15th February, 2016 (MAINS)


Q1. One of the scientists working in the R&D laboratory of a major pharmaceutical company discovers that one of the company’s bestselling veterinary drugs has the potential to cure a currently incurable liver disease which is prevalent in tribal areas. However, developing a variant of the drug suitable for human being entailed a lot of research and development having a huge expenditure to the extent of Rs. 50 crores. It was unlikely that company would recover the cost as the disease was rampant only in poverty stricken areas having very little market otherwise.

If you were the CEO, then

(a) Identify the various actions that you could take

(b) Evaluate the pros and cons of each of your actions

[20marks/2015/GS-4] 250 words.

Please write answer in the comments section.

  • Umesh Sachin

    (a) The various actions which can be taken are –

    (i) Taking support of Government
    (ii) Raising money through equity market
    (iii) Collaborating with foreign company
    (iv) appealing common people through media and NGO’s for collaboration and funds through sale of products
    (b) Evaluation of the options :-

    (i) Option 1 : Taking support of government
    1.1 It will solve the funding issue.
    1.2 Poor people will benefit. Justice will be done to them.
    1.3 Government machinery can be utilized for better service delivery.
    1.1 It will put Subsidy burden on government.
    1.2 Company’s ownership of product will be diluted

    (ii) Option 2 : Raising money through Equity market
    2.1 It will solve the problem temporarily.
    2.2 Poor people will benefit
    2.3 Corporate Social Responsibility will be fulfilled
    2.1 Investors may lose money in future.
    2.2 My company might come under severe financial stress.

    (iii) Option 3 : collaborating with foreign company
    3.1 Not just poor of India, but of whole world will benefit.
    3.2 The problem can be solved in holistic manner.
    3.1 Issues of Intellectual property rights may hamper this collaboration.
    3.2 foreign company may sell the drug at higher prices.

    (iv) Option 4: appealing common people through media and NGO’s for collaboration and funds through sale of products
    4.1 Pool for social activities will be created
    4.2 Good publicity of company will be done.
    4.3 Increase in sales and profits which then are transfer to the project
    4.1 It may also decrease the sale as price of company’s products will be increased
    4.2 may take a long time to collect necessary funds
    Considering all the above three options, I will go for the first option, of taking support of government.

  • Ashi Agarwal

    Ans. The CEO of the organisation can choose anyone of various options that can be available to meet the need.
    1. He can disperse the burden of the cost of development of the specific drug on various other products. Thus, without increasing the cost of a
    particular product, he can raise the required fund. But in such a condition consumers of other products will have to pay the cost of the drug that they will not use and it will be unethical on both professional and social parameters.
    2. He can ask the government to provide financial aid for the project because it requires a huge amount and the people, who will be benefited by the drug, can not afford its cost. Hence, it is responsibility of the government to pay for the welfare of such people. It may avail the required
    amount as per need. But due to the formal work culture of the government system the approval and issuance of the amount can take a long time that will cause unnecessary delay in the starting and running the project. Furthermore it can invite unwanted interference of government
    personnel in the project.
    3. He can arrange the required amount from the corporate social responsibility fund (CSRF) of the organisation. If amount is less than requirement he can seek assistance from similar funds of other corporate organisations. It will avail the required amount without delay and without following unnecessary formal activities. But the amount collected by CSRF may also be insufficient.