October 19, 2005
Shareholder Values at Roche
As of today, scientists know two things about avian influenza ( the 'bird flu"). First, that the disease is deadly. Second, that transmission from birds to humans is rare. In the dice game of mutation, however, both characteristics could change. Humans might become vulnerable to birds. The disease might become less deadly.
Mutation at this biological level happens lightening fast. Both shifts could very well happen over the course of this autumn and winter. All of which means we need to pay attention to the pace and effectiveness of the other mutating phenonmenon -- human kind's medical response as determined by markets, governments, networks and organizations.
Looking over the past several decades, we can find much to give us confidence here. There is a nearly vertical growth curve in indicators of scientific advance (patents, scholarly articles, technological advances, etc). And, still, we must remind ourselves that we are human. There is that other part of the picture: greed, selfishness, fear, bigotry and so on. There is the track record of governments that have not distinguished themselves in terms of performance that matters such as planning, preparedness, fairness, coordination and so forth.
And, there is the profit motive -- the celebrated engine of bringing good things to life. Good things like Tamiflu, the patented pharmaceutical owned by Roche. Big Pharma has not distinguished itself over the past several years in adhering to the Hippocratic Oath, that, among other things, demands all health professionals to 'keep the sick from harm and injustice'.
Roche, like other big pharmaceutical companies, has recently written a caveat into this oath: so long as they can pay, we can make profits and we can preserve our patent rights.
All of which means Roche's reversal of its announcement last week that it would remain the sole manufacturer of Tamiflu is good news on two counts: (1) that Roche will now consider licensing others; and, (2) the speed of the change.
One week. That's much, much faster than any similar shift has happened with those pharmaceutical companies who have refused to sell anti-viral AIDS patented medicines to impoverished peoples. It is, as the management gurus like to say, a dramatic improvement in cycle time.
At least two potential causes are known. Kofi Annan has put pressure on Roche. And, Cipla, an Indian pharmaceutical company announced it is nearing readiness to distribute an un-patented version of Tamiflu. Put differently, we can see both governments (the UN) and markets (competition from Cipla) at work in the 'mutating phenomenon" that will determine human response.
Both are good news. Now, let's ask Roche and it's shareholders (as well as employees): At what profit margins will you license Tamiflu? Will you use 'quality requirements" according to the Hippocratic Oath, or as a smokescreen for restricting distribution?
Put differently, what do you stand for? What are your values?