Marijn Dekkers, CEO of Bayer, is frank and forthright. Last year, in full display of his sincerity, he said that Bayer did not make the cancer drug for Indians, but for Europeans; implying that it was not meant to be sold in a poor country [1] . What was the context? When Bayer launched a $97,000 cancer treatment in India, the Supreme Court ruled that since this was a medical treatment aimed to improve health conditions, other companies can manufacture it and sell cheaper and pay a 6% royalty to Bayer [1]. Now the other company offers to sell it at $120!!! Bayer’s price of $97,000 is more than the annual income of over 99.5% Indians.

Back to Marijn Dekkers the CEO who won’t lie….is this statement representative of the healthcare industry? Healthcare is one of the most profitable industries in the world, and most global corporations have their fingers in it. It is easy to see why –

i) Consumers don’t decide what to buy, doctors do. And some firms like our truthful CEO, put business ahead of healthcare and then find it easier to convince doctors. Competitive advantage!

(ii) Patients with life threatening diseases get hooked on to treatments long term . Diabetes is a very profitable disease. Patients don’t die quickly and remain loyal consumers till end of life. CEO’s like Marijn Dekkers love this disease – customer lifetime value is huge here!

(iii) This is one is the best…..When buying medical treatment consumers equate high price with higher efficacy! So when Bayer sells it for $97,000 we feel it is more potent and fall for it!

Coming back to Bayer – This global corporation has three product divisions[2]   (i) Agriculture – which makes genetically modified seeds and biocides (ii) Speciality Polymers – which makes plastic coatings and specialty plastic materials (iii) Healthcare – which makes medicine.

Two of their divisions make stuff which begets cancer while the third sells stuff to cure cancer….how convenient! I am sure the CEO is pleased with this arrangement!

By the way I found an interesting fact about Bayer on the internet ….In 1888 they trademarked heroin and sold it as children’s cough syrup without side effects[4]. LOL! Bayer was one of the largest contributor’s to Hitler’s war fund [5].

Let’s cut the fun and get down to business. It is very very expensive to create a treatment. ‘Create’ means not just manufacture but includes the time and efforts in research, development and testing, umpteen rejections and few years before the final marketable drug is ready. Thus when the drug is priced, the firm would account for all the expenses incurred over all development years.

So how do companies choose which treatment to invest in? As a business, they must consider three things – the demand, the competitive intensity within that product and the profitability which the market structure allows. But wait…..what about epidemics, suffering, people dying, children affected……No! those are not business considerations at all! These corporations are responsible to their share holders….why should they invest in research on drugs which are not profitable? This is what Marjin Dekkers tells us truthfully.

We understand this business perspective but then firms should not deceive consumers with Mission statements like “Bayer : Science for a better life”[3] .

Because if they really care for a better life then they would invest in research to reduce polymer triggered cancers, or produce natural seeds over genetically modified seeds, or stop making biocides which can kill ANY life not just pests. In short, if Bayer wants to claim that their mission is “Science for a better life” , then they should have chosen better life over profitable life; prevention over cure. This makes Bayer untruthful….they should learn a lesson from their own CEO!

On their website, Bayer says “Bayer in future will focus entirely on the Life Science businesses – HealthCare and CropScience”. Of course they will…..that’s where the profits are! But I would suggest a minor change in their Mission statement.”Bayer : Science for a better life of our shareholders”

And as for Marjin Dekkers, as Michael Corleone would have said, “Just don’t tell me you are innocent. Because it insults my intelligence.”[6] 

References

[1] http://www.dailymail.co.uk/news/article-2545360/Pharmaceutical-chief-tries-stop-India-replicating-cancer-treatment.html | http://keionline.org/node/1910

[2] http://www.bayer.com/en/Subgroups.aspx
[3] http://www.bayer.com/en/mission—values.aspx
[4] http://www.businessinsider.com/yes-bayer-promoted-heroin-for-children-here-are-the-ads-that-prove-it-2011-11?IR=T
[5] http://listverse.com/2013/10/24/10-big-business-nazi-profiteers/
[6] The dialogue from Godfather 1 https://www.youtube.com/watch?v=8vZx7yF_a7M

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