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Merck & Samarco - CSR Analysis

1) Samarco's new PROECOS initiative aims to focus on strategic leadership in CSR by involving more stakeholders and communities in sustainable development projects, making it more beneficial than their past initiatives. 2) Merck developed the drug Mectizan to treat river blindness after observing the effectiveness of their drug Ivermectin in animals. They were able to leverage their investment in Ivermectin to develop Mectizan without allocating many new resources. 3) Both companies have been leaders in CSR previously and now face the choice of whether to pursue ambitious new projects. Given Merck's success distributing Mectizan in Africa, the author argues Samarco should approve the PROECOS

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Abhinav Prakash
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161 views1 page

Merck & Samarco - CSR Analysis

1) Samarco's new PROECOS initiative aims to focus on strategic leadership in CSR by involving more stakeholders and communities in sustainable development projects, making it more beneficial than their past initiatives. 2) Merck developed the drug Mectizan to treat river blindness after observing the effectiveness of their drug Ivermectin in animals. They were able to leverage their investment in Ivermectin to develop Mectizan without allocating many new resources. 3) Both companies have been leaders in CSR previously and now face the choice of whether to pursue ambitious new projects. Given Merck's success distributing Mectizan in Africa, the author argues Samarco should approve the PROECOS

Uploaded by

Abhinav Prakash
Copyright
© Attribution Non-Commercial (BY-NC)
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CSR_Assignment-2 Abhinav Prakash, 0006/49, Section B Mercks Ivermectin Vs.

Samarcos PROECOS
Samarcos_PROECOS Though PROECOS expands on the Bento Rodrigues program; it has a much larger scope in trying to focus more on Strategic Leadership in terms of CSR. Along with the 25 towns and 50,000 people who will be affected PROECOS involved other stakeholders which was not the case with Samarcos other CSR initiatives. The main operative behind PROECOS will be GAIA which basically will involve community in much more sustainable socio-environmental projects. This will be more beneficial as compared to projects which Samarco has undertaken till now since PROECOS will focus more on building a network of partners for meeting local demands. In terms of brand building and putting Samarco as a company that has integrated quality, environmental and health safety and community relations policy, PROECOS is poised to become the companys flagship CSR initiative. As far as future dependence on the community is concerned (building of second pipeline), PROECOS will build a positive relationship with the communities which will improve the companys image in the areas, surrounding its facilities. The total funds required are $ 528,000, which basically is largest expense company will undertake towards CSR till now. Mercks Ivermectin Mercks Ivermectin is a drug which is astonishingly effective against legion of parasites in cattle, horses, etc. With the result of its effectiveness duly observed just after its induction, Merck extended the analysis to develop Mectizan, a drug for river blindness, affecting large number of people especially who cannot afford the drug. A significant advantage which Merck could leverage was the amount of investment in Ivermectin which obviates the possibility of allocation of heavy resources to develop its human formulation. Onchocerca Volvulus (virus) had already affected 18

million people and the potential reach was 85 million. Hence, such project is poised to be a hit and would additionally be a relief to numerous affected people. However, the RoI on such investment does not exist and effectively its NPV is negative, from a business perspective. Along with the same, river blindness was a disease which hit mostly the third world countries of Africa, Middle East and Latin America. Concordantly, the probability of funding, even from WHO, amounts to nada. From another perspective, since the river blindness affected the poor people in the rural and remote areas of the third world, there wasnt any chance to price the medicine high. Studies showed that it takes 12 years and $ 200 million to bring a new drug to market. Had the new drug failed or it had side effects, the sales of Ivermectin were also supposed to go down leading to a great financial loss. Conclusion Both cases are in many ways similar, since both companies have been identified with CSR initiatives in the past and ultimately both are caught up with the same choice, whether to go for the expansive project or stay back. Given Mercks experience in the case of distribution channels while trying to distribute its drug in Africa, where the project came through ultimately, I think Samarco should give a go-ahead to the PROECOS project. The scale and scope of PROECOS might be a stumble to pass through, but the host of benefits this project brings along will prove remarkably beneficial in Samarcos pathway to leadership in CSR. The Second Right of Way, which will a major consideration for Samarco, when it decides to increase its capacity might get bogged down in resistance from the local communities, if PROECOS is not undertaken. Along with the same, PROECOS involves local talent and along with the know-how developed from earlier CSR projects taken up by Samarco, the probability of its failure is miniscule. We should recall that Merck also solicited external help, in terms of expert panel and foundations to assure its drugs are properly distributed.

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