (the humidifier
disinfectant in 2001), and finally the misleading advertisements on the case of Nurofen in 2016.
Records show that the company has from time to time made mistakes, however, with the recent
circumstances, it is of no confidence that this company will not repeat itself (Youn, 2019).
The Nurofen case
Nurofen is a product of Reckitt Benckiser’s health branches, created with ibuprofen as essence to
treat several types of pain, including back pains, migraine, tension headache or period pain. The
product is advertised with two packages: the regular package is used for general pain-relieving
purpose while the premium package is oriented for a specific type of pain range (RB, 2020).
However, in 2016, the issue was discovered that the premium packages advertised for specific
pain ranges contained the same ibuprofen, which treated different types of pain similarly. The
consumers had been buying premium Nurofen without knowing that these products had no
specific bonus functions; as a result, the company was denied appeal and fined $6 million to the
ACCC (Dole, 2016). In this case, the company was dictated as intentionally violating the
Australian laws; while it was probable that the internal departments at RB faced a dilemma
between the professional standards regarding the use of medicine and profits, it was clear that the
company chose profits over others.
The ethical issues
On this decision, RB violated the five essences of ethics with the main damages done to
integrity, objectivity, professional competence and professional behaviors. The company’s
unconducted ethics were mostly associated with behavioral issues.
Integrity: Beside from the honest practice principle, integrity also requires involved parties to
avoid spreading misleading information (Huberts,2018), which RB/Nurofen had violated in this
case. The products spread falsified information regarding the actual uses and functions of the
products, wasting the society over $45 million in irrecoverable costs (the costs spent on buying
the products but did not see the according benefits).
Objectivity: The violation of objectivity is not yet clear as it is mostly proven internally (Singer,
2012). However, virtually it appears that the heath production departments did not interfere with
the marketing department and agreed with the two-layered pricing advertising strategies. The
propagation of the same products with different uses must have been aware of, yet no early
actions had been taken until the enforcement of laws.
Professional competence: This violation overlaps with objectivity, as the departments at RB
involved in the production of Nurofen had neglected their standards and allowed low-quality
products to come into circulation.
Professional behaviors: RB was criticized on their choices in this ethical dilemma. The company
realized that if they imposed two-layered pricing strategies, they could earn higher revenue and
accordingly profits on each unit sold; however, they must have been aware that these products
were simply an outrage markup from regular Nurofen. Yet they turned toward profits and
neglected their professional standards.
The affected parties
In the case of Nurofen, there are two primary affected parties: the consumers and the company
RB.
On the part of the consumers, while they were not purchasing fake products that directly harmed
their well-beings, they were robbed of their consumer surplus through a double pricing scheme
(Richard, 1981). The company targeted regular consumers with limited budget on healthcare
products with their regular Nurofen packages, and converted high-budget consumers into higher
sales value with the personalized offers on the premium Nurofen. Essentially in this case, buyers
were purchasing a product not true to the advertisements, which, in certain aspects, could be
considered as a scam.
On the other hand, the company benefited from the scheme. They retained the input cost on each
Nurofen box while enjoying a higher selling price, thus implying a higher profit margin on the
$45 million revenue they gained from selling Nurofen. While it was positive for the company in
terms of profit, it would hurt the brand image deeply when the case was discovered. As a result
of this incident, the company had recorded a slump in their stock price during the period 2015-
2016, especially at the end of 2016 when RB was required to pay the $6 million fine to the
ACCC.
Figure 1: Reckitt Benckiser stock price 2016. Reproduced from Finance Yahoo (2020).
Point of view
Such cases of large corporations ignoring ethical principles of conduct have not been rare in the
age of modern economy. With any laws in issuance, large businesses can opt for searching for a
loophole, or outright ignoring it. Through the study of such cases, the researcher has gained a
different understanding regarding the realistic practice of ethics in the real world, and not
surprisingly, it is different from the theory.
First of all, business ethics in the real world are a re-enforcement, not a requirement. Many
businesses teach their employees and customers about their ethics as a scheme to build up their
brand image reputation and draw in as many customers as possible. An example of this is the
“green swindlers”, which are businesses that claim to be environmentally friendly with bogus
CSR reports to attract customers to their services, while in fact they do not practice what they
claim (Pearce, 2008). It is similar in the case of RB; the company has a motto to “protect, heal
and nurture” to create a healthier, cleaner world; yet they are willing to put aside their ethics for
short-term profit surges.
Second of all, practicing business ethics hurt the profits. Ethics require the business to be honest,
transparent and provide as advertised, however, if the market practices business ethics at the
maximum level, the market will become a fully-competitive market that will drives the profit
margin down to practically 0 (Rio, 2013). This is not beneficial for the producing parties and
thus there is little chance they will practice ethics if the perceived value is insignificant.
Regardless of the practical situation, the essence of ethics is still present in the business
activities. In fact, companies are required to uphold the five principles to a certain extent, for
example professional care and conducts. While its primary purpose is to attract customers and
retain their loyalty to produce profits, this very motive is driving businesses to practice exactly
the theoretic ethics, which are generally similar to the researcher’s original view.
Conclusion
By the means of conclusion, the case study of Nurofen at Reckitt Benckiser has shown us that
while consumers may not be subjected to a scam with fake products, they are inside a great
scheme to rob them of their consumer surplus with falsified advertisements and unethical
conducts. Businesses such as RB are more than prepared to search for a loophole in the
regulation or set up a stealth campaign to reap as much profit as possible; for them, business
ethics are little more than a façade to masquerade as a reputable brand. While eventually they
have to pay for their misconduct, the damages done to the society cannot be reversed, suggesting
to us that business ethics may not be a requirement to operate, but rather only a re-enforcement
to protect the brand.

