In a sweet spot

Launched in 1996 and prescribed to millions of patients around the world, Lipitor, the cholesterol fighting drug from Pfizer remains the biggest blockbuster of all time. It is then not difficult to envisage how much impact pharma companies exercise on the society when it comes to ensuring healthy populations worldwide. For years, their mandate has been to plough money into researching and developing drugs that could help alleviate the disease burden of the society. That, however, is a part of their business, a growing impetus on corporate social responsibility (CSR) on the other hand ensures that they take their role in the society at large much more seriously.

The story so far

As per the ‘triple bottom line’ approach on corporate social responsibility, three aspects (social, financial and environmental) determine the degree to which a business represents a sustainable organisation. Traditionally Big Pharma have been implementing a mixed bag of CSR programmes in the fields of global health, local communities, education, employees, ethics and transparency and environment. Pfizer for instance works on building partnerships in communities throughout the world to strengthen health systems, increasing access to medicines through patient assistance programmes, and finding sustainable solutions to the health challenges of today and tomorrow.

Says Zitin Munshi, Associate, CSR Services,Samhita Social Ventures, “Companies have dealt in causes as wide as livelihoods to as specific as palliative care. CSR initiatives have been related to core competencies and business practices of provision of healthcare products and services, spread across geographic presence of the company or driven by philanthropy. The beneficiary groups being catered to, have also ranged from children to terminally ill patients from low income groups.” A large Indian pharma company partnered with physicians to execute a CSR programme in partnership with diagnostic laboratories for creating awareness and early detection of dyslipidemia. Engaging employees through CSR activities such as conducting health camps and creating infrastructure for community development are other ways. For instance, one of India’s top 10 pharma company has built a school in a village in Rajasthan.

Donating medicines for elimination of diseases has been another favourite. In an effort to tackle lymphatic filariasis, schistosomiasis, trachoma, onchocerciasis and soil-transmitted helminthiasis, Merck, Pfizer, GlaxoSmithKline and Johnson & Johnson have collectively donated significant amounts of ivermectin, azithromycin, albendazole and mebendazole to the Neglected Tropical Diseases programme launched by USAID in 2005. Bayer HealthCare donated 50,000 ampoules of Germanin (suramin) in 2002 to the WHO to eliminate African sleeping sickness (Human African trypanosomiasis) renewing this commitment again in 2008 donating the same amount over a five-year period.

Companies are also aligning their CSR objectives with global health initiatives and forming alliances with governments to support their health programmes, opines Sridhar Ganesan, Country Head, Hay Group India. “Pfizer has aligned their CSR activities to support fulfilling UN millennium development goals for many countries. GSK has been a partner of the GAVI Alliance for years, offering large quantities of its vaccine products at low cost to help support immunisation efforts for children in emerging countries. It recently announced a five-year price freeze on three of its vaccines to help sustain national vaccine programmes of 22 developing countrieswho will stop receiving resources from GAVI by 2022,” he says.

Indian companies are also doing their bit. Wockhardt Foundation, a full fledged NGO is working extensively as a NGO partner on CSR initiatives filling the gap in NGOs focussing on healthcare.

Cipla has been running the CIPLA Palliative Care and Training Centre since 1997 in Pune providing holistic care to 7700 terminally ill cancer patients and their families so far, free of charge. Others proactive in the space are Piramal Foundation (healthcare & water), Lupin Foundation (community development), Dr Reddy’s Foundation (strategic CSR). While Glenmark works on sustainable livelihoods, child health and medicine donation, Ranbaxy has been working on mobile health van, scholarships among others.

Socially responsible or CSR serious

“It is important to separate the component of being a socially responsible company by providing affordable medicines from fulfilling CSR regulation as introduced in April 2014 in the new Companies Act.” Adarsh Kataruka Director, Soul Ace Venture

It is important to demarcate the line between a socially responsible company and the one which is consciously making an effort to integrate CSR into the big picture. A socially responsible pharma company, needs to maintain fine balance between profit and people by making affordable medicine and the increased use of generic medicines, which not only has a large social impact but also directly impacts its profits, feels Adarsh Kataruka, Director, SoulAce Venture. “It is important to separate the component of being a socially responsible company by providing affordable medicines from fulfilling CSR regulation as introduced in April 2014 in the new Companies Act. Making affordable medicines will not constitute as part of the new CSR regulation but separate initiatives would need to be planned as CSR projects keeping regulation in mind,” he adds.

He is also of the opinion that CSR within the pharma sector is still at a nascent stage with most of the initiatives undertaken till now either ad-hoc or not at a large scale. Priya Naik, Founder and Joint Managing Director, Samhita Social Ventures offers an answer. “While some socially responsible pharma companies may be more comfortable leveraging their core competencies and business expertise in the pharma sector for contributing to social good. Others are afraid that this will be seen as more of marketing or ‘something undertaken in the normal course of business.’ Many pharma companies therefore consciously divorce CSR causes from their business operations and opt for education or livelihoods,” she opines.

