A Project Report on Analysis of CSR in Health Sector : GlaxoSmithKline

Chetna 08-Aug-12

Table of Contents
Introduction ................................................................................................................................................... 3 Global Scenario of Health related issues ...................................................................................................... 3 Progress on the health-related MDGs ....................................................................................................... 4 Indian Scenario ............................................................................................................................................. 4 Glaxo SmithKline ......................................................................................................................................... 6 GSKs approach to deal with people......................................................................................................... 6 Market place.............................................................................................................................................. 6 Workplace ................................................................................................................................................. 7 Health & Safety......................................................................................................................................... 7 Community ............................................................................................................................................... 8 Environment............................................................................................................................................ 10 CRITICAL ANALYSIS ............................................................................................................................. 11 Maintaining the Triple Bottom Line ....................................................................................................... 11 Making a Profit responsibly! ............................................................................................................... 11 Facing Ethical Dilemmas The Need for Stakeholder Engagement ...................................................... 11 Philanthropy and Business Development: On the same Continuum? ..................................................... 12 In conclusion . ..................................................................................................................................... 12

Table Of Figures:
Figure 1: Health Risk transition over time; Source: WHO Report 2010 ...................................................... 3 Figure 2 Managing impacts through value chain; Source: GSK CR report 2011 ......................................... 6 Figure 4: GSKs approach to Human Rights; Source: GSK CR Report 2011 .............................................. 9 Figure 5: Charitable Grants GSK India Report 2011; Source GSK website ................................................ 9 Figure 3 GSK targets and 2011 performance; Source: GSK CR Report 2011 ........................................... 10

Subject : Business Ethics and Corporate Social Responsibility

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Introduction
Healthcare and pharma companies are often criticized by people as a consequence of escalating healthcare prices and increase in healthcare fraudulent cases. Collecting money from the healthcare policy illegitimately, commonly termed as Medicare or healthcare fraud is at its high in recent times. Thus, there is a common public perception that pharma and healthcare companies profit immensely and most of the times through high prices/charges and unethical practices by some. Therefore, it is necessary that pharma and healthcare firms improve their image and strengthen their brand. As companies scramble to counter negative public perceptions, CSR has taken on a new appeal. It is today one of the finest ways to give back some good to the society and at the same time enhance business.

Global Scenario of Health related issues

As per the latest report by World Health Organization low-income populations are most affected by risks associated with poverty, such as under nutrition, unsafe water, poor sanitation and hygiene; these are the so-called traditional risks. As life expectancies increase and the major causes of death and disability shift to the chronic and non communicable, populations are increasingly facing modern risks due to physical inactivity; overweight and obesity, and other diet-related factors; (Refer to Fig 1). As a result, many low- and middle income countries now face a growing burden from the modern risks to health, while still fighting an unfinished battle with the traditional risks to health. (World Health Organisation, 2009).

Figure 1: Health Risk transition over time; Source: WHO Report 2010

Progress on the health-related MDGs

UNs Millennium Development Goals target reduction in hunger, poverty, diseases (like HIV/AIDS, malaria, TB), child mortality and maternal deaths. It also aims at proving clean and safe drinking water and access to affordable essential medicines in developing countries. While some countries have made impressive gains in achieving health-related targets, others are falling behind. Often the countries making the least progress are those affected by high levels of HIV/AIDS, economic hardship or conflict. Few other Global Health related statistics are as follows: Fewer children are dying. Annual global deaths of children under five years of age fell to 8.1 million in 2010 from 12.4 million in 1990. Fewer children are underweight. The percentage of underweight children under five years old is estimated to have dropped from 25% in 1990 to 16% in 2010. More women get skilled help during childbirth. The proportion of births attended by a skilled health worker has increased globally; however, in the WHO Africa and SouthEast Asia regions fewer than 50% of all births were attended. Fewer people are contracting HIV. New HIV infections have declined by 17% globally from 20012010. Tuberculosis treatment is more successful. Existing cases of TB are declining, along with deaths among HIV-negative TB cases. More people have safe drinking-water, but not enough have toilets. The world is on track to achieve the MDG target on access to safe drinking-water but more needs to be done to achieve the sanitation target.