References
Rio, F 2013, ‘Perfectly competitive markets: Efficiency and distribution’, in book: Southern Europe School
on Liberalism 2013, European Liberal Forum.

Richard, S 1981, ‘Monopolistic Two-Part Pricing Arrangements’, The Bell Journal of Economics, vol 12(2),
pp. 445-466.

Singer, P 2012, ‘The Objectivity of Ethics and the Unity of Practical Reason’, Ethics, vol 123(1), pp. 9-31.

Huberts, L 2018, ‘Integrity: What it is and Why it is Important’, Public Integrity.

RB 2020, ‘Relieving pain for over 30 years’, Rickett Benckiser, viewed 18 October 2020,
https://www.rb.com/brands/nurofen/

Singh, C 2017, ‘CODE OF ETHICS IN AN ORGANISATION’, International Journal of Application or

Innovation in Engineering & Management, vol 6(5).

Pearce, F 2008, ‘The great green swindle’, The Guardian, 23 October, viewed 18 October 2020,
https://www.theguardian.com/environment/2008/oct/23/ethicalbusiness-consumeraffairs

Yahoo Finance 2020, ‘Reckitt Benckiser Group plc (RB.L)’, Yahoo Finance, viewed 18 October 2020,
https://finance.yahoo.com/quote/RB.L/history/-

Youn, S 2019, ‘Suboxone maker Reckitt Benckiser to pay $1.4 billion in largest opioid settlement in US
history’, ABCNews, 12 July, viewed 18 October 2020, https://abcnews.go.com/Business/suboxone-
maker-reckitt-benckiser-pay-14-billion-largest/story?id=64274260

Scott, M 2008, ‘Reckitt Benckiser Cleans Up’, Bloomberg, 24 April, viewed 18 October 2020,
https://www.bloomberg.com/news/articles/2008-04-23/reckitt-benckiser-cleans-upbusinessweek-
business-news-stock-market-and-financial-advice

Dole, N 2016, ‘Nurofen fined $6m for misleading consumers following ACCC case over 'specific pain'
range’, ABC, 16 December, viewed 18 October 2020, https://www.abc.net.au/news/2016-12-
16/nurofen-fined-6m-for-misleading-consumer/8126450