Pharmaceutical firms engage in large-scale, intensive R&D to create and market drugs meant to treat everything from cancer to hair loss. Thousands of pharmaceutical drugs allow people to live longer and healthier lives. Europe and the United States are home to the major pharmaceutical firms and to industry R&D. They benefit from strong patent protection laws and abundant investment capital. According to industry statistics, it takes 12 to 15 years, and more than $800 million in R&D expense, to successfully bring a new pharmaceutical compound to market.

1. Specify the types of country risks that pharmaceutical firms face in international business. How do the political and legal systems of countries affect the global pharmaceutical industry?
2. People need medications, but the poor often cannot afford them. Governments may not provide subsidies for health care and medications. Meanwhile, pharmaceutical firms focus their R&D on compounds likely to provide the best returns. What is the proper role of the following groups in addressing these dilemmas: national governments, branded pharmaceutical firms, and generic manufacturers?
3. Consult www.phrma.org , The Pharmaceutical Research and Manufacturers of America. What steps is the branded industry taking to address the various ethical issues it faces, such as providing affordable drugs to poor countries?
4. Consult the TRIPS agreement at the WTO portal (www.wto.org ). What are the latest developments regarding this treaty? What types of protection does this treaty provide to pharmaceutical firms? What enforcement mechanisms does TRIPS provide for ensuring that these protections will be carried out?
5. Recommend a strategy that management at a large pharmaceutical firm should employ to reduce the likelihood of political and legal risks that such firms face. What steps should management take to minimize its exposure to such risks?