GSK's approach to corporate social responsibility
Leela Barham investigates what other pharma firms can learn from GlaxoSmithKline CEO Andrew Wittys recent award for corporate social responsibility.
GlaxoSmithKline CEO Andrew Witty was named Individual Leader of the Year at the Ethical Corporation Responsible Business Summit 2010.
Awards for corporate social responsibility (CSR) are still relatively uncommon for the pharma industry, so its worth examing what GSK did rightand what other firms might learn from its award-winning ways.
Ethical Corporation magazine, our sister company which organized the awards, cited Wittys conviction that GSK will only succeed as a business if it uses its resources and influence to make a real and sustainable difference to the lives of people in the developing world as the basis for his selection.
Under Wittys leadership, GSK has substantially reduced the price of its patented medicines in the least developed countries (LDCs) to 25% of developed world prices.
It is adopting more flexible pricing structures for middle-income countries, too.
As part of an effort to provide sustainable long-term funding to LDCs, GSK reinvests 20% of its profits from sales of medicines in those countries to support the strengthening of healthcare infrastructure.
Researchers also have access to GSK's intellectual property and know-how.
Some 13,500 compounds from GSKs library that have shown activity against the malaria parasite have been made freely available online, a first for the pharma industry.
The benefits of CSR
According to Julia King, GKS vice president of corporate responsibility, Witty has led from the front on CSR, treating it as an integral part of all of GSKs activitiesfrom basic research through to how GSK works with governments and other stakeholders.
CSR has been part of running our business for years, King says.
What we are doing now is refining our thinking and developing our competence. We used to be playing catch up. Now, were ahead of the game in our policies and implementation.
The benefit of CSR to the bottomline is difficult to quantify.
But King nevertheless believes its vital to GSKs commerical success, especially in a field like healthcare where relationships and perceptions matter so much.
GSK, like other companies, has to work with a whole host of external stakeholders, King says.
We want them to feel comfortable working with us, and that means acting responsibly.
Keep it simple
Simplicity is an essential part of any CSR program.
Witty was chosen for this recognition in part because he doesnt overcomplicate the issues, according to Jon Pender, GSKs director, global access issues.
Andrew is focused on the strategic priorities of growing the business and diversifying, a valuable pipeline, empowering people, building trust andcruciallydriving out complexity, Pender says.
The pharma business is already complicated enough.
Avoiding additional complications enables GSK to keep a clear focus on implementation.
Keeping things simple also creates more room for innovation.
Witty hasnt just talked about CSR, King says, but hes been very comfortable being innovative and trying out new ways of working.
That openness to doing things differently can be been seen in everything from GSKs flexible pricing schemes in LDCs to opening up parts of the firms database to other scientists.
These initiatives represent a moving away from a previously unsustainable business model, according to King.
We know that we need to adapt to be successful.
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.