Business Case Studies & Business Publications

American Home Products: Signal Detection...

Riefberg, Vivian, ...

Case

American Home Products: Signal Detection (A)

Riefberg, Vivian; Klopfenstein, Amy

OB-1377 | Published February 26, 2025 | 5 pages Case

Collection: Darden School of Business

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This case set examines the challenges that leaders at American Home Products Corporation (AHP) face after evidence surfaces regarding potentially fatal side effects of two of its drugs: Pondimin (fenfluramine) and Redux (dexfenfluramine). This A case is set immediately after AHP withdrew the drugs from the market in 1997 and places students in the shoes of AHP executives Robert Essner and Ken Martin as they determine how to proceed in light of likely litigation. It also explores the larger dialogue simultaneously taking place inside AHP, as CEO Jack Stafford and CFO Bob Blount determine whether and how to continue the company’s pivot from a multi-product company to a health care business. The A case facilitates a discussion of the key uncertainties that each of these leaders faced and whether there are warning signals of a pending crisis that they could detect in time to mitigate its impact. The B case reveals AHP’s status in May 2021 as the company continues to confront the consequences of the drug withdrawals; it provides an opportunity to discuss the longer-term leadership challenges at AHP and the subsequent crisis. At the University of Virginia Darden School of Business, this case set is taught in the “Leading in Uncertainty and Crisis” class, which is included in the full-time, part-time, and executive MBA programs. It would also be suitable in a leadership and strategy module. It includes video with Ken Martin, one of the case protagonists, discussing the issues in the case.

(1) Explore key uncertainties that chief executives face as they work to shift the strategic direction and focus of their organization. (2) Analyze what differentiates a crisis from a business challenge. (3) Examine whether there are warning signals of a pending crisis and actions that could be taken to minimize its impact. (4) Consider the business implications for “mega-mergers” in the pharmaceutical industry to better understand the consequences of strategic growth decisions. (5) Understand the five phases of a typical business crisis and lessons learned from each. (6) Explore how leadership actions taken before and during an initial crisis may contribute to an additional crisis, including key uncertainties leaders face as they confront the next crisis.