Indian Scenario
In India life expectancy is now 63.5 years, infant mortality rate is now 53 per 1000 live births, maternal mortality ratio is down to 254 per lakh live births and total fertility rate has declined to 2.6. Of the 9.2 million cases of TB that occur in the world every year, nearly 1.9 million are in India accounting for one-fifth of the global TB cases. Experts estimate that about 2.5 million persons have HIV infection in India, Worlds third highest. More than 1.5 million persons are infected with Malaria every year. Almost half of them suffer from p.falciparum Malaria. Diseases like Dengue and Chikungunya have emerged in different parts of India and a population of over 300 million is at risk of getting Acute Encephalitis Syndrome (AES) / Japanese Encephalitis (JE). One-third of global cases infected with filaria live in India. Nearly half of leprosy cases detected in the world in 2008 were contributed by India. More than 300 million episodes of acute diarrhea occur every year in India in children below 5 years of age.
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Because of the existing environmental, socioeconomic and demographic factors, the developing countries like India are vulnerable to rapidly evolving micro-organisms. During the past three decades more than 30 new organisms have been identified worldwide including HIV, Vibrio cholerae O139, SARS corona virus, highly pathogenic avian influenza virus A, and novel H1N1 influenza virus. Many of these organisms emerged in the developing countries of Asia. Emerging Infectious Diseases In recent times, Influenza A H1N1 virus created a scare by affecting birds/poultry in more than 60 countries including India. The speed and virulence with which the novel H1N1 virus spread in 2009 in over 200 countries, including India, took the public health system by surprise and created a public health crisis. Containment of epidemics and rapid response to disease outbreaks through a nationwide networking of public health resources including public health laboratories is one of the major problems today. In an important policy shift during 2008-09, the Government of India decided to provide the services of epidemiologists in all district headquarters and state headquarters and entomologists and microbiologists in all state headquarters of them so far 200 epidemiologists, 85 microbiologists and 23 entomologists have joined. However, integrated disease surveillance is still faced with inadequately trained professionals, ill-equipped public health labs and inadequate capacity for rapid response to disease outbreaks in many states. The ongoing initiative of upgrading the National Institute of Communicable Diseases into National Centre of Disease Control with responsibility for enhanced capabilities for lab-based surveillance of communicable diseases and rapid response for minimizing the effects of disease outbreaks is a major development in this field. Health related Goals set by Government Of India To raise public spending on health from 0.9 per cent of GDP to 2-3 per cent of GDP, with improved arrangement for community financing and risk pooling. To undertake architectural correction of the health system to enable it to effectively handle increased allocations and promote policies that strengthen public health management and service delivery in the country. Reduction in child and maternal mortality. Universal access to public services for food and nutrition, sanitation and hygiene. Universal access to public health care services, integrated comprehensive primary health care, with emphasis on services addressing womens and childrens health and universal immunization. Prevention and control of communicable and non-communicable diseases, including locally endemic diseases Population stabilization, gender and demographic balance. Promotion of healthy lifestyles (Govt Of India, 2010) In light of the above global and Indian scenarios, the purpose of this report is to analyze how a company in pharmaceutical industry is contributing in addressing the health issue. We have
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chosen GlaxoSmithkline Company for our analysis. Corporate Social Responsibility plays an increasing important role in addressing the issues. Also it is important to analyze whether the company has a strategic approach to CSR.

Glaxo SmithKline
GSK is a science-led global healthcare company headquartered in London, United Kingdom. It is the fourth largest company in the world measured in terms of the sales of prescribed medicines after Pfizer, Novartis and Sanofi. Their mission is to improve the quality of human life by enabling people to do more, feel better and live longer They are committed to tackling the three "priority" diseases identified by the World Health Organization: HIV/AIDS, tuberculosis and malaria Their business employs over 97,000 people in over 100 countries Their long term vision is to have an entire value chain to be carbon neutral by 2050 (GSK).

GSKs approach to deal with people Market place

1. In the year 2011, GSK launched Votrient , a medicine for kidney cancer, at a price significantly lower price than developed world prices. Same was also true for a drug called Revolade, a medicine for a disease which causes in reduction of platelet count 2. Pneumococcal disease is one of the cause of infant mortality in India, GSK launched a vaccine for the same at an appropriate price for the same 3. They believe in making medicines available to people at affordable price whenever and wherever they need it 4. Supply Chain: GSK through its REACH division was able to penetrate the rural areas of the country

Figure 2 Managing impacts through value chain; Source: GSK CR report 2011

5. A global program of ensuring 100% vendors being audited for global level quality compliance got completed which would assure RM/PM quality all the time and is a big step to ensure vendors becoming true partners for reliable supply, service and quality and with lowest possible total cost to your Company

