by J. R. McLeay
“Unfortunately,” Rick continued, “all we can do after that point is try to keep our seniors as healthy as possible within their natural lifespans and make them as comfortable as possible in their declining years. I’d be happy to see your father if you think I can do anything in that regard.”
Tian smiled appreciatively.
“No, thank you Rick. He’s already in capable hands. I suppose I already knew there would be nothing else we could do. It just seems so cruel and unfair—to have two different classes of people living side-by-side in the same generation: aging mortals, and ever-young immortals.”
“Yes, I’ve had to grapple with this problem myself—at the hospital, and elsewhere,” Rick agreed. “But it’s important to keep in mind we don’t yet know for sure how long we’ll be able to hold back the natural aging mechanisms in juveniles. This hypophysectomy intervention is still a fairly new experiment in the grand evolutionary scheme. It’s contrary to the engineered design of our human body, and we can’t be certain it won’t someday find another unknown path to its natural destination. I think we should be careful about setting too lofty expectations, and using terms like immortal.”
Tian paused to consider the weight of Rick’s words.
“Yes, I suppose none of us should take this for granted—least of all those holding positions of responsibility for the welfare of so many others. I’ll talk to the Director-General of the WHO about tempering its message.”
There was momentary silence as Tian was lost in thought once again.
“You know…the funny thing is that this whole pituitary-removal idea might never have come to fruition if the WHO had had its way, so long ago.”
“How do you mean?”
“Once your grandfather proved it was possible to retard aging in this manner using chimpanzees as his study subjects, it took a rogue nation’s leader to take the first step with humans—in that case as you recall, with his own son. None of the other member states would sanction or allow the experiment to be tested with live humans.”
“Yes,” admitted Rick, “I suppose we have that one not-so-crazy dictator to thank for laying the groundwork for the rest of us—at least in enough time for this generation.”
“Indeed,” Tian said. “Now, if only you could pick up the gauntlet from your grandfather and see if we could somehow broaden this life-saving idea to those left behind.”
5
The world headquarters of the Endogen Pharmaceutical Corporation sat on a sprawling estate covering over five hundred secluded acres in upstate New Jersey. Hosting over 20,000 employees, the huge complex housed the key manufacturing, research, and administrative functions of the organization. With annual sales of more than $100 billion, the company had grown into the world’s largest biotech organization. Although it now offered a wide range of pharmaceutical and health care products for both young and old customers, the primary driver for its large size was the exclusive contract it had won to supply all juveniles’ replacement hormone patches. Their “e” trademark, etched on every patch worn by every hypophysectomized juvenile in the world, was arguably the single most recognized commercial symbol across the globe.
The top management team was justifiably proud of their ability to secure the U.N. contract as well as their ability since then to maintain a flawless record of quality control and distribution. None more so than the Chief Executive Officer Roland Jamieson, who had played a key role in the original negotiating process and in convincing the agency of Endogen’s suitability for the job. Now, with such a massive network of international resources applied to the task of producing and distributing the patches around the world, he felt comfortable knowing it would be difficult to displace his company as the preferred U.N. supplier.
But in his latest meetings with the Director-General of the World Health Organization and the U.N. Secretary-General, he felt uneasy about the nature of some of their enquiries. Instead of the usual platitudes and self-congratulatory luncheons, they were showing a newfound and inordinate interest in the logistical and financial details of their longstanding arrangement. The questions pertained not only to the typical annual contract price negotiations, which were decidedly one-sided in Endogen’s favor given its monopolistic position but also involved new and unusual concerns about such factors as distribution and manufacturing capacity.
Jamieson couldn’t imagine the U.N. would consider upending the terms of their supply agreement, not least because of the displacement it would have upon Endogen’s hundreds of thousands of employees around the world, but also because he felt he had built a close rapport with the Secretary-General and that she would never take any drastic action without first consulting him personally. Nonetheless, he thought it prudent to prepare the organization in the event of a sudden or unforeseen change in circumstances, and as such, had ordered a special meeting of his Executive Committee to discuss the situation.
The meeting was set for eight a.m. sharp in the corporate boardroom, and since Jamieson insisted on strict punctuality, he always showed up at the last appointed second as a show of authority.
“Good morning everyone,” he announced, as he strode briskly into the wood-paneled room. Each of his direct reports were dutifully assembled around a huge, glass oblong table. Surrounding them on the walls of the boardroom hung giant original expressionist paintings by various 20th century masters.
“We have a special order of business today, and I wanted your input and recommendations on how we should proceed on a very sensitive matter. As you all know, the company is somewhat beholden to the U.N. under the terms of our exclusive endocrine patch supply contract. We have far too much to lose if this arrangement were to be substantially disrupted in any manner. I would like for us to discuss today how we can best protect the company’s interests in the event of a material change in our relationship with the U.N.”
