- Burroughs Wellcome Company: Retrovir
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- This case is obviously about pricing. Given the seven conditions that favor a skimming strategy that are listed in your text, Retrovir is a classic example of a product that should be priced very high. The problem is not in the reality that drugs are skimmed for good reason but in the equally important reality that corporate enterprise must be sensitive to criticisms that arise in the environments in which they operate. Thus the focus of the case is "should we, or shouldn't we" not because of what is economically required but what can be reasonably negotiated with those who influence public opinion for or against us. So you must pick a position and then offer argument in support of that position. Whenever you get into the area of determining "fairness" then you must have solid documentation (in terms of your numerical analysis) and sound conceptualization (in terms of the ethical position taken by Burroughs Welcome). Expect then to offer opinions on the appropriateness of a projected rate of return as well as whether or not you should follow a deontological or teleological approach to determining what is right or wrong.
- Discussion of the case will follow these basic questions:
- How would you describe the situation related to the AIDS epidemic in the United States during the time of this case? This includes more than the vital statistics of how many and how fast, but also includes economic, social and political concerns.
- How would you characterize the R&D efforts undertaken by Burroughs Wellcome to develop Retrovir?
- What arguments can be made on the basis of demand, cost and competitive conditions to justify the pricing of Retrovir?
- What arguments can be made on the basis of ethical grounds and social responsibility for the pricing of Retrovir?
- How profitable has Retrovir been for Burroughs Wellcome?
- Should Burroughs Wellcome reduce its price for Retrovir below $120 per 100 capsules? If yes, why and when? If no, why not?
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