Organizational Behavior Help! 7
Apotex And Bristol-Myers Squibb
Peter Dolan survived many crises in his 5-year tenure as CEO of drug giant Bristol-Myers Squibb including a corporate accounting scandal allegations of insider trading Federal Bureau of Investigation (FBI) raids of his office and a stock price that dropped 60 percent during his tenure. But in the end what may have done Dolan in was his negotiation performance against the head of Apotex a Canadian drug company founded by Dr. Barry Sherman.
At its peak Plavixa drug to prevent heart attackswas Bristol-Myers’s best-selling drug and accounted for a staggering one-third of its profits. So when Apotex developed a generic Plavix knockoff Dolan sought to negotiate an agreement that would pay Apotex in exchange for a delayed launch of Apotex’s generic competitor. Dolan sent one of his closest lieutenants Andrew Bodnar to negotiate with Sherman. Bodnar and Sherman developed a good rapport and at several points in their negotiations asked their attorneys to leave them alone. At one key point in the negotiations Bodnar flew to Toronto alone without Bristol-Myers’s attorneys as a gesture of goodwill. The thinking was that the negotiations would be more effective this way.
As Dolan Bodnar and Bristol-Myers became increasingly concerned with reaching an agreement with Sherman and Apotex they developed a blind spot. Privately Sherman was betting that the Federal Trade Commission (FTC) wouldn’t approve the noncompete agreement the two parties were negotiating and his goal in the negotiation was to extract an agreement from Bristol-Myers that would position Apotex favorably should the FTC reject the deal. Indeed he nonchalantly inserted a clause in the deal that would require Bristol-Myers to pay Apotex $60 million if the FTC rejected the deal. I thought the FTC would turn it down but I didn’t let on that I did Sherman said. They seemed blind to it.
In the meantime Apotex covertly began shipping its generic equivalent and it quickly became the best-selling generic drug ever. Thus Sherman also managed to launch the generic equivalent without Bristol-Myers even considering the possibility that he would do so while still engaged in negotiations.
It looks like a much smaller generic private company completely outmaneuvered two of the giants of the pharmaceutical industry said Gbola Amusa European pharmaceutical analyst for Sanford C. Bernstein & Company. It’s not clear how or why that happened. The reaction from investors and analysts has ranged from shock to outright anger. Within a few months Dolan was out at Bristol-Myers (Carreyrou & Lublin 2006; Saul 2006).
Based on the above reading and the knowledge gained from your assigned readings respond to the following questions:
References:
Carreyrou J. & Lublin J. S. (2006 September 2). How bristol-myers fumbled defense of $4 billion drug.Wall Street Journal p. A1 A7.
Saul S. (2006 August 9). Marketers of plavix outfoxed on a deal.New York Times.Retrieved from http://www.nytimes.com/2006/08/09/business/09drug.html?pagewanted=all&_r=0
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