“What makes you think these arrangements might change, Roland?” enquired Alan Brache, Endogen Chief Counsel. “We still have the better part of a year remaining in the term of our present contract, and the annual renewals have pretty much been a rubber stamp by the U.N. for several years now.”
“I know Alan, and to be honest, I don’t have any concrete evidence to suggest this is in jeopardy, other than some odd comments and inquiries from the Director-General and Secretary-General at our last quarterly review.”
“What kind of comments?”
“Well, for instance, they were asking how many employees we have committed to the patch supply from our various production and distribution arms around the world,” Jamieson said.
“Perhaps they’re simply trying to further clarify our costs in preparation for the next round of pricing negotiations?” suggested Joe Bennett, the company’s Chief Financial Officer.
“It’s possible that’s all it is,” admitted Jamieson. “But they were also asking about the size and location of each of our plants, and how much is produced at each location. Normally, they don’t factor in our capital costs in the pricing formula—as you know, they’ve traditionally been more concerned about our gross margins.”
“Maybe they’ve finally begun to pay attention to our requests to recognize our fully loaded costs, as we’ve been imploring them to do for so many years?” mused the CFO.
“I considered that,” continued Jamieson. “I just don’t see why they would suddenly change their tune after all this time. Plus, they know the majority of these costs have already been substantially depreciated—I think they’re more sophisticated in their cost analysis and estimating than we may be giving them credit for.”
Jamieson’s brow furrowed. “I’m afraid they’re getting at something else.”
“Do you think they would seriously considering giving the patch contract to another supplier?” asked Sue Weldon, the Marketing EVP, incredulously.
“I can’t imagine that they’d take it away from us outright. But they could quite easily parcel out pieces of the supply arrangement to other local area vendors. They m
ay believe we’re being given unfair competitive advantage and other countries may be taking exception with all of this business going to U.S. interests.”
Even though everyone at the table had long known that Endogen was overly reliant on the U.N. contract and unduly concentrated in this market niche, they had become increasingly complacent with their continuing success. None of them had seriously considered the possibility of the company’s preferred status changing.
Bruce Ellis, the Production Superintendent, was the first to break the uneasy silence.
“What do you think we should do, Roland?”
Jamieson had been contemplating the ramifications of a U.N. move for some time now and had already conceived a number of countermeasures.
“I think we should find a way to hedge our bets,” he stated. “Joe, what can Endogen do to prepare for a worst-case scenario?”
“To be honest Roland, if we were to lose the entire contract, it would decimate our business. Almost half of our revenues, and over two-thirds of our profits, are wrapped up with this single product. Our share price would fall off a cliff overnight.”
“That’s what I’m afraid of,” Jamieson admitted. “You’re our finance specialist—what hedging strategies can we take against this?”
“Such a large hit is very difficult to protect against. It’s not like when we purchase commodity futures to lock in material supply prices, or take options positions to cover ourselves against currency fluctuations. This order of magnitude would be largely uninsurable.”
“There’s got to be something we can do!” implored Jamieson, banging his fist on the table.
Joe paused as he glanced uneasily at his fellow Executive Committee members.
“We could float a new stock issue to take advantage of our high current share price then buy back into the treasury large portions of the outstanding shares after they drop.”
Joe was only half-serious. This was a timeless corporate strategy for taking advantage of transitional share price fluctuations, but such action also sent a strong signal that the company had no better purposes for its capital.
“I don’t consider that a viable option,” Jamieson replied. “Besides, that would only benefit some of our shareholders, and only in the short term. It does nothing to position us to be more competitive nor focus on carrying on the business as a going concern.”
Jamieson was becoming increasingly irritated in his management team’s inability to propose workable solutions, and he was far from finished making them think this through.
“Sue,” he said, calling once again on his Chief Marketing Officer. “What can we do about diversifying into more product lines?”
“As you know, Roland, we’ve been trying to do this for some time now. The underlying issue is that juveniles have far fewer health management needs than the rapidly declining adult population base—other than for hormone regulation, of course. Plus, with the FDA and other regulatory agencies requiring extensive longitudinal studies before approving most new health care products, we’re probably looking at years before we can introduce any meaningful new products into the marketplace.”
“You’re all beginning to make this sound impossible,” groaned Jamieson. “Where do we stand with new products in the development pipeline, Nathan?” Nathan Taylor was Endogen’s Chief Scientist, in charge of the company’s research and development efforts. “How are we coming with the clinical trials for the proposed ‘designer’ patch?”
“We’ve been nearing completion on the testing phase for some minor changes in the formula for increased melanocyte production and its effect on improved skin tone,” Nathan responded. “We could be ready for production in a few months if we get the required regulatory approvals.”
Jamieson recognized a glimmer of hope.
“This could be a key differentiating factor for us if the regular patch were to become commoditized by multiple suppliers, don’t you think?”
