The pharmaceutical industry and corporate social responsibility

Corporate social responsibility (CSR) is industrys response to growing public concern about the accountability and the social, economic, and environmental impact of global corporations. To date, CSR has been closely linked to public relations and reputation risk management. CSR is used to reassure an increasingly anxious audience of investors, governments, consumers, and citizens that companies are trustworthy, sensitive to public pressure, able to manage their power in the public interest, and Over whelming , do not need further regulation. The key challenge facing companies which are embracing the new discipline of CSR is in its content. For Oxfam, Save the Children, and VSO, CSR is about more than philanthropy. It is about the role that global companies can and should play in addressing some of the deep inequalities between rich and poor countries inequalities which create and perpetuate poverty. It is about challenging companies to rethink their attitudes towards markets in developing countries in order to evaluate and improve the impact their business has on human development. It requires companies to review seriously how they can undertake their core business in a way that ensures the benefits are shared more evenly between rich and poor countries. In the wake of public pressure, the pharmaceutical industry has now acknowledged that it has a more important role to play in the complex process of increasing the availability of medicines in poor countries. Since 1999, there has been a considerable increase in philanthropic programmes, with some significant sums being spent by companies in joint public private initiatives (JPPIs). There have also been interesting developments in research-based public private initiatives to tackle key infectious diseases, such as HIV/AIDS, malaria, and tuberculosis (TB). However, the industry has not yet made a collective and systematic move to address the crucial issue of pricing - the area in which it could have the single most significant impact. Growing attention to the pharmaceutical industrys alleged complacency in the face of the human suffering wrought by the AIDS pandemic has shown that the industry is not above criticism. The issue of access to medicines in poor countries has proved a real reputation risk, threatening investor confidence and employee morale. For example, the decision by the pharmaceutical industry to challenge the government of South Africa for not protecting its intellectual property proved to be unwise. Instead of strengthening legal safeguards, it resulted in increased public awareness of the issues surrounding prices and patents, and encouraged developing countries to stand together to demand that public health be given priority over patent protection. The industry is now faced with the possibility of more stringent regulations, which could alter market dynamics and reduce profitability. Oxfam, Save the Children, and VSO believe that a companys CSR policy in relation to developing countries should address five specific issues: pricing; patents; JPPIs; R&D; and appropriate use of medicines. Broader aspects of CSR policies, relating to governance, are also directly relevant when assessing the quality of a companys response to the health crisis in developing countries. If companies are to demonstrate that CSR is more than an exercise in public relations,

they will need a clear, comprehensive policy on the subject. This should include measurable targets, which will be implemented and reported on by a nominated board director. The results of implementing these policies should be reported in the companys annual report. What n Why is CSR in PHARMA?? The activities of pharmaceutical companies cover a number of areas such as: improving access to medicines in developing countries, donation programmes, research and development for diseases prevalent in developing countries, investing in health related education and prevention programmes and establishing global safety and ethical standards into daily business practice. Confronted with new emerging diseases and increasing microbial resistance to existing medicines, the most important role of the research-based pharmaceutical industry is to continue to create and develop new products. As expressed by Nobel Prize Laureate, Joshua Lederberg; "In the race against microbial genes, our best weapon is our wits, not natural selection on our genes." The primary societal responsibility of the pharmaceutical industry is to discover and develop new drugs and vaccines. The industry currently has more than 100 new drugs and vaccines in development for HIV/AIDS, plus major industry-supported initiatives to advance research and development for new drugs in malaria, tuberculosis and other diseases prevalent in developing countries. Companies undertake these activities individually and independently, but also involve stakeholders from different sectors. Between 1998 and 2002, contributions from the 10 largest pharmaceutical companies for health-related programmes in the least developed countries totalled US$2.2 billion[*]. The industry has made and continues to expand its efforts to ensure that patients have access to the medicines they need. The vision for the pharmaceutical industry's role in global healthcare is to create and develop medicines that save and improve the lives of millions of people and, in partnership with governments and other organisations, to help improve access to them. Currently there are more than 50 separate public-private partnerships around the world, based on individual company contributions or working through groups of companies in collaboration with international bodies. In addition to donations, there are numerous initiatives where the industry provides education, infrastructure and technical assistance to developing countries. Some examples of pharmaceutical companies' activities in corporate social responsibility include: In addressing the HIV/AIDS crisis a number of companies are working with UN agencies and other international institutions in what is called the Accelerating Access Initiative (AAI). In this programme, companies are supplying products at steeply discounted costs to patients in a growing number of countries in Africa and world-wide, in the poorest countries, frequently at prices below copycat producers who are not burdened by research costs.

