Social Corporate Responsibility 10/29/2007 Bristol-Myers Squibb Case Analysis
Situation Audit When looking at the Bristol-Myers Squibb Company (BMS) you see various strengths and weaknesses. The strengths of the company are plentiful. First, BMS has been a leader for years in the pharmaceutical drug industry and has patents on many of the leading drugs on the market. Most of BMS' drugs deal with the treatment and recovery of cancer patients, which in our society today is a major market. BMS has also been a great company to invest in because of their reputation as a leader in cancer drugs and for many years have been showing investors great profits. BMS also has a few major weaknesses. First, BMS invested in the company "ImClone" which was a leading company in cancer research and was going to come out with supposedly great new cancer and chemotherapy drugs. However, the Food and Drug Administration rejected ImClones application for two chemotherapy drugs and therefore the company suffered. This is the scandal that involved Martha Stewart in 2002 and dealt with insider trading. Secondly, there has been two major scandals in the companies history. First, BMS lied to stockholders reporting higher sales than actually were correct. Secondly the company obstructed smaller generic companies' ability to make a generic version of two of BMS' leading drugs. The opportunities for BMS are also great. At this point in our society, cancer is the biggest disease problem the world has ever seen. As a company that specializes in cancer research and
treatments, BMS has room to expand and develop new drugs and remedies for the awful disease. Threats to BMS are also large because of the prominence of cancer in today's society. Another company could be first to develop a new drug that is leaps and bounds above the technologies BMS has. This means that BMS must constantly be working very hard to develop itself as the leader in cancer research and also chemotherapy drugs.
Problem/Decision Statement There are two major problems with the Bristol-Myers Squibb Company. The first problem is the "ImClone" debacle. ImClone was a company that BMS invested heavily in between 2001 and 2002. The company was supposedly on the verge of a gigantic breakthrough in cancer medication. The CEO of ImClone was indicted in 2002 for insider trading and giving some select people the advice to sell their shares of ImClone right before the FDA rejected the application for their drugs to be put on the market. This affected BMS because they had put quite a bit of funding into ImClone and therefore BMS' stock prices plummeted. Secondly, in 2002 BMS was "engaged in a series of anticompetitive acts over the past decade to obstruct the entry of low-price generic competition for three of Bristol's widely-used pharmaceutical products: two anti-cancer drugs, Taxol and Platinol, and the anti-anxiety agent BuSpar. [...] Bristol avoided competition by abusing federal regulations in order to block generic entry; deceived the U.S. Patent and Trademark Office (PTO) to obtain unwarranted patent protection; paid a would-be generic rival over $70 million not to bring any competing products to
market; and filed baseless patent infringement lawsuits to deter entry by generics." (http://en.wikipedia.org/wiki/Bristol_Myers_Squibb) This was another problem that led to a dramatic decline in stock prices and tremendous losses for stockholders of the large pharmaceutical firm.
Identification of Alternatives The biggest issue I feel Bristol-Myers Squibb Company has is the responsibility to its shareholders. For many years BMS was known as a leader in corporate social responsibility. BMS needs to find a way to get back to that reputation. The first course action of that I feel should be taken is to issue an apology to all those who were effected by the two situations listed above. This would be a first step in rebuilding their social image that was tarnished by these two debacles. Specifically the company should perhaps support a generic drug in entering the market. By doing this it would show that there is more than profits on the mind of BMS. It would show that they care about the consumer and benefiting all those who have been affected with the evils of cancer.
Critical Issues/Evaluation Criteria The Bristol-Myers Squibb Company really needs to look at their public image in deciding what course of action to take in bringing the company back to the level that they once were. BMS needs to look at their public image especially. Should BMS sacrifice some profit at this point to bring back the confidence of their investors and consumers? If so, then they need to show that
they care about those people. If they decide that at this point in time that sacrificing profits for a better social image would be detrimental to the company then they need to stay on the path they are on.
Analysis It is very clear that the public image of BMS is tarnished and is in need of repair. The insider trading scandal with ImClone research had a huge detrimental effect on how this company is seen. BMS for a very long time was seen as a leader in the medical research field and at this point in time has recovered in many ways from their two major debacles that it encountered around 2002. What needs to be looked at in evaluating what needs to be done is the effect actions will have on profitability. If the company makes a more concerted effort to fix its public image and return to being a trusted and reliable company then action will need to be taken in order to make those repairs. If the right actions are taken, Bristol-Myers Squibb will be a leader in the medical field long into the twenty first century.
Recommendations As was said in section four, something significant needs to be done in order to fix the tarnished image and broken corporate social responsibility of the Bristol-Myers Squibb Company. At this point, I feel profits in some ways need to be compromised in order to restore that lacking public image. Specifically I feel that emphasis needs to be put a lot on the consumer. BMS needs to show it
cares and wants to help people, especially those with cancer and not loot their pockets in a very difficult time for them and their families. This can be done in numerous ways, whether it be supporting generic medications or lowering their prices or even something as simple as issuing some sort of sentimental note or card when someone is prescribed their chemotherapy drugs. All in all they just need to show that they care about the consumer. If they show that they care about the consumer then eventually the profitability of the company will return to those exceptional numbers that were seen before their scandals. In turn this will also give shareholders exceptional profits as well. If BMS can gain profits, therefore more money can be put into research for new drugs and BMS can become known as a company who cares about people and not one who steals from them.
Works Cited 1. Beltran, Luisa. "Waksal Indicted in ImClone Scandal." CNN Money. 8 Aug. 2002. 28 Oct. 2007 <http://money.cnn.com/2002/08/07/news/waksal_indictment/>. 2. "Bristol-Myers Squibb." 28 Oct. 2007 <http://en.wikipedia.org/wiki/Bristol_Myers_Squibb>. 3. "Bristol-Myers Squibb Illustrates Woes." 17 July 2002. 29 Oct. 2007 <http://knowledge.wharton.upenn.edu/article.cfm?articleid=592>. 4. Waddock, Sandra. Leading Corporate Citizens. Boston: McGraw-Hill Irwin, 2002. 218-220.