Here’s a lesson about the concept of Shared Values and how it can be used to not only solve a market or social problem, but also to build a competitive advantage and positive reputation. Last month, as one might remember, Turing Pharmaceuticals rose to infamy for upping the price per-pill of a life saving medicine from $13.50 to $750. To put that in perspective that’s an increase of nearly 5,000%. Martin Shkreli, Turing’s CEO instantly thrust himself into the spotlight as the most hated man in American pharmaceuticals and showed a nation why leaving healthcare in the hands of hedge funds may not be the best idea.
Shkreli argued that the price was raised to boost profits that could be put back into R&.D. After first standing firm that he would not lower the price, Shikrelli bowed to pressure and announced that he would lower the price. However, as of this writing, the price had still not been lowered. Shikrelli said he wanted to “assess demand” before determining what the price should be. One would have assumed that he would have done that when he decided to increase prices, unless he simply determined that the price was totally inelastic.
Late last week, Imprimis Pharmaceuticals – a compounding pharmaceutical company – showed the world that there are pharmaceutical companies who are focused on what’s best for the patient.– by offering to sell a bottle of 100 pills for only $99, or $749 less per pill than that offered by Turing.
Now if you’re not familiar with what a compounding pharmacy does, they buy FDA-approved compounds that can be customized for certain solutions. For instance if someone cannot take a pill form they can buy the compound and turn it into a liquid. And according to Business Insider that’s what Imprimis plans to do; they will combine the molecule with B-vitamins and folic acids.
Impirimis CEO, Mark Baum – who has become my favorite person of the moment said, “I’ve served this patient population for a long time, and when I see a company (Turing) do this… it just shocks the conscience. This is what we like to call “doing well by doing good”. Some may call this corporate social responsibility (CSR). Others might see it as an example of customer capitalism vs shareholder capitalism. We believe that this is a perfect example of the principle of Shared Values, by which a company seeks measurable business value by identifying and addressing social problems that intersect with their business. Impirimis is a publicly traded company. Mr. Baum has recognized that his shareholders will be well served if he builds a competitive advantage with patients. Essentially, a win–win–win outcome for his company, shareholders and the customer.
In addition, what Mr. Baum has done is to expose, if not destroy all of the arguments made by Mr. Shkreli. Clearly, there can be profits in this market at a low price and, if there are compounding capabilities for the drug, there is no R&D left. The drug for this market is now a commodity.
We advocate for companies to recognize that it is “their customers” who create the opportunity for value, which in turn allows them to increase shareholder value. Mr. Shkreli understands the opposite concept—that it is all about increasing profitability, even at the expense of customers, if not in this case, lives. He overlooked the fact that he did not have a monopoly, or that other executives would be as crass or as greedy as he is. Companies with strong corporate social values and who practice Shared Values can positively impact both their profitability and their stakeholders perceptions (reputation) of them.
We commend Mr. Baum and his willingness to take a negative and turn it to a positive. I have a feeling we’ll be hearing a lot more about Impirimis in the coming months. Many people want to work, or be a part of something that aligns with their values, and in one powerful moment, Imprimis has done that.
Adam is the Chief Operating Officer of Schreiber Paris. Adam has helped to develop complex digital initiatives and external communication plans at an international level for some of the largest brand names around. His primary focus has been in corporate alignment, strategy development and deployment, operational effectiveness, post merger integration and short to long-term strategy execution for clients in nearly any industry.