By the end of March 2003, a total of 80 countries had indicated their interest participating. Furthermore, companies are donating drugs to developing countries for mother-to-childtransmission of HIV and for opportunistic AIDS infections. Companies have also played a leading role in the establishment of the Medicines for Malaria Venture (MMV), one of the first public-private partnerships focused on product-development for a disease prevalent in developing countries. Today, companies are contributing their skills and expertise to the objective of launching one new anti-malarial medicine every five years. In the area of vaccines for children, the industry is an active partner in the Global Alliance for Vaccine and Immunisation (GAVI). The GAVI is boosting immunisation rates and reducing the gap in vaccine access among children in developing countries. Industry also makes a financial contribution to the operation of the GAVI secretariat. Through the Global Alliance for TB Drug Development, industry works together with more than 30 partners around the world to accelerate the discovery and development of costeffective new drugs for tuberculosis. The alliance draws on the expertise of our industry. In practice the pharmaceutical industry, through its voluntary initiatives, has not only become a leading CSR performer but is also increasingly recognised as a key player in the area of global health. Its combined contributions, i.e. financial, in-kind donations, expertise, knowhow, etc., make a real difference globally to millions of people in need and are comparable in scale with the efforts of many international organisations and global initiatives. Most importantly, it should be emphasised that the industry's primary role and major social responsibility is to deliver new, innovative, medicines. Furthermore, besides its support for the goals of corporate social responsibility, it should be recognised that the research-based pharmaceutical industry is the main source of all modern pharmaceutical products, responsible for saving lives and improving the quality of life in our society.

CONCLUSION PART-Purpose The purpose of this paper is to provide practitioners of management a sense of the importance of strategically leveraging social responsibility in the pharmaceutical industry, such that it provides a sustainable competitive advantage is that it requires a culture that can successfully execute a combination of activities. These firms should educate their employees towards the value-added processes that accompany CSR-based strategies. The internal as well as the external stakeholders of the pharmaceutical industry should also buy in the concepts of being socially responsible. CSR should be strongly supported in the company culture; thus including CSR in the training process of new employees and reinforcing the concepts to existing employees. Design/methodology/approach A review of the applied literature on practices and actual examples of international firms with major headquarters in the Pittsburgh area have shown that innovative responsible strategy, exceeding government requirements and considering multiple stakeholders, as a long-term objective. Findings Case studies of GlaxoSmithKline and Bayer Corporation, which are two of the world's leading research-based pharmaceutical companies, highlight the need and practice for sound corporate social responsibility. Historically, a concentration on improved operational effectiveness and overcapacity created a temporary economic advantage accompanied by increased profit and firm value. Such an advantage is short-lived; investors may be satisfied, but competing companies will eventually mimic technological and material improvements. Practical implications It is particularly difficult for pharmaceutical companies to allocate its strategic resources necessary to CSR strategies, due to so much of its funds are allocated for R&D and promotional activities, which are relatively risky in nature. The demand for its products is based on consumer motivation, which can vary greatly amongst different countries depending on the responsibilities of consumers, government and economies, and insurance companies or a mix of the three.. Originality/value The pharmaceutical industry is under immense pressure by external and internal stakeholders with hopes of developing and distributing drugs efficiently. The pharmaceutical companies and their lobbyists command considerable influence on healthcare initiatives by governmental agencies and must continually emphasize effort and investments in R&D in order to compete in the industry on a global perspective. The pharmaceutical industry must take into account the ability to be socially responsible to the external stakeholders. The prolonged advantage of corporate social responsibility ensures sustainable economic advantage of any organization.