“Unfortunately,” Sue interjected, “the market size for that type of product may be limited. Our research suggests skin tone and color is much less of an obsession for the juvenile market than it used to be for the now largely defunct adult market. On the other hand, our focus groups are showing an opportunity for a growing interest in specialized patches for boosting sex hormones.”
“You mean a type of Viagra patch for juveniles?”
“Nathan’s people tell me that it is technically feasible to adjust the levels of sex hormones regulated by the standard patch—to increase or improve sexual interest and function among juveniles.” Sue said.
“Yes, technically,” Nathan quickly jumped in. “But this is a very delicate area, both physiologically and ethically...”
“How do you mean ‘ethically’?” interrupted Jamieson.
“I think what Nathan is referring to, Roland,” said Sue, “is that a lot of people from the senior generation still think it is immoral for juveniles to be engaging in any kind of sexual activity.”
“This debate has been raging since the onset of the pituitary removal program,” Bruce suddenly interjected. “I for one feel—as do many others—that no one has the right or authority to dictate our individual sexual proclivities. Besides, virtually all of these complaints are coming from a marginal group of aging seniors who have little remaining moral authority or influence. I think for the benefit of the company, and indeed for the betterment of everyone’s quality of life, that we should proceed deliberately on this front.”
“I agree,” asserted Jamieson. “I think we have to investigate every potential edge we can develop, and put ourselves in a position to be less exposed in the event of forces outside our control. Nathan, I want you and your team to begin stepping up your development efforts on this variation right away and report back to me weekly on your progress. I’d like us to have some kind of unique new product we can introduce before the current U.N. contract expires.
“Joe, in the interim I also want you to look into whatever means we may have at our disposal—short of buying out our own shareholders—to protect against the financial implications of a serious setback in revenues and profits. I want a report on my desk before the end of this week.”
“I’ll see what I can come up with, Roland.” Joe knew any significant new financing proposal or change in strategic direction would require approval by the Board of Directors. “Will we be presenting any of this to the Board at our upcoming meeting later this month?”
“Hell, no!” admonished Jamieson. “At this point, that is the last thing I want to bring to the Board’s attention. They’ll blow a gasket if we suggest there is the slightest possibility of our losing the U.N. contract. I want this matter to stay in this room for now; even your own people mustn’t know. If the market gets wind of even a rumor, all of our stock options will be under water in a nanosecond. I know many of you have borrowed heavily against your personal collateral to purchase additional shares in the company, and none of us can afford to see this company’s shares be taken down. Let’s keep this between ourselves for now, and deal with it in a timely and effective manner so it never has to become an issue for anyone else.”
The group sat in sober silence. Everyone was absorbing Jamieson’s grave comments and contemplating the potential consequences of failure in both corporate and personal terms. With a giant blood-red Rothko painting on the adjacent wall hanging over their heads, the executives looked at one another nervously.
Everyone knew they couldn’t afford to fail.
6
Thursday was Rick’s favorite day of the week. This was the day he taught his Bioethics class at NYU, and he enjoyed the unique intellectual stimulation provided by the academic forum and the opportunity to broaden inquisitive young minds. It was a much anticipated break from the mostly predictable work involved in his general practice and hospital duties.
Although the campus environment in Greenwich Village was only a few miles from his uptown offices, it seemed a world apart in attitude. Unlike the frenetic
pace of the rest of city, the Village community had a uniquely creative and laid-back flavor, which had long attracted many of the world’s greatest artists and intellectuals.
Usually Rick took the subway from his Upper East Side townhouse to the downtown campus; it was a straight run on the Green Line from the 86th Street stop to the Astor Place station. But today he decided to take a cab and seek pre-lecture inspiration in the sights and sounds of the Manhattan streetscape. The route along Fifth Avenue from the upper end of Central Park to its terminus at Washington Square was among the most glorious and uplifting stretches of cosmopolitan real estate anywhere in the world.
After flagging a taxi opposite the Metropolitan Museum, Rick settled in for the twenty minute ride downtown. As the soaring classical columns of the grand museum passed behind, majestic trees framing the park began lining up in perfect formation at the edge of the thoroughfare, like stoic sentinels protecting the public gardens within. In mid-October, the leaves were just starting to turn, and this made the sight all the more magnificent. Rick could see couples walking hand-in-hand along the adjoining carriage path, and others playing with their dogs on the lush carpeted fields beyond.
At the south end of the park, the city’s affluent shopping district opened its arms at 59th Street. Dominating the intersection on the south-west corner sat the Plaza Hotel, rising regally above the street in the manner of a grand renaissance chateau. Surrounding the hotel on opposite corners were some of America’s most famous retail institutions, including Bergdorf Goodman, Tiffany’s, and Cartier. As he scanned to the opposite side of the street, Rick winced as he caught sight of the brassy edifice of the Trump Tower, standing in garish contrast to the old world beauty of its elegant neighbors.