As a management consultant, it is very painful for me to see a company's strategy driven by its legal department rather than the vision put forward by the CEO such that strategic growth is its foundation. I saw this happening with Merck that has followed a totally flawed Vioxx recall strategy and now I see the same happening at Pfizer though I expected that several very powerful lessons for business leaders in the Vioxx recall example.
So what is Pfizer CEO Hank McKinnell thinking when they admit that Celebrex increases the risk of heart attacks but they will not withdraw the drug. I would not be surprised if such discussions were held at Merck for years and that is exactly what McKinnell is thinking. To see how long they can keep Celebrex on the market and extract whatever value they can from the drug. Most doctors are not buying into the logic of McKinnell though I would not be surprised if the Pfizer lobbyists in Washington are successful in preventing the FDA from banning the drug.
In other words, when everyone agrees that the business model of pharmaceutical firms in the United States is failing, the Pfizer CEO does nothing to help. It is quite understandable why a firm would want to keep a blockbuster drug on the market but Pfizer needs to dedicate some resources to understanding the risk of doing so. Some recent estimates put Merck's Vioxx liabilities at $55 billion. Or in other words, Merck will simply disappear as a company in a couple of years. It is pretty obvious that McKinnell may be about to do the same to Pfizer.
How to handle product recalls professionally and ethically?
So what is Pfizer CEO Hank McKinnell thinking when they admit that Celebrex increases the risk of heart attacks but they will not withdraw the drug. I would not be surprised if such discussions were held at Merck for years and that is exactly what McKinnell is thinking. To see how long they can keep Celebrex on the market and extract whatever value they can from the drug. Most doctors are not buying into the logic of McKinnell though I would not be surprised if the Pfizer lobbyists in Washington are successful in preventing the FDA from banning the drug.
In other words, when everyone agrees that the business model of pharmaceutical firms in the United States is failing, the Pfizer CEO does nothing to help. It is quite understandable why a firm would want to keep a blockbuster drug on the market but Pfizer needs to dedicate some resources to understanding the risk of doing so. Some recent estimates put Merck's Vioxx liabilities at $55 billion. Or in other words, Merck will simply disappear as a company in a couple of years. It is pretty obvious that McKinnell may be about to do the same to Pfizer.
How to handle product recalls professionally and ethically?
- Admit your mistake. Everyone makes mistakes and the damage is smaller if you are honest and upfront about it.
- It is perfectly fine to be over-cautious. It will help your firm in the long run. This is even more important for a drug firm whose products can kill.
- Never antagonize your customer by making them feel as if something is wrong with them. This is exactly the strategy that Merck is following - making Vioxx patients feel alienated and abandoned when they were the ones who made Vioxx a blockbuster drug.
- Compensate your customers.
- End the distraction and move on. The three pillars of a business (shareholders, employees, and customers) do not like distraction.
Related article: Merck is a classic example of shareholder value destruction