Essay: Patents Bayer Must Make Its Decision

Pages: 3 (1021 words)  ·  Style: MLA  ·  Bibliography Sources: 3  ·  Level: College Senior  ·  Topic: Business - Law  ·  Buy for $19.77

Patents

Bayer must make its decision on an appropriate course of action in context of two key variables -- shareholder interests and corporate ethics. Bayer's indecision was the worst of both worlds -- it resulted in considerable erosion of goodwill and it a suspension of the patent would not have been in the best interests of shareholders. Patents exist to protect intellectual property, and this holds even in the event of a public health crisis. Bayer has an obligation to protect its intellectual property rights because that is in the interests of the shareholders. The only reason not to uphold theses property rights is in the event that doing so would create such a negative perception of the company as to impact the business in the long-run.

From an ethical perspective, it is not the perception of profiting from crisis that is the consideration. Utilitarian ethics would demand that if the release of the Cipro patent was the moral imperative, it should be released. Determining the moral imperative, however, is the role of management and based on societal norms. Consequentialist ethics would view the issue as one whereby putting profit over public health is a risky proposition for Bayer. If the company was unable to meet the need for Cipro, it would be roundly criticized and face a profound erosion of goodwill. Moreover, in the long run the consequentialist perspective supports the idea that protecting patents encourages innovation by providing the opportunity for monopoly rents. The system, therefore, should not be broken in the event of public panic; while politically expedient, such moves discourage innovation (Sterckx, 2006). Bayer therefore has an ethical dilemma to address.

Given that the market is the United States, the moral imperative is defined by the American people. In this society, drug patents and intellectual property are held in high esteem, but the health of the community is also held in high regard. Sacrificing short-term profits to help the community is something that would be viewed favorably and indeed for many Americans would be considered the correct course of action. Given that consequentialist ethics supports the utilitarian view that Bayer should temporarily release its patent on Cipro, that is the course of action that company should take.

In suspending the patent voluntarily, Bayer achieves two key objectives. The first is that it demonstrates considerable good faith that under the circumstances a temporary suspension would not be abused by competitors. This demonstration of good faith and an interest in the public good can only benefit the company in terms of goodwill, both with governments facing a perceived health crisis and among a fearful populace. The second objective would be to build shareholder value. Shareholders lose in the short-term because Bayer loses its pricing power on Cipro and because the potential sales volumes are reduced. However, the shareholders benefit in the long-run from the goodwill that the gesture generates. The shareholders were never expecting a massive run on Cipro, so they are not sacrificing expected profits. The lesson Bayer learned in the wake of World War Two was… [END OF PREVIEW]

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Patents Bayer Must Make Its Decision.  (2009, November 14).  Retrieved November 17, 2019, from https://www.essaytown.com/subjects/paper/patents-bayer-make-decision/858836

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"Patents Bayer Must Make Its Decision."  Essaytown.com.  November 14, 2009.  Accessed November 17, 2019.
https://www.essaytown.com/subjects/paper/patents-bayer-make-decision/858836.