Pharma and CSR: Why good deeds are good business

Pharma is increasingly turning to corporate social responsibility (CSR) to repair its damaged reputation and boost the bottom line. Andrew Tolve reports

For big businesses, negative publicity is an occupational hazard.

Food manufacturers and beverage companies face public lashings for the obesity epidemic, while financial firms and banks are excoriated for the subprime mortgage crisis and global recession.

The pharmaceutical industry is no different.

The public perception that pharma companies profit grossly and often unethically from matters of life and death has led to vitriol and mistrust.

Reports of fraudthe US Federal government recovered $4 billion due to healthcare fraud in the past fiscal yeardont help matters, nor do settlements in legal cases, such as GlaxoSmithKlines agreement to pay $750 million for knowingly selling contaminated baby ointment and ineffective antidepressants.

In an increasingly competitive marketplace, with dwindling product pipelines and soaring generic penetration, public relations setbacks have potentially enormous repercussions on the bottom line.

Therefore, as companies scramble to counter negative public perceptions, corporate social responsibility (CSR) has taken on a new earnestness and appeal.

To turn this situation around, not only must pharma embrace responsible practices and philanthropic endeavors, it must also effectively broadcast these stories to the general public.

Were facing a ton of skepticism and scrutiny, and its critically important that we demonstrate in very meaningful and tangible ways our commitment to doing business responsibly, says Caroline Roan, vice president of corporate responsibility at Pfizer.

That means understanding what our costumers and stakeholders want, as well as engaging our critics in what we hope is productive discussion about how to make changes or think differently about approaches to our business model.

(For more on pharma and CSR, see Compliance and the corporate brand; for Mal Barnards take on CSR, see Mals Musings: Its time for pharma to get serious about CSR and Mals Musings: A call for purpose-driven marketers.)

Embracing CSR

The benefits can be manifold. Embracing CSR can redeem the industrys reputation with the general public.

It also can help attract and retain talent; increasingly, employees care about the public perception of the companies where they work.

Likewise, CSR can develop good will and access in developing markets.

Access to medicines initiatives have long been the focal point of pharma CSR.

As sources of revenue tilt toward emerging markets, access to medicine initiatives can create valuable business opportunities.

Emerging markets offer a groundswell of opportunity, says Brenda Colatrella, executive director of corporate responsibility at Merck.

You have under-resourced communities and developed communities that co-exist side by side, she says.

Through commercial activities and CSR programs, we can create innovative business solutions that are able to reach both of those markets in different ways but in both cases provide access.

(For more on emerging markets, see Strategies for growth in South Koreas pharma market, Transforming the Turkish pharma market, Cracking the Chinese pharma market, Getting into the Indian pharma market, The Middle East: A pharma market in the making, Reassessing Russia's pharma market; Breaking into the Brazilian pharma market; and How to get ahead in 'pharmerging' markets.)

Make it transparent

To succeed in the current environment, pharma companies are overhauling their CSR approaches toward more simple, transparent, and concrete foundations.

GlaxoSmithKlines CEO Andrew Witty was named Individual Leader of the Year at the 2010 Ethical Corporation Responsible Business Summit for restructuring GSKs approach to CSR.

Notably, he simplified it, dropping the price of all patented medicines in least developed countries to 25 percent of those in developed countries and agreeing to reinvest 20 percent of profits from drug sales in those countries to build local healthcare infrastructure.

(For more on GSK, see GSKs approach to corporate social responsibility.)

Meanwhile Merck, which ranks second behind GSK in the Access to Medicines Index, has rolled out a new CSR platform after its merger with Schering-Plough in 2009.

The platform attempts to increase transparency for stakeholders and incorporate their input into goals and programs.

Were taking a more formal, more thoughtful approach, trying to really put information out there with our stakeholders that is meaningful, says Colatrella.

Going forward, we plan to utilize our stakeholders as a sounding board and an opportunity for feedback.

The new Merck platform also attempts to integrate CSR throughout the Merck organization and make it something of which every employee is actively aware.

Were getting employees on a day-to-day basis to think very deliberately about the business decisions theyre making and ensuring theyre making those decisions in a responsible manner, says Colatrella.

Sometimes, people think about business objectives and separately think about corporate responsibility objectives.

For us, the question has become, Are you achieving your business objectives in a responsible manner? Colatrella says.

So its a much more comprehensive, embedded approach to corporate responsibility.

Likewise, Sanofi-aventis recently unveiled Sanofi Espoir, a foundation focused on access to medicines and on putting patients at the heart of Sanofis business operations. (For more on patients and access, see Why patient access means market access and How early access strategies affect market access.)

Sanofi has a CSR department but the idea of the foundation is to create a special framework and an increased capacity to build on existing initiatives and develop new ones.

The great advantage of a Foundation is to offer a special form of governance, by including external personalities who are free to act as they wish, says Caty Forget, Sanofis director of Humanitarian Sponsorship.

This means that we draw on a variety of backgrounds and expertise to ensure discussion, new proposals, innovation and good management inside the Foundation.

Choose programs that make a difference

Structure is one thing; setting specific programs into motion is another.

Pharma companies need to ensure that new strategies translate into actionable programs that make a difference to people and developing countries, as well as to employees, stakeholders, and the general public.

One way to do this is to develop programs that help tackle the World Health Organizations Millennium Development Goals.

Another and potentially more potent way is to respond to areas of real and unmet need on the ground, need that may not be in the international spotlight but is concrete and meaningful.

