BM2212

Names Shaine Padua Section bshm 301 Date 03/23/23

ACTIVITY
Merck
Merck, a major pharmaceutical manufacturer that liked to spread its bets across a range of research
directions and products, faced the most challenging decision of whether to invest primarily in one
research and development line or spread its investments in multiple lines of research.

Merck’s R&D strategy was to bring as many drugs to market as possible. Recently, the firm’s focus
shifted. Rather than developing a range of drugs, Merck has focused primarily on one drug, Keytruda, a
new cancer drug that leverages the patient’s immune system to fight cancer tumors. The drug is already
marketed to treat skin, bladder, and other cancers, but the firm is looking for even more uses.

Merck has expanded its oncology team, doctors who study and treat cancer, from 20 to 100 specialists.
The firm has over 700 clinical trials examining how Keytruda could treat more than 30 types of cancer.
Over half of Merck’s budget for clinical trials is aimed at Keytruda. Merck’s R&D head, Roger Perlmutter,
said to his staff that whatever other projects they are working on, they can stop now because they will
focus on Keytruda.

Not all clinical trials have produced positive outcomes. The drug did not appear to extend the survival of
gastric cancer patients. Still, the general news has been positive. Trials for kidney, brain, lung, and
esophageal cancers have shown positive results. The drug sales have been growing rapidly, making up 9
percent of Merck’s sales in 2017, and are projected to make up nearly 20 percent of the firm’s sales in
2019, $8 billion in sales for one drug alone. Even with its success, some wonder if Merck is investing too
heavily in this one patented drug

Answer the following questions: (4 items x 10 points)

1. Which between Milton Friedman’s and Archie Carroll’s views on business responsibility is
being demonstrated in the given case? Explain your chosen view.
Answer: Since it was stated in the introduction that Merck was debating whether to spend
investments on a number of lines or to concentrate on one area of research and development, I
believe the business responsibility that is being described here is Milo Friedman's perspective.
He shifted his attention to He or She. Merck has mostly concentrated on one therapy, Keytruda,
a novel cancer treatment that makes use of the patient's immune system to combat cancerous
tumors, rather than producing a variety of medications. The medication has already been
approved to treat bladder, skin, and other malignancies. Which only means that Merck and his
team decided to focus on Keytruda in order to conduct experiments on how to improve
medicine for patients with gastric cancer because they are already making money from one
drug, Keytruda, and they want to be able to continue doing so as long as they are abiding by the
rules and regulations without deception or fraud.

2. Who are the primary stakeholders of Merck based on the case study?

Answer: Because the company didn't create a variety of medications that could effectively treat
all types of cancer, including gastric cancer, the customer is considered to be unhappy because
Keytruda isn't helping enough patients with this type of cancer. This is because the medication
itself isn't really suited to their situation.

3. Who are the secondary stakeholders of Merck based on the case study?

Answer: Trade Associations since it doesn't matter whether Merck continues to produce
pharmaceuticals or not; they can still learn and continue to market, but because of the company's
 shifting business objectives, they are limited to marketing Keytruda. In contrast, if they keep
working on developing cancer treatments, the cancer association could face numerous risks.

4. How do the stakeholders of Merck influence the strategic decisions of the company?

Answer: We believe that the team's decision to concentrate on one medicine, Keytruda, had an
impact on the company's strategic decision. It's possible that they chose to focus on just one drug
because it would be simpler to manage and cost less to produce. This would be smart for the
team and business, but it's fine with us if they stick with it since it's already generating a large
portion of their revenue rather than prioritizing RD, which is now or never.

Rubric for grading:

CRITERIA PERFORMANCE INDICATORS POINTS

Content Provided pieces of evidence, supporting details, and 8

factual scenarios

Organization Expressed the points in clear and logical arrangement of 2

of ideas ideas in the paragraph
TOTAL 10

Reference:
Witcher, B. (2020) Absolute Essentials of Strategic Management. New York. Taylor & Francis Group Ltd.

04 Activity 3 *Property of STI

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