How to Create an International Crisis & Destroy Your Brand

Published on: Jan 28, 2014 by Michael SnyderNo comments

“We did not develop this medicine [Nexavar] for Indians, we developed it for western patients who can afford it.”

Bayer Berlin HQThese inflammatory words, uttered by Bayer AG Chairman Marijn Dekkers at a Financial Times global pharmaceutical forum last month, have flared into an international firestorm, according to the Star of India newspaper. With fury-fueled outrage encircling the globe, Forbes magazine weighed in. “[Dekkers comment] reinforces the notion that Big Pharma is only interested in profits and those in need are out of luck when it comes to life saving medicines.”

With Bayer’s international brand swiftly decomposing across key sectors, Dekkers weakly responded to the Forbes story in the article’s online comments section.

Bayer CEOHe alleged that the destructive words represented “a quick response” that came across “in a different way than was meant.”He went on, amidst significant clutter from other commentors, to make sort of a formal statement (which could not be found on the main Bayer AG Web site): “Bayer as a company wants to improve people’s health and quality of life with innovative therapies and  we would like all people to share the fruits of medical progress, regardless of their origins or income.”

At the heart of the matter — now essentially obscured — is a critical issue. The United Kingdom’s Daily Mail sums it up: “Nexavar, which is also known as Sorafenib, has been approved for the treatment of kidney cancer, advanced liver cancer (hepatocellular carcinoma), and thyroid cancers that are resistant to radioactive iodine treatment. Currently a kidney cancer patient would pay $96,000 (£58,000) for a year’s course of the Bayer-made drug.”

Because Nexavar is so pricey, nearly two years ago the Indian government took an unprecedented step and licensed Nexavar to be produced in a generic form in India. This, of course, violated numerous international patents, threatens the established rule of law, sets dangerous precedents, and wrongly destroys Bayer’s legitimate claim to intellectual property it developed and/or owns.

So, in effect, it’s a no-win in many cases. And this situation strikes at the heart of Big Pharma growth and sustainability issues, where shareholders expect to see continued handsome profits, while R&D and related costs (not to mention risks) to bring a drug to market are often extreme. A Big Pharma company like Bayer, Merck or Lilly can spend multiple millions of dollars in drug development, only to see it vanish in a puff of pharmaceutical dust if the FDA does not validate and approve it for human use.

Secondarily, the issue raises a factor that will have to be dealt with in the years ahead: the rationing of healthcare on the basis of affordability and cost.

However, the validity of these issues is now smeared with the evident affirmation of corporate greed by Bayer.

Whether one agrees with it or not, as they say in our business, perception equals reality. In the hearts and minds of millions who have followed this story, Bayer’s brand is toast. Whether fair or not, instead of brand elements representing a forward-looking innovative company seeking to improving the human quality of life, Bayer is now affirmed as a greedy, profit-focused, corporate near-parasite in the minds of many.

So what does Bayer do now? And importantly, how could this be avoided in the first place?

Let’s consider some proactive crisis communications

Substantive strategic advice can be found summarized in article MEK published: The Seven Deadly Sins of Public Relations. One of the key ones is this (which in the context of Bayer’s CEO, sounds like fulfilled prophecy):

Local Anesthesia This deadly sin often rears its head when a negative story or comment appears in a small newspaper and the top corporate executives blow it off as inconsequential. Even small newspapers have Web sites, and those Web sites are accessible and linkable everywhere. Back to brand development, as brand legend Scott Bedbury puts it, a brand is based on collective experience and perception. A company can make a public claim about its performance, but if they don’t live it, somebody’s going to blow the whistle, even in a small rural town. The negative outcome can be global.

The other six “deadly sins” are equally critical for executive consideration (hopefully in advance of a crisis). You can read them here.

To fully resolve this issue at this point would require complex, multi-level actions. As the New York Times pointed out nearly two years ago, Bayer’s legal claims are legitimate. The perceived moral dimension, however, is a different story.

This is not the last time this will happen. It’s certainly not solely a “PR” or public relations issue, but communication strategy, integrity and honesty represent key issues. Hopefully Big Pharma executives are paying attention.

By Michael Snyder, Managing Principal, The MEK Group

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