Gsk Case

If I were managing GSK in Brazil I would continue the PPP into the future. Multiple members of GSK (to include GSK's president of emerging markets) have stated that the Fiocruz PPP is a key component of GSK's strategy to penetrate emerging markets.

Continued partnership with Brazil's premier public health institute would serve to create good will within Brazil and neighboring countries. According to the case, GSK exports to 11 other Latin American countries from Brazil. Creating lasting relationships with Fiocruz will certainly lead to future opportunities to market other vaccines and pharmaceuticals in Brazil as well as other Latin American markets.

Brazil has a broad market for health care products. Public health needs range from treatment and prevention of low-income diseases, such as dengue fever and tuberculosis, to health issues faced by developed countries, such as cancer, diabetes and hypertension. It is important to create and retain lasting partnerships and relationships with the government of Brazil in order to have access to these markets.

PPPs seem to be the future of global health initiatives, such as those funded by the Bill and Melinda Gates Foundation. By demonstrating GSK's forward looking agenda through partnerships like the Fiocruz PPP, they position themselves strategically to benefit from future initiatives to treat and eradicate diseases in other emerging markets.

GSK is now three years into the ten year PPP agreement. If they pull out now, they would not only forgo the benefits of the goodwill they are hoping to create through this partnership, but they would stand to incur the costs of being an unreliable partner. Competition from firms like Novartis, Sanofi-Aventis, and Johnson & Johnson is high. If GSK shows itself to be untrustworthy, countries and health organizations will look to the competition for more reliable partnerships.

GSK has expressed concern that the Brazilian political climate creates uncertainty for foreign investors. They speculate over sunk costs related to changes in leadership and political in-fighting. If they are concerned about sunk costs created by governmental fickleness, they should be equally concerned about the certainty of creating sunk costs by pulling out of the PPP prematurely.

I don't think companies have any social obligations except to their shareholders. On the other hand, I do believe that humans have an obligation to help ease suffering in situations where they have the power to do so. I don't think I am alone in this belief and therefore think it is in the best interests of the corporation and their shareholders to do the "right" think morally when conducting business.

As long as GSK is making some profit, they should be willing to price their products at reasonably according to the market they are targeting. This strategy goes back to my previous argument, that positioning themselves