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School of Business Management, NMIMS University, Mumbai

Sustainability Report On GlaxoSmithKline

CORPORATE SOCIAL RESPONSIBILITY


Under the guidance of Dr. SUJATA MUKHERJEE

Submitted By: GROUP-8(DIVISION B) Aditya Jain Anshul Gupta Gaurav Jain Himanshu Chaudhary Saket Agarwala Thirumagan A.

Contents
1. 2. EXECUTIVE SUMMARY .............................................................................................................. 4 THE PHARMACEUTICAL SECTOR ............................................................................................. 4 2.1 OVERVIEW OF THE MAJOR ISSUES PLAGUING THE NATIONAL AND GLOBAL HEALTH SCENARIO ........................................................................................................................ 4 2.2 DEFINING CSR FOR PHARMACEUTICAL COMPANIES ...................................................... 6 3. GSK CSR ACTIVITIES THAT IMPACT THE COMMUNITY ...................................................... 6 3.1 Rural Initiative ............................................................