Forget says that some of Sanofis most successful CSR initiatives demonstrate that we get the best results when the project has strong local roots and manages to develop a network of partners and public/private funding that ensures robust, independent, and empowered action over the long term.

As a result, Sanofi Espoir has created a formal Guide to Selecting Programs based on criteria like relevance to local needs and cultures, the inclusion of local stakeholders, capacity building, and assessing social impact.

Similarly, Merck has created a Strategy Map that provides checkpoints as initiatives move from concept to rollout to feedback and stakeholder engagement.

Colatrella admits that CSR can be broad and sometimes conceptual, which makes it more difficult to choose specific programs that accomplish tangible and meaningful results.

Sometimes, companies end up spreading investments too thin over too broad a set of goals.

By using the Strategy Map, she says Mercks intention is to identify specific opportunities, challenges, and gaps that need to be filled and then design tailored strategies for each.

As opposed to just looking for ad hoc opportunities or being more reactive in terms of what we do, we really want a more focused, proactive, yet comprehensive approach, Colatrella says.

I think its important for companies broadly when they talk about philanthropy, theres a real movement away from just giving away money to using very strategic investment, agrees Pfizers Roan.

Were stewards of shareholder dollars. We need to be making investments that make sense for the company and make sense for society.

Not only can strategic investment reap greater rewards for local communities and create better public perception, it can also cultivate future markets and make them more receptive to Western medicine.

Tell stories

If pharma is to transform negative public perception into goodwill, it needs to get better at telling stories.

After all, doing good is nothing new for pharma, but many people outside the industry (and some within it!) would be surprised to learn about all the good causes pharma embraces.

Stakeholders want to know who we are, says Eric Dziedzic, director of corporate responsibility at Merck.

Thats the first question we ask of anyone who enters our lives: Who are you and what do you mean to me?

Dziedzic says that companies like Merck have plenty of material at their disposal to get a positive story out there. Its just about figuring out how to tell it.

We have so much for us to go out to world and say, This is who we are as an organization. This is what responsibility means to us and this is how we demonstrate it.

Part of the problem in getting this message out in the past, Forget points out, is that pharma companies communicate about their CSR actions primarily through their own internal medialike websites, newsletters, and reportsthat rarely reach the general public.

When the message extends outside the pharma bubble, its targeted at external audiences like healthcare professionals, health authorities, shareholders, ratings agencies, and NGOs. This needs to change moving forward.

The outcomes of our programs, together with the stories about the local players and all other partners, must be the real focus of communication, Forget says.

One positive way to get stories out there is to use social media outlets like Twitter and Facebook. (For more on social media, see Ten reasons your pharma firm isnt participating in social media and 9 ways your pharma firm can overcome barriers to participating in social media.)

Likewise, when the opportunity arises to speak with journalists, its important to drive home CSR stories and the companys genuine commitment to them.

I dont think weve found the magic bullet, concedes Roan, but what we do seek to do is, first and foremost, welcome when we have an opportunity to speak to journalists; we take that very seriously.

Furthermore, Roan says Pfizer tries to use program partners and organizations that are more trusted in the publics eye to tell stories of good deeds.

Some of the organizations weve worked over the years that know us and know us well can really do a better job of telling that story than we can, she says.

Theyre more trusted and give honest assessments of whats worked well and what hasnt.

Partner with other players

Many of the social issues that pharma companies target overlap.

Access to medicines is a widely shared goal, as is improving environmental impact, product safety, and clinical recruitment. (For more on recruitment, see Social media: A tool for clinical trial recruitment?.)

Considering the scope of some of these challenges and the rewards of helping to tackle thema better world, a better public image, a better bottom lineit follows that pharma companies should consider joining forces to expedite the process.

Pharmaceutical companies alone are not going to solve these problems, says Colatrella.

Merck has made a concerted effort to recognize where we need to bring other players into the fold and to work as a team. As an industry, we need to do more to work together, but in general terms of governments, academic organizations, non-governmental organizations, civil society, there needs to be that recognition that we can do more together than we can alone.

Many infectious disease control initiatives and neglected tropical disease programs, for instance, are run side-by-side, independently, and sometimes redundantly.

Chronic non-communicable diseases offer another opportunity for partnership.

Of course, some collective problem solving already exists.

The World Health Organizations Millennium Development Goals have served as a unifying force that brings governments, pharma companies, and large NGOs together.

Likewise, organizations like the Pharmaceutical Research and Manufacturers of America (PhRMA) have helped align various players within the industry around access to medicines.

It does happen, says Roan. Could we do a better job? Absolutely. Must we do a better job? Absolutely. This applies to not only the pharma sector but all the major actors from a global institution perspective that have responsibility for health.

Pfizer has partnered with the World Health Organization on several millennium development goals, as well as with the Task Force for Global Health, the Carter Center, UNICEF, and others.

Nonetheless, Roan says, theres still plenty of room to add partners to the equation, especially within the industry.

We have to come to the table with a renewed commitment and hopefully new rose-colored glasses to see a different way forward, she says.

Because weve got to achieve some of these goals. The fact that we still have neglected tropical diseases is a real issue and a real problem. Were making inroads, but collectively we can all do a better job.

For exclusive business insights into KOLs, attend KOL and Stakeholder Engagement Europe 2012 on February 21-22, 2012 in Berlin.

For more articles on KOLs, see Special report: KOLs and pharma.

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