“The business model itself should be heavily patient-focused and offer great value in improving their overall health outcomes.” Ian Wilcox Global MD, Life Science, Hay Group

Pharma companies are also under increasing pressure to facilitate improved access to medicines for poor patients in the developing countries – lower the cost of the most urgently and most widely needed drugs, equitable distribution, etc. They are also subject to a variety of regulations regarding the patenting, testing and ensuring safety and efficacy and marketing of drugs. In addition challenges around high R&D costs and long development time makes it harder for companies to implement CSR activities that can be free of laws and operational challenges, says Ian Wilcox, Global MD, Life Science, Hay Group. He cites an example, “Development of orphan drugs for rare diseases can be seen as a CSR effort, however, the long time to bring the drug to market and the R&D costs makes the drugs increasingly unaffordable, resulting in the CSR element never being credited to the company receiving patent for this drug.”

Naik sheds further light. “Unlike other consumer-oriented companies, pharma companies really need to think strategically about CSR, since their core business satisfies a social ‘need’, rather than a ‘want’. That is, medical intervention for low income beneficiaries as being a primary need as compared to buying a consumer good, which would be a ‘want’,” she points out. However, therein lies the opportunity, she feels. The complex and nuanced pharma ecosystem offers a huge stakeholder list both internal and external, including hospitals, doctors, medical representatives, pharmacies etc., each with its own set of priorities and requirements. Leveraging specific competencies or resources that each stakeholder brings, gives the company a diverse range of programme ideas to work on to satisfy stakeholder needs, she suggests. For example, any programme that reduces the role of, for instance, oncologists, for disseminating awareness related to financial or any other help, reduces the burden on them, in turn, allowing them to cater to more patients, will be welcomed by oncologists.

Finding the right model

“Unlike other consumer-oriented companies, pharma companies really need to think strategically about CSR, since their core business satisfies a social ‘need’, rather than a ‘want.” Priya Naik Founder & Jt. Mng. Director, Samhita Social Ventures

As companies navigate through pressures of bottomlines and the dynamics of running the business, formulating a CSR strategy that can create an impact and has long-term goals is a challenge to be overcome. Pharma companies’ performance on CSR is typically benchmarked on their contribution to access to medicines. Increasingly, it has been a challenge to meet these benchmarks, and to meet the needs of the high number of patients in need of medicines given the nature of increasing burden of disease and rising per capita healthcare cost, points Ganesan.

“Companies need to look into sustainable business models and collaborations (both with competitors within the industry space and to adjacent markets such as healthcare technology, open innovation networks and new ways of R&D knowledge sharing), to ensure continuity in improving access to medicines and improving health outcomes,” he adds. Companies also have difficulty identifying a social cause and credible and suitable NGO partners as well as monitoring and impact measurement along with clearly demarcating CSR spend from other activities such as health camps in rural or slum areas as part of their marketing and sales promotion activities, pitches in Naik, whose firm offers consulting services to corporates on CSR.

So what is it that they need to do differently? Wilcox suggests prioritising the integration of ethical and transparent business practices as well as philanthropic endeavours as part of their business model. “The business model itself should be heavily patient-focused and offer great value in improving their overall health outcomes. They can set themselves apart by broadcasting personalised stories of these improved health outcomes to the general public via widespread media platforms and demonstrate its scalability at a population level,” he says. This helps give them a ‘sustainable’ competitive advantage adding value to not just patients but citizens on a global scale. Gathering adequate buy in both from internal as well as external shareholders in the company on CSR initiatives would be helpful.

Kataruka thinks partnering on various healthcare initiatives being run as part of CSR by other companies, NGOs or government, where the pharma companies can supply medicines at subsidised price could be one way. This would not only ensure quality products are used in social initiatives, but such partnerships would help in increasing social impact. “Focussing on vaccination of Below Poverty Line families, who are not a part of their target product segment from business perspective is another way they are able to reach out without affecting their business,” he chips in.

He is equally passionate about companies meeting the prioritised needs of the community around factory locations (mainly in underserved rural areas) who are directly or indirectly affected by the factory’s presence. Identification of such areas alongwith need assessment and a long term action plan would help maximise the social impact as would expanding the focus beyond healthcare to education, livelihood, healthcare, drinking water, sanitation etc. in those areas. Naik adds that skills of local employees of the company could be leveraged for community development initiatives.

After the companies bill, firms have realised CSR needs to be undertaken in a focussed manner, and ad-hoc initiatives will not suffice. Many of them are yet at a planning stage formulating their CSR policy and plan of action for the next few years. The bill is fairly recent so a lot of the implementation results since its passing have yet to materialise on a tangible scale. CSR consultants such as Samhita suggest starting off by internal stakeholder involvement for articulating the broader CSR approach for the company, understanding the intent behind their contribution to social good and identifying cause focus as prescribed under Schedule VII of the Companies Act 2013.

This followed by assessment of community needs for further cause prioritisation and careful thinking around programme design would lead to mapping out the modalities of execution and impact that the company wishes to achieve throughout the programme implementation phase. It is important to clearly think through the monitoring and impact assessment process at the planning stage itself, stresses Naik. To sum it up, pharma industry is in a sweet spot as far as CSR is concerned. There are challenges, but as we can see, therein lie the opportunities It remains to be seen how this potential is optimised.

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