Catalyst for change

GSK lists issues such as access to medicines, research practices, ethical conduct, supply chain management, environmental sustainability, human rights, public policy, advocacy, and community work under its CSR projects. GSK is also working to respond to the differences in healthcare systems in various markets, differences that reflect everything from the qualifications of local healthcare staff to divergent regional and national cultures. We look at the context and will strive to meet the twin objectives of commercial return and access, Pender says. In practice, that means adding commercial value to GSK as well as social value in the markets in which it is active. There is no one-size-fits-all model, King says, and no magic bullet to ensuring commercial success and ensuring access to medicines. As a result, new CSR initiatives need to balance the value they bring to external stakeholders with the costs they bring to GSK. This is particularly true in relation to transparency. Wittys commitment to transparency has led to an increase in reporting on key business practices, from disclosing speaking and consulting fees for healthcare professionals to making available results from all clinical trials to advance scientific understanding. GSK has published the fees paid for doctors in the U.S., but this does not yet happen in Europe. The commitment in Europe is instead to publish aggregate payments made to doctors at the country level, but not individual payments. Witty has also committed GSK to tough climate change targets and broad action on environmental sustainability. With regard to healthcare in developing countries and access to medicines, the Ethical Corporation judges concluded, this CEO has clearly set a game-changing standard against which GSK and the rest of the industry will be judged. Pender and King agree, suggesting GSK may act as a catalyst for change in the pharmaceutical industry and further afield.

Reinvesting 20% of our profits in LDCs In the worlds LDCs, lack of basic healthcare infrastructure and qualified healthcare workers prevents millions of people from getting the treatment they need. At GSK, we reinvest 20% of the profits we make from our pharmaceutical and consumer healthcare businesses in LDCs back into local healthcare infrastructure. We partner with three leading NGOs AMREF, CARE International and Save the Children specifically to address the shortage of trained frontline healthcare workers. The funding available for investment in2011 was 3.8 million, based on 2010 profits from our medicines and consumer healthcare products.This has enabled us to initiate programmes to train up to 10,000 health workers. We have initiated projects in 25 countries (at the end of 2011), and are on track to implement a project in each profit-making LDC (34) by June 2012.Our goals for 2012 include: Measuring the impact of projects, including the number of health workers trained and improvement in health indicators. Engaging other organisations to help achieve the WHO goal of one million health workers in developing countries by 2015.Some examples of the activities this investment has supported are outlined here:In Niger, one in six children dies before they are five. Tohelp prevent this we are working with Save the Children in the Maradi region to conduct health education sessions in 1,175 communities. We are training 2,350 community health volunteers to deliver health and nutrition messages. The sessions will focus on the causes of malnutrition and ways of preventing common childhood diseases.Lack of access to quality health facilities and services affects many poor women and newborn infants in the far-western region of Nepal. GSK is supporting an initiative led by CARE International to upgrade 20 local community health service centres to birthing centres with improved facilitiesand to provide training to mobilise 1,750 female community health volunteers. We are supporting an innovative eLearning project in Tanzania to up-skill 1,000 nurses from remote regions,so they are better-informed about healthcare advances and best practices and able to provide a higher standard of care to rural communities. We are working closely with education institutions and the Ministry of Health and AMREF to develop these distance learning courses.

Raising awareness A fundamental aspect of good health management is to ensure that people are well informed about how to avoid getting ill, and what to look out for if they fall ill. If people are not adequately informed, they will not take the right precautions, nor seek appropriate treatment when necessary. Malaria is a good example of this, where a significant effort has been invested to encourage people to sleep under insecticide treated bed nets, and to look for the early signs of malaria. These efforts have contributed significantly to the recent declines in mortality from malaria. See page 16.In our pharmaceutical business, our flexible pricing approach is often accompanied by comprehensive campaigns to increase awareness and in turn make sure that the maximum number of patients can benefit from price reductions and increased access. One example of this is in Indonesia where we reduced the price across a number of our established brands by between 1580%; setting prices at a realistic level reflecting the countrys ability to pay. A disease education and media awareness campaign was supported by GSK and a launch event for physicians was held which was attended by the Minister for Health. These efforts as well as expansion of our healthcare professional coverage, from 5,000 to 16,000 covering 56 countries, have helped to increase access to our medicines. For example the volume of our Seretide asthma treatment has almost doubled in 2011 following an approximately 50% price reduction. Furthermore we are working to raise awareness of disease and improve prevention and treatment in developing countries, for example in our PHASE hand-washing programme.