6. GSKs Anti-Bribery and Corruption Programme: Impose harsh fines (GlaxoSmithKline, 2012)

Workplace
In the Human Resources domain the Company continued to focus on the three strategic pillars of Capability Building, Talent Management and Employee Engagement. 1. Talent Management has focused on taking a structured approach emphasizing on creating a talent pipeline at the leadership, the middle management and at the fresh management graduate intake level. Each function has been encouraged to identify key talent with a view to retain, grow and develop them. 2. A carefully planned Learning and Development calendar was created and implemented to provide the necessary leadership and skill building capability to its employees. 3. Under the Employee Assistance Programme - Wellness and Wellbeing Services were provided to those employees who needed it. HR surveys were conducted this year to gauge service levels and bring in better customer service to its employees. The survey findings indicate that the company has scored well over the global average. 4. On the Industrial Relations front GSKs Unions have extended its support and cooperation in attaining companys business objectives. 5. On the sales training front over 44,000 man days of classroom training have been invested to enhance the Disease - Product Knowledge - Selling Skills. Additionally, internet based learning solutions was widely adopted to promote continuous distance learning. 6. Diversity at GSK- Being an inclusive employer helps GSK to attract, retain and motivate a workforce which reflects the communities in which they operate. They are committed to making employment at GSK accessible to people with disabilities and increasing the proportion of women and people from emerging markets in management positions. They currently have three women serving as Non-Executive Directors, representing 20% of the Board. They have three women on Corporate Executive Team with an aspiration to have more than 25% female representation on the board by 2013. 7. In 2011 they signed the Employers forum for Disability Accessible Technology Charter. Supported by 17 other blue chip organizations and government departments, the charter aims to improve access to IT for people with disabilities and to spur more inclusive IT design. (GlaxoSmithKline, 2012)

Health & Safety

Health and safety management is integrated in GSKs environment, health and safety (EHS) strategy. They have identified seven strategic priorities to achieve this. Healthy sustainable lives
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Energized and resilient workers Sustaining high performing leaders Healthy, high performing workplaces Zero serious accidents Embedding EHS beliefs and behaviors Environmental sustainability

Community
GSK continued its commitment towards social development by supporting long term ongoing projects while undertaking many new initiatives. 1. GSK implemented rural development initiatives through Gramin Arogya Vikas Sanstha (GAVS), a registered public trust promoted by the Company and operates predominantly in remote areas of tribal villages in Peth district near Nashik. 2. Through GAVS, GSK in collaboration with Nirmaya Health Foundation is running a Tribal health care project in 115 villages covering a population of over 1 lakh for preventive and curative health care. 3. GAVS in partnership with Kherwadi Social Welfare Association (KSWA) has also provided vocational training to 875 tribal youths in this underserved district for sustainable livelihoods. 4. GSK continued its support to Institute for Indian Mother and Child (IIMC), a non government organization and reached more than 1.30 lakh patients including pregnant, lactating, weaning mothers and malnourished children for health and nutrition in Kolkata. 5. GSK is supporting a health care project through Nirmaya Health Foundation in the slum areas of the dumping grounds in Deonar, Mumbai. This project caters to the health and educational needs of over 6000 rag picker children and their families. 6. During the year, GSK proactively supported four voluntary organizations for cancer care. This included screening camps to facilitate early detection, treatment, rehabilitation and palliative care of cancer affected patients from underserved community. 7. In collaboration with Pratham, an NGO, GSK runs shelter homes in Behraich (U.P.) and Jodhpur (Rajasthan) for 92 underprivileged and vulnerable children who were earlier exploited as child laborers. In these shelter homes, besides education and health, the focus is on holistic development. 8. GSK also supported 1000 underprivileged girls through project Nanhi Kali, for primary education to contribute to Millennium Development goal. 9. Among other new initiatives taken during the year is the support to Paraplegic Foundation in Mumbai for rehabilitation of the severely orthopedically disabled lower socio-economic class patients. 10. The Installation of Solar photovoltaic technology to meet the electricity need of 108 girls in residential school in Allahabad to facilitate their studies was also undertaken.

11. The Personal Hygiene and Sanitation Education (PHASE) Programme supported by GSK plc was implemented successfully this year as well through Pratham, an NGO working towards childs right to education (GlaxoSmithKline, 2012). 12. GSKs approach to human rights is as shown in following figure

Figure 3: GSKs approach to Human Rights; Source: GSK CR Report 2011

As an example of corporate philanthropy following figure provides an idea of GSKs charitable contributions in India.

Figure 4: Charitable Grants GSK India Report 2011; Source GSK website

Environment
1. GSK continues to invest in manufacturing capabilities and the supply network to support growth at optimum product cost. Nashik site continues to deliver Albendazole tablets to WHO as a part of the Lymphatic Filriasis eradication programme. 2. Nashik manufacturing site continue to focus on waste reduction opportunities through optimizing material usage and pack rationalization. There was considerable focus on improving Environment, Health and Safety and GMP compliance at both Nashik and Thane sites during the year. 3. Conservation of Energy: Energy conservation activities continue to be one of the key focus areas for all manufacturing initiatives. Regular review of energy generation & its utilization is continuously undertaken. In support of the initiative on Climate Change, the focus is to reduce the carbon foot print and improve energy efficiency. 4. In comparison to last year electricity purchased reduced from 23394(KWH000) to 20674(KWH000)

