Shell Oil in Nigeria and the Transformation of Shell

Shell’s History: In 1833, a man named Marcus Samuel began selling seashells in London, eventually expanding into a thriving import-export business. In 1892, the first oil tanker was commissioned, to deliver kerosene from Russia to Singapore and Bangkok. During this time, the Royal Dutch was forming to develop oil fields in Asian regions, and by 1896, Royal Dutch had a fleet of tankers. In 1907, Shell and Royal Dutch merged after realizing the benefit of working together. In the early 1920’s, an aviation attempt was made across the Atlantic, prompting the start of Shell’s Aviation Services. Shell had expanded as there was a mass production of cars in the early 20th century, but experienced a reduction in operations during the first World War. In 1929, Shell continued to expand their operations to include chemicals. However, as the Second World War occurred, Shell again lost business. The rebound occurred by 1950’s and 1960’s, in which the Shell Company had nearly a tenth of the world’s market share. In the 1970’s, Shell experienced increasing crude oil costs, due to an economic recession. In the 1980’s, Shell diversified and became technologically advanced and more aware of environmental concerns. In 2005, the ultimate merger of the Royal Dutch and Shell happened.

Shell Nigeria: Since the 1930’s, an exploration for oil was concentrated in the West African area. In 1956, a discovery of oil was made in the area of the Niger Delta.ited Nations estimated, in 2001, that an additional 3.8 million would be infected on an annual basis, with an approximate 2.4 million dying from this disease or related illnesses that threatened life within a person who had an immunity problem. Furthermore, the undeveloped country did not have the resources to combat this problem. The drugs needed exceeded the affordable cost for its population, regardless of who would pay for it.

Global Intellectual Property Rights: The World Trade Organization (WTO) authored the global intellectual property rights, which granted drug manufacturers to maintain exclusive rights to the products for a period of twenty years. Drug manufacturers greatly supported this right, claiming high costs of research and development. If the rights were not granted, this could have caused the drug companies to not pursue research for new drugs, which would have been detrimental to the world’s population who is constantly searching for cures for ailments, cancers, diseases, and so forth.

Pressure on the Pharmaceutical Industry: A challenge was made, in 2001, by a company called Chemical, Industrial and Pharmaceutical Laboratories, Inc. Yusef Hamied made an offer of selling Duovir – a copy of Glaxo’s Combivir – to an organization for the price of $350 a year for each person. Keeping in mind, GSK’s discounted rate would vary depending on the country served, but was in the neighborhood of $3,000 a year, this came as an absolute shock. Cipla made a similar offer to the African governments to sell the drugs at cost. Cipla found a loophole to fulfill this offer. The Medicines and Related Substances Act enabled parallel importing and compulsory licensing, of which Cipla planned to utilize on their behalf. Lawsuits were filed by drug manufacturers and trade associations to fight this MRSA. An international human rights group launched a campaign to make the medicines more affordable so that the people could afford to be treated. Oxfam demanded that the pharmaceutical companies lower the costs and forgo patent rights on the drugs, as well as earmark the other drugs to help treat secondary illnesses. Ethics became the hot seat in this campaign.

Formulating a Response: Although GSK joined the Accelerated Access Program earlier, this still did not settle well with the organizations, the governments, and the clinics. In the annual report, the statement was made that although GSK was doing what they could do, that there were other factors needed to be able to accomplish the advancement of treatment needed, such as updated clinics. Though the prices were discounted by other pharmaceutical companies, GSK pointed out that even the sales didn’t increase based on discounts, and stated that the issue of pricing was not the problem.

Core Interests: GSK’s core interests were to be as humanitarian as financially possible, while remaining the leader of the AIDS treatments, and satisfying investors, shareholders, and the employees of the company(ies).

Options: Pricing options, in light of the cost