Novartis in India: Innovation versus Affordability
(9 pages of text)
This case presents complex managerial challenges that stem from the institutional context in emerging markets, particularly in relation to the intellectual property regime and its impact on business strategy. The case centres around a multinational pharmaceutical firm, Novartis International AG (Novartis), that is waiting on a major court decision regarding patent policy as it pertains to one of the firm’s products.
The case takes students through the company’s journey in marketing a promising anti-cancer drug that had global sales of US$3.9 billion in 2009. Novartis’ global success with this drug is being challenged by the changing institutional environment surrounding innovation and pharmaceutical patents. The company’s decision to patent the drug in India and challenge the institutional system of patent law is meeting significant resistance from those who argue that the drug is neither novel nor affordable for most patients. With key domestic players staking their claim to the large pool of patients who could benefit from the drug, the case focuses on a controversial patents law. Given the uncertainty of the court’s final decision on these matters, students are asked to develop an action plan for the company’s future.
The case works well with MBA or executive MBA classes on global strategy, strategic management, management of technology and/or management of innovation. In the context of a class on global strategy, this case can be used to discuss the effects of institutional environment on firm strategy. It also works well as an introduction to strategy in emerging markets and also provides a compelling context to think creatively about institutional voids and the evolution of institutions in emerging markets. In addition, the case can be used to sensitize global and domestic managers to the strategic issues of a transitioning intellectual property (IP) regime.
The case allows students to reflect on the difficult policy trade-offs between incentivizing innovation through strong IP laws and enhancing access and affordability through weak IP laws. Students are exposed to the complex challenges facing business executives in multinational firms, particularly in knowledge-intensive sectors. Students are also challenged to come up with creative solutions to IP issues and develop new strategies for appropriating innovations in the context of emerging economies. The primary aims of the case are to familiarize prospective multinational managers with intellectual issues in developing economies; to help students understand the context of the “patient versus patent” paradox common in emerging markets; and to grasp the dynamic impact of the institutional context in emerging markets on corporate strategy, particularly the non-linearity of the developments as institutions evolve. The case can be taught either in an 80-minute session (a quick overview of the case and alternate strategies for IP) or a three-hour session (allowing for role-playing and extensive class discussions).
Professional, Scientific, and Technical Services
India, Large, 2012
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