Figure 5 GSK targets and 2011 performance; Source: GSK CR Report 2011

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CRITICAL ANALYSIS
Maintaining the Triple Bottom Line
GSK has been able to maintain its triple bottom line by following its principles of sustainability and transforming the company and society for a better future to meet financial needs, societal needs for equity and wellness and environments capacity to meet resource needs. The company has to maintain its focus on developing countries, where expenditure on healthcare is low, as well as developed countries where a greater and greater level of GDP goes toward healthcare. Planet-To reduce adverse environmental impacts from operations Profit- To lower costs and prices to provide greater access to medicines in a way that is business based, not philanthropy People- To recognize the societal benefits that come with greater access to medicines in the general uplifting of society.

Making a Profit responsibly!

Pharmaceutical companies have been accused of making a profit from a public good: health. Oxfam, Save the Children and VSO, have jointly developed a standard for assessing the corporate social responsibility (CSR) of drug companies in responding to health problems in the developing world, in a report called Beyond Philanthropy. The standard is made up of a set of benchmarks which assess the social responsibility of pharmaceutical companies. These benchmarks relate to company policies and practices in pricing, joint public private initiatives, research and development and patents. There are patent issues that are specific to the pharmaceutical sector. These rights seek to ensure that generic drugs cannot be manufactured during the protected period and therefore allow the drug developer to take a profit premium as a reward for getting the product to market at all. The debate about the length and legitimacy of patent rights is perhaps most visible around combating the HIV/AIDS pandemic, particularly in sub Saharan Africa. A number of companies have already reduced the price of drugs for Africa to what they describe as being "below cost price". Six companies met with Kofi Annan to agree further steps that could be taken to improve access to better healthcare.

Facing Ethical Dilemmas The Need for Stakeholder Engagement

In developing the strategy for R&D and new product development, the factors shaping a pharmaceutical companys considerations are dominated by CSR issues. What are the ethical
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implications of the research process such as animal testing and human clinical trials? Is the medical intervention itself contentious on ethical grounds? The emotive nature of many of the concerns means that any part of the supply chain can affect the success of any other part. Drug developers have been targeted by animal rights protestors as part of their campaign against Huntingdon Life Sciences. The argument of guilt by any association, however tenuous, is deployed with ferocity. Patient groups provide an important conduit into key stakeholders on these issues. Glaxo SmithKline's (GSKs) annual CSR report lists more than 60 patient organizations that GSK provided funding towards in that one year. This type of engagement is vital as the industry is under tremendous scrutiny that is rarely wholly rational or scientific! There is, for example, an opinion that the process of drug development can be exploitative, particularly when clinical trials take place in developing countries. Companies throughout the industrys supply chain need to be aware of the concerns about issues such as informed consent, or conducting clinical trials which might be perceived as high risk. Pharmaceutical companies may also find that some stakeholders are concerned about whether there is, in general, something unjust about people in developing nations serving as research subjects in clinical trials that developed countries appear unwilling to participate in.

Philanthropy and Business Development: On the same Continuum?

Nearly all the big drug development companies are exploring ways to differentiate themselves and, by association, their industry from conventional business models. They are seeking a way to link business goals to ethical and social goals, in effect; they are trialing CSR business models on the largest scale of any industry sector. GSK foundation for Sustainable Development in collaboration with other organization emphasizes on the public understanding of science are examples. Product development partnerships (PDPs) are another innovation. PDPs are usually public-private partnerships with a combination of stakeholder interests, private profit and public health, which provides the relative tension and new cross-connections and insights to drive innovation.

In conclusion .
Our study of GSK has shown that the market leaders in pharmaceutical industry are dealing with CSR seriously and systematically. They are facing up to issues which are global and beyond their control and engaging with a variety of stakeholders to find the partners and innovations which will continue to make the pharmaceutical sector a major contributor to human well being.
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Bibliography
GlaxoSmithKline. (2012). Annual Report. London: GSK. Govt Of India. (2010). Annual Report on Health. Delhi: Ministry of Helath and Family Welfare. GSK. (n.d.). Retrieved July 31, 2012, from GSK.com: ww.gsk.com/mission-strategy/index.htm GSK. (2011). Corporate Responsibility Report. London: GlaxoSmithKline. World Health Organisation. (2009). GLOBAL HEALTH RISKS, Mortality and burden of disease. Geneva: WHO.

Glossary
AIDS- Acquired Immuno Deficiency Syndrome CSR-Corporate Social Responsibility GDP- Gross Domestic Product GSK- GlaxoSmithKline HIV- Human Immuno-deficiency Virus MDG- Millennium Development Goals SARS- Severe Acute Respiratory Syndrome UN- United Nations VSO-Volunteer Services Overseas WHO- World Health Organization

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