Faculty of Business and Social Sciences
M.A. International Business and Management, Sem. 3
Heroin and Contergan:
Crisis Management at Bayer and Grünenthal
Written assignment for International Markets
Winter Semester 2006/07
By: Russeva Margarita
Date of submission: 5
th
November, 2007
Table of Contents
1
Introduction ... 1
2
Crisis Management at pharmaceutical companies Bay ... 2
3
Bayer and the Heroin Crisis... 2
3.1
Brief history of heroin, the new wonder drug ... 2
3.2
Advertising and Marketing of Heroin... 3
3.3
Banning Heroin from the Market ... 4
3.4
Bayer's Response to the Crisis... 5
4
Chemie Grünenthal and the Thalidomide Crisis ... 7
4.1
Brief History of Grünenthal's thalidomide ... 7
4.2
Research, development, testing and marketing of thalidomide... 7
4.3
The thalidomide tragedy ... 9
4.4
Chemie Grunenthal's actions after the tragedy ... 10
4.5
How victims were treated... 11
5
Conclusion ... 12
6
References... 14
1
1
Introduction
In the modern medicine the use of pharmaceutical products for treatment of wide
spectrum of diseases is indispensable and of common practice. Hence, the responsibility
of the pharmaceutical companies to guarantee the safety of their drugs for human
consumption is enormous. Unfortunately, there are cases from the history proving that
due to improper testing and human negligence drugs caused more harm than good. Even
in the present day, these tragedies are worth an examination in order to remember and
learn from past mistakes and to prevent their recurrence.
Many people believe that street drugs are "an entirely different class than prescription
drugs, and they believe that pharmaceutical companies would never manufacture or sell
street drugs".
1
Actually the well-known pharmaceutical giant, Bayer AG, is responsible
for the most addictive and feared drug nowadays heroin.
Exactly 50 years ago, on 1. October 1957, another big pharmaceutical producer,
Grünenthal, introduced the substance thalidomide. It was perscribed mainly as a
sedative and for treatment of morning sickness during pregnancy, before it was
discovered that the drug caused severe birth defects.
In this assignment I will investigate the consequences caused by both drugs, as well the
role of the producing company in the tragedy. By providing a brief history of the
development of heroin and thalidomide, as well as a detailed research of the testing and
marketing strategies, I am interested in the crisis management measures that Bayer AG
and Chemie Grünenthal applied to handle the catastrophes. Since heroin and Contergan
were distributed all over the world, their negative effects caused harm globally. In the
conclusion of the assignment, I will give a short analysis of the corporation's efforts to
prevent further damage and to reverse existing problems, bearing in mind the social
responsibilities of the pharmaceutical sector.
1
Adams, Mike (2007): The secret history of Big Pharma's role in creating and marketing heroin, LSD,
meth, Ecstasy and speed:
2
2
Crisis Management at pharmaceutical companies Bay
In the first place it is necessary to give a definition for a crisis. The following one is
provided by the Institute for Crisis Management
2
(ICM):
"...a significant business disruption that stimulates extensive news media coverage. The
resulting public scrutiny will affect the organization's normal operations and also could
have a political, legal, financial and governmental impact on its business."
The reasons for a crisis could be due to external factors, e.g. natural disasters, war,
terrorism and are applicable to any industry. On the other hand, errors in the medicine
development, improper testing, insufficient research about the side effects, are internal
to the pharmaceutical industry. A crisis in the pharmaceutical sector could cause not
only regulatory and legal problems, loss of resources, operational control or licences but
might be extremely dangerous and could lead to serious damages to the population's
health.
3
Developing and marketing a medicine has always been a very profitable business for
many companies. Still, the pharmaceutical producers should bear in mind the social
responsibility that they have towards the humanity. In the next chapters, I will analyse if
the measures that Bayer AG and Grünenthal took after the crisis that they caused were
appropriate and effective.
3
Bayer and the Heroin Crisis
3.1 Brief history of heroin, the new wonder drug
In the 1890es Bayer AG was one of the leading research-intensive European dyes
manufacturers. Its chemists routinely tested all new chemicals for medicinal effects.
4
Just before the turn of the century, in 1897, one of the company's young chemists, Felix
2
The Instutute for Crisis Management is a research-based crisis communications consulting firm with
clients in the U.S. and abroad. It develops communications in order to minimize the crisis's consequences
of a crisis event so the client's business can be returned to normal, profitable operations in the shortest
possible time.
3
See Vora, Hemant (2006) ,,Crisis Management in Pharmaceutical Outsourcing"
4
ACS publications: The pharmaceutical century. 10 decades of drug discovery
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