Mals Musings: Its time for pharma to get serious about CSR
Why future success should be measured by gains in corporate social responsibility (CSR) as well as in share price
By on Jul 26, 2010Why future success should be measured by gains in corporate social responsibility (CSR) as well as in share price
Until recently, the pharma sector had witnessed a period of unprecedented growth and prosperity.
We sold more products at increasingly higher prices, but the success was coupled with dissatisfaction from the general public.
Pharma was one of the bad guys, like Oil and Tobaccoa paradox for an industry that meets the fundamental human need of health.
There is something about old pharma that, although successful, created an increasingly hostile environment.
Is it time to start to undo the damage the last three decades have delivered?
Pharma is a living example that winning at all costs is not a sustainable strategy.
Pharmas CSR deficit
As the dust settles on the economic tsunami, we are realizing that the prior period of world economic prosperity came at the expense of the immediate future.
Politicians are now queuing up to do the right thing and ensure that success today does not come at the expense of tomorrows success.
So they are cutting public expenses, increasing taxes, and making us work longer.
Fixing the structural deficit is not easy, but it is necessary if we are to thrive in the future.
Is there a lesson for pharma here? I think so.
Aside from the deficit facing the global economy, we face our own deficit: corporate social responsibility (CSR)doing the right thing, even if in the short term it hampers growth.
Challenging, but unfortunately it is the reality of CSR; and it is gaining momentum as the general public and the press watch our every move.
In the future, growth in share price will have a closer link to operating with a strong sense of corporate social responsibility.
From selling value to creating value
Given the sensitivity of the area in which we operate, we may need to conduct research into disease areas that are not necessarily the most profitable but nonetheless make a significant contribution to healthcare.
The lines between for-profit and not-for-profit organizations will blur as the public increasingly demands tangible and socially responsible contributions.
Our huge investment in sales and marketing will have to continue its downward trend as the emphasis will need to move rapidly from selling value to creating value.
To this end, the strand of marketing that propagates segmenting customers based on meeting their needs is a better fit for the future paradigm.
The move from sales orientation to market orientation will have to be faster than we anticipated, since public tolerance is low.
A phenomenal force for good
In future, we will need to be squeaky clean as an industry.
We have the potential to be a phenomenal force for good.
However, with that comes a heightened sensitivity from the public, since they feel like a captive audience.
We have to lead the CSR drive; if there is one industry the world needs to be socially responsible, it is pharma.
We can cope with Tobacco and Oil being somewhat unethical, but not pharma.
The good news for us is, we can be responsible and profitable.
While there might be a lag period, the two will correlate stronger in the future.
How can executives steer the industry in the right direction, given the pressure they are under to deliver?
It is tough but it needs to be done. Our environment is changing and we have crossed the point of no return.
This is a time for doing things differently rather than just talking it.
Most of the necessary realignment consists of things we should have done already.
I remember an old Chinese proverb: The best time to plant a tree is twenty years ago. The next best time is now.
Now is the time to realign our businesses for a socially responsible future.
For more on pharma and corporate social responsibility, see GSK's approach to corporate social responsibility.