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Case Study Of Cheap Pharma Inc.

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Pocketing the Greens- Alex Erlito S. Fider Cheap Pharma Inc,, a pharmaceutical company specializing in generic drugs , had been suffering low sales in the past months because of fierce competition from other generic drug brands. It was looking for other ways to make profit by improving its product line. Mr. De Guzman , a member of the Board of the Directors of Cheap Pharma , together with two other proposes to buy shares of stocks of Green Med , an insolvent pharmaceutical company whose claims to fame is its innovative use of lagundi leaves in its cough syruo. According to Mr. De Guzman ,Cheap Pharma can make use of GreenMeds’s patents and develop new products which incorporate traditional herbalS medicine with Cheap Pharma’s existing product line.…show more content…
Basic Issue(s) or Associated Issue(s): The three members of the board of directors of the Cheap Pharma Inc. must fight and save their reputation to the shareholders of the Cheap Pharma Inc because they are sued by the company. Mr. De Guzman and the two other members must examined the passed resolution of the Cheap Pharma Inc. in ratifying the purchased of share of stocks of the Green Med. Is there any contract signed by both the parties: Cheap Pharma Inc. and Green Med? Or it is only a negotiation between the two parties involved and no signing of contract at all?(See Attachment: DUTY OF A DIRECTOR NOT TO COMPETE WITH HIS CORPORATION) 3. Issue(s) Analysis or Information Summary: Information outlined to Mr. De Guzman and the two others: • They are members of the board of directors of the Cheap Pharma Inc. • They have their duties and responsibilities to Cheap Pharma Inc. • As member of the board of directors they are bound by a duty of loyalty. They must act in the best interests of the corporation and the shareholders. • They can purchased/owned share of stocks other company but with limitations. Information outlined to Cheap Pharma Inc. • Lawsuit if there’s a breach of contract and will be costly the
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