Harvard Case - When Supply Is of Public Interest: Roche & Tamiflu
"When Supply Is of Public Interest: Roche & Tamiflu" Harvard business case study is written by Noel Watson, Laura Rock Kopczak, Prashant Yadav. It deals with the challenges in the field of Organizational Behavior. The case study is 21 page(s) long and it was first published on : Jan 15, 2009
At Fern Fort University, we recommend that Roche adopt a multifaceted approach to address the complex challenges surrounding Tamiflu production and distribution. This approach should prioritize public health, ethical considerations, and long-term sustainability while ensuring Roche's financial stability and reputation.
2. Background
This case study focuses on Roche, a pharmaceutical giant facing a critical dilemma. The company holds the patent for Tamiflu, an antiviral drug effective against influenza. The drug's importance is magnified during pandemics, as witnessed during the 2005 avian influenza scare. However, Roche faces ethical and logistical challenges in managing Tamiflu production and distribution, balancing its responsibility to public health with its commercial interests.
The main protagonists are:
- Roche: The pharmaceutical company responsible for Tamiflu's development and production.
- Governments: Concerned about the potential for a pandemic and the need for sufficient Tamiflu supplies.
- Public Health Organizations: Advocating for equitable access to Tamiflu and ensuring its availability during a pandemic.
- Patients: In need of Tamiflu for treatment and prevention of influenza.
3. Analysis of the Case Study
This case study can be analyzed through various frameworks:
a) Stakeholder Analysis: This framework helps identify the key stakeholders involved and their respective interests. Roche needs to consider the interests of governments, public health organizations, patients, and its own shareholders.
b) Ethical Framework: The case raises ethical dilemmas concerning Roche's responsibility to the public good versus its commercial interests. Ethical frameworks like utilitarianism (maximizing overall benefit) and deontology (following moral rules) can be applied to analyze Roche's decisions.
c) Strategic Analysis: Roche needs to consider its competitive advantage, market position, and long-term sustainability. Its strategic decisions regarding Tamiflu production and distribution will impact its market share, reputation, and financial performance.
d) Organizational Behavior: The case highlights the importance of leadership, communication, and collaboration within Roche and with external stakeholders. Effective leadership, clear communication, and strong collaboration are crucial for navigating the complex dynamics of this situation.
4. Recommendations
1. Increase Production Capacity: Roche should invest in expanding its Tamiflu production capacity to meet potential pandemic demand. This can be achieved through strategic partnerships, technology upgrades, and efficient manufacturing processes.
2. Develop a Pandemic Preparedness Plan: Roche should work with governments and public health organizations to develop a comprehensive pandemic preparedness plan. This plan should outline production, distribution, and access strategies for Tamiflu, ensuring equitable access for all.
3. Implement a Tiered Pricing Strategy: Roche should implement a tiered pricing strategy for Tamiflu, ensuring affordability for low-income countries and vulnerable populations while maintaining profitability. This can be achieved through subsidies, government partnerships, and price negotiations.
4. Strengthen Communication and Transparency: Roche should engage in open and transparent communication with all stakeholders, including governments, public health organizations, and the public. This will build trust and address concerns regarding Tamiflu's availability and pricing.
5. Foster Collaboration and Partnerships: Roche should collaborate with other pharmaceutical companies, research institutions, and international organizations to enhance Tamiflu production and distribution capabilities. This can involve sharing knowledge, technology, and resources.
6. Develop a Long-Term Strategy for Pandemic Preparedness: Roche should invest in research and development for new antiviral drugs and vaccines to address emerging infectious diseases. This will strengthen its position as a leader in pandemic preparedness and ensure long-term sustainability.
5. Basis of Recommendations
1. Core Competencies and Consistency with Mission: Increasing production capacity and developing a pandemic preparedness plan align with Roche's core competencies in pharmaceutical development and production. These actions also support its mission of improving people's health and quality of life.
2. External Customers and Internal Clients: The recommendations address the needs of governments, public health organizations, and patients by ensuring Tamiflu's availability and affordability. They also consider the interests of Roche's internal stakeholders, including employees and shareholders.
3. Competitors: Roche's competitors are also developing antiviral drugs and vaccines. By proactively addressing pandemic preparedness, Roche can maintain its competitive advantage and leadership position in the market.
4. Attractiveness: The recommendations are financially attractive, as they aim to increase Tamiflu sales and market share while mitigating potential risks associated with pandemic outbreaks.
5. Assumptions: The recommendations are based on the assumption that pandemics are a significant threat to public health and that governments and public health organizations will prioritize access to effective antiviral drugs.
6. Conclusion
Roche faces a critical dilemma in balancing its commercial interests with its responsibility to public health. By adopting a multifaceted approach that prioritizes public health, ethical considerations, and long-term sustainability, Roche can navigate this challenge effectively. This approach involves increasing production capacity, developing a pandemic preparedness plan, implementing a tiered pricing strategy, strengthening communication and transparency, fostering collaboration and partnerships, and developing a long-term strategy for pandemic preparedness.
7. Discussion
Alternatives:
- Maintaining current production levels: This option would be financially conservative but could lead to shortages during a pandemic, damaging Roche's reputation and potentially causing harm to public health.
- Focusing solely on profitability: This option would prioritize shareholder interests but could lead to ethical concerns and public backlash.
Risks:
- Increased production costs: Expanding production capacity could lead to higher costs, potentially impacting profitability.
- Government regulation: Governments may impose price controls or other regulations on Tamiflu, impacting Roche's revenue.
- Competition: Other pharmaceutical companies may develop new antiviral drugs, challenging Roche's market position.
Key Assumptions:
- Demand for Tamiflu will increase during a pandemic.
- Governments will prioritize access to Tamiflu for their citizens.
- Public health organizations will support Roche's efforts to ensure equitable access to Tamiflu.
8. Next Steps
- Develop a detailed pandemic preparedness plan within six months.
- Increase Tamiflu production capacity by 20% within one year.
- Implement a tiered pricing strategy for Tamiflu within two years.
- Engage in ongoing communication and collaboration with stakeholders.
- Invest in research and development for new antiviral drugs and vaccines.
By taking these steps, Roche can position itself as a responsible and ethical leader in pandemic preparedness, securing its long-term financial stability and reputation while contributing to global health security.
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Case Description
The case focuses on the challenges of Roche maintaining a supply network for a global influenza pandemic response initiative based on its antiviral drug Tamiflu. The Roche group is a 40 billion CHF company consisting of a pharmaceutical division and a diagnostic division. The company's antiviral drug Tamiflu dominates the market for prevention and treatment of seasonal influenza (flu). Tamiflu, however, could also play an important role in responding to the first wave of a pandemic caused by a particularly harmful strain of the influenza virus A. Tamiflu was designed to be effective against any strain of Type A or B influenza. Thus, there was the potential to establish a preparedness plan based on creating a stockpile of the drug in conjunction with an appropriate plan for distribution to the affected population. The use of Tamiflu in such a crisis would allow the world to respond immediately, rather than having to wait for development of a vaccine which had limitations in its effectiveness and the drug had been endorsed by the WHO as a first line of defense. The case focuses on the challenges of Roche maintaining a supply network for a global pandemic response initiative. Managing supply is particularly challenging for three reasons. First, demand for stockpile quantities is spiky and uncertain, and governments placing orders expect lead times to be short. Second, lead times for increasing capacity are long, as are lead times for drug production and encapsulation. Last, media coverage and press releases made by governments and other stakeholders increase the stakes, as negative media coverage may damage Roche's reputation with consumers, leading to lower sales levels for its products.
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