Case for Module 5 – MBA 601

Read the following article on the Tamiflu drug.

Asia news
Roche opens full access to Tamiflu[1]
Thailand and the Philippines are free to begin making their own versions of the anti-viral drug Tamiflu in preparation for a bird flu pandemic, said Roche Holding AG, manufacturer of the medicine.

Asian stocks of Tamiflu have been depleted by panic buying
The pill, which governments are stockpiling as a precaution against a virulent outbreak of flu, does not have patent protection in either country, meaning that the Thai and Philippine governments are free to make their own versions.
The move follows a similar decision by Indonesia last week and could create a source of cheap Tamiflu for other developing countries which are unable to afford the Roche-branded drug.
“Tamiflu is not patent-protected in these countries and so there is no question about granting a licence or sub-licence [for production],” a Roche spokesman said. There will be no financial consequences if the two countries begin their own production of the drug, he said.
In Bangkok, Anish Kumar Roy, director of the ASEAN Secretariat’s Bureau for Resources Development, said yesterday that Southeast Asian nations were developing regional action plans against bird flu to combat the virus.
The plans were being developed under the Regional Framework for Control and Eradication of Highly Pathogenic Avian Influenza endorsed in September by 10 members of the Association of Southeast Asian Nations (ASEAN), he said at a regional teleconference forum for information sharing on pandemic hazards.
They would cover eight key strategic areas, including surveillance, alert systems, vaccination, diagnostic capabilities, as well as setting up disease-free zones.
“Avian influenza is a great concern in the region. We believe that unless some efforts are made at the regional level, we could face an unprecedented challenge,” said Dr Anish.
David Nabarro, the United Nation’s senior system coordinator for avian and human influenza, stressed the need for international collaboration as a means to combat the virus, especially in preparations for a human pandemic.
Meanwhile, China has culled six million birds in a northeastern region of China hit by the country’s fourth outbreak of avian flu in a month, state media said.
All poultry within a three kilometre radius of the site in Liaoning province where the deadly H5N1 virus was found last week had been killed.
China has yet to report any human cases of bird flu from the latest outbreaks, but said it would invite World Health Organization experts to probe three suspicious cases of pneumonia in the southern province of Hunan, the site of one of the recent outbreaks of bird flu.
Tests on the three did not show the presence of H5N1, but it added the virus could not be ruled out due to the fact the three lived close to the site of the outbreak.

Assume that the following costs are incurred in the manufacture of Tamiflu:

·  Basic research to develop and test the drug

·  Materials used in the manufacture of the drug

·  The costs of the building in which the drug in manufactured

·  Labor associated with the manufacture of the drug

·  Senior supervisors of the manufacturing process

·  Liability insurance that is based directly on the number of units of the drug that are sold

·  Other insurance that is a single annual rate regardless of the units of production

·  Senior management salaries

For each of these costs, determine whether on not the cost should be included in inventory for internal decision making and explain why or why not.

[1] See: http://www.vir.com.vn/Client/VIR/index.asp?url=content.asp&doc=8977