The case therefore presents a challenge for students of Multi National Essay

The case therefore presents a challenge for students of Multi National Strategy - Essay Example This way a substantial amount of time taken in the drug development process can be saved. (Gonzalez-Benito, 30) The issue that occurs here is that testing drugs in poor countries gives rise to ethical concerns. Then dealing with the pharmaceutical critics becomes both a managerial concern and issue. These critics come up with claims that companies have failed to develop cures and only test drugs in the developing world intended for wealthy nations. (Lou Ann Di Nallo, 2008) In recent years the rising affluence in developing nations has created new incentives for drug makers to produce treatments over here. Also the huge population in developing countries makes a large market for the drug makers. However, according to advocates of social responsibility, the main responsibility for drug makers in the developing countries is to provide to their citizens an access to health care at affordable prices and to fight the neglected diseases prevalent over there. Which means these large companie s need to come up with programs that would at any time put the need for meeting public health care ahead of their profits. These kinds of programs will then eventually lead to improved relations with the host countries and will also promote the growth of market there. Therefore, addressing to the needs of developing counties has become an important part of pharmaceutical companies’ agenda. (Nott, 1996) In developing countries, the issue of getting intellectual property rights for the development of new drugs by pharmaceutical companies becomes an issue. This is because property rights or patents can be a disadvantage for developing countries in two ways. Firstly, these will increase the knowledge gap and secondly the producers of knowledge will have more bargaining power as a result. And most of these producers of knowledge themselves live in developed countries. Giving out patents will put the developing nations in a weak bargaining position when negotiating prices from the monopoly suppliers of drugs. Also, is believed that by awarding such rights to multinational companies, the introduction of new products by the local industries will be delayed and new medicines will become more expensive for a common man in these poor countries to afford. The resulting impression will be that of denying the people an access to the new drugs. (Charles Y.J. Cheah, 2004) Therefore the defense of the intellectual property rights is one of the major managerial issues of pharmaceuticals in developing countries just like the case of Novartis in India These companies argue that these rights would promote innovation and technological development which will eventually lead to social welfare and economic growth in developing countries. Patents provide an incentive to producers for investing in research and development, hence innovation. (Shah, 2010) Therefore, choosing a strategy that gives the company a reputation of being responsible while at the same time lowers the innova tion cost needs to be established. Companies expect reasonable rate of return for their investments on new drugs developed which would at times also mean charging a price that is much higher than what the market can afford to or is willing to pay. This lack of opportunity to make profits can be demotivating and lead to some