CSR: An opportunity for pharma companies

Adarsh Kataruka

Corporate social responsibility is currently a buzzword in India with the Companies Act 2013 making it mandatory to spend two per cent of profit for companies having profits of above Rs five crores or turnover of Rs 1,000 crores or net worth above Rs 500 crores.

Now with the new CSR regulation being applicable from April 1, 2014 for Indian companies as well as global companies having operations in India, it is important that each company charts a CSR vision and works towards creating sustainable and long-term impact. Also two per cent of profits would mean large pharmaceutical companies having CSR budgets going upto Rs 50 crores annually to be spent in India.

One of the key reasons, why CSR has been gaining momentum in the last few years and eventually becoming mandatory arises from the role the manufacturing firms play in and around their factory. Majority of the factories are either in rural region or on the outskirts of cities, which are surrounded by villages. In recent years, rural communities have started demanding better services of healthcare, education, potable drinking water, sanitation, livelihood opportunities etc. The expectation of these communities in the villages is the highest from the company as directly or indirectly they are affected by the factory’s presence. The stark contrast in the visible facilities enjoyed by the company officials and the community, leads to increased expectation.

The CSR notification also stresses on the need to focus on activities in and around company locations. Pharma companies have manufacturing setup across the country especially in hilly regions with better environment conditions like Baddi (Himachal Pradesh), Sikkim etc. As part of CSR, pharma companies should use this opportunity to develop innovative healthcare delivery models in communities surrounding their factory locations. This could help in replicating similar models for the large NGO sector and the government healthcare initiatives across different geographies. It is important for the companies, to first understand the prioritised needs of the community before planning initiatives, the intervention needs to have long-term focus instead of standalone ad-hoc initiatives. Initiatives should focus on eradicating certain prevalent diseases or checking fraudulent healthcare practices.

Currently, very few pharma companies have been active in CSR. Companies like Glenmark Pharma have been working towards reducing child mortality in Madhya Pradesh and Rajasthan. Ranbaxy has also been running mobile health vans in selected villages in Punjab to meet healthcare needs of the disadvantaged villagers and has made an effort to reduce infant mortality rate in the region. Dr Reddy’s has been working on education and livelihood initiatives with well-defined goals and objectives. Cipla has established Palliative Care centre in Pune.

One of the pharma companies, Wockhardt, seeing the gap in the healthcare delivery by the social sector, has established its own foundation and is working as an independent NGO bringing best of healthcare facilities to the needy in remote areas of the country. It works on range of healthcare issue as an implementing partner for Wockhardt and other corporates ranging from running mobile health van to providing water purification tablets.

These are commendable initiatives but not necessarily done around the factory locations. Focusing on regions near its factories has certain long-term advantages. One advantage of working near the company locations is that the commitment of the respective company is greater and it can have deeper engagements with the communities, can have efficient monitoring mechanism and progress with set milestones to be achieved to have larger and long-term impact on the lives of marginalised and disadvantaged communities. Through the initiative there can be a higher level of employee engagement, especially near its manufacturing locations, which also adds up to be a learning ground for its employees. If required, professional help should also be sorted towards creating plant level CSR strategy with short, medium and long-term objectives.

If we look at top pharma companies in India, till now only a handful have been active in CSR considering their size of operations. Majority of them feel that they are already creating a social impact through their business and therefore are already acting as responsible citizens. With the new CSR law, pharma companies should take the lead in this direction and create path-breaking work towards changing the healthcare delivery models. Pharma companies can use their knowledge, network and dynamism in the healthcare sector to impact the lives of the poor bringing them affordable and accessible healthcare facilities. It is also an opportunity to partner with other corporate in designing collaborative solutions.

Few ways in which pharma companies can align their CSR, which would also be in norm with the CSR regulation:

• Setup vaccination and awareness generation centres for different diseases prevalent in the regions it operates. This could also be done in collaboration with government in terms of using the existing infrastructure of district hospitals or even primary healthcare centre present in villages.
• Work in collaborations with CSR initiatives of other pharma companies especially in Special Economic Zones (SEZ) regions to tap into larger CSR funds and expertise, which would also lead to enhance overall industry image
• Holistic healthcare delivery models around their factory locations, which can be replicated and showcased to the Government and other NGOs for development at larger scale.

Another interesting phenomenon with the pharma companies is that their core business and the products are directly creating a social impact, therefore pharma companies walk a thin line when it comes to balancing their profitability and affordability of the medicines to the consumer. Some companies in the last 10 years have tied up with international organisations like World Health Organisation and tried to develop specific drugs for prevalent diseases in backward regions in India, Africa and Latin America.

After eight to 10 years of research, Ranbaxy has launched specific improved drugs related to malaria and HIV. Cipla has worked towards making cancer drugs affordable in India and has also been working with international organisations to make medicines, drugs for neglected disease like malaria, HIV/AIDS etc. at affordable price. These might not come under new regulation by the Government on CSR, but plays an important role towards being a socially responsible pharma company.