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• Case | HBS Case Collection | March 2014 (Revised November 2020)

  The Novartis Malaria Initiative

  Michael Chu, Vincent Marie Dessain and Emilie Billaud

  The Novartis Malaria Initiative was designed, as a result of a precedent–setting agreement with the World Health Organization in 2001, to provide a breakthrough treatment for malaria—"at no profit"—for public health systems. What had begun as an exemplary act of corporate responsibility had succeeded beyond any expectations. In 2012, for the second year in a row, Novartis had manufactured and distributed over 100 million units of the anti–malarial drug Coartem ®. But with the significantly increased volumes came increased costs, bringing into question the sustainability of the program. In 2013, Dr. Linus Igwemezie, executive vice president and head of the Novartis Malaria Initiative, reflected on the evolution of the program and the way forward. His goal was to expand access to Coartem in the private sector through a low-margin, high-volume social business model to eventually enable the Malaria Initiative to break even and become financially sustainable. Was this the right strategy?

  Keywords: Health Care and Treatment; Product Marketing; Corporate Social Responsibility and Impact; Pharmaceutical Industry; Switzerland; Africa; Nigeria;

  Citation:

  Chu, Michael, Vincent Marie Dessain, and Emilie Billaud. "The Novartis Malaria Initiative." Harvard Business School Case 314-103, March 2014. (Revised November 2020.)  View Details

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• Background Note | HBS Case Collection | June 2014 (Revised November 2020)

  Board of Directors: An Introductory Note

  Charles C.Y. Wang, Selina Jan and Kyle Thomas

  Citation:

  Wang, Charles C.Y., Selina Jan, and Kyle Thomas. "Board of Directors: An Introductory Note." Harvard Business School Background Note 114-096, June 2014. (Revised November 2020.)  View Details

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• Working Paper | HBS Working Paper Series | 2020

  The European Commission's Sustainable Corporate Governance Report: A Critique

  Mark Roe, Holger Spamann, Jesse Fried and Charles Wang

  In July 2020, the European Commission published the “Study on directors’ duties and sustainable corporate governance” by EY. The Report purports to find evidence of debilitating short-termism in EU corporate governance and recommends many changes to support sustainable corporate governance. In this paper, we point out deep flaws in the Report’s evidence and analysis. We recently submitted the content of this paper in response to the European Commission’s call for feedback.
  First, the Report defines the corporate governance problem as one of pernicious short-termism that damages the environment, the climate, and stakeholders. But the Report mistakenly conflates time-horizon problems with externalities and distributional concerns. Cures for one are not cures for the others and a cure for one may well exacerbate the others. Second, the Report’s main ostensible evidence for an increase in corporate short-termism is rising gross payouts to shareholders (dividends and stock repurchases). However, the more relevant payout measure to assess corporations’ ability to fund long-term investment is net payouts (gross payouts minus equity issuances), which is much lower and has left plenty of funds available for long-term and short-term investment. Third, when the Report turns to other evidence for short-termism, it selectively picks academic studies that support its views on short-termism, while failing to engage substantial contrary literature. Significant studies fail to detect short-termism and some substantial studies show excessive long-termism. Conceptually, some short-termism is an unfortunate but an inevitable side effect of effective corporate governance and may not be a first-order problem warranting wholesale reform. Finally, the Report touts cures whose effectiveness has little evidentiary support and, for some, there is real evidence that the cures could be counterproductive and costly.

  Keywords: Short-termism; hedge funds; securities regulation; agency costs; political economy; payouts; repurchases; Corporate Governance; Investment Activism; Research and Development; Investment; European Union;

  Citation:

  Roe, Mark, Holger Spamann, Jesse Fried, and Charles Wang. "The European Commission's Sustainable Corporate Governance Report: A Critique." Harvard Business School Working Paper, No. 21-056, October 2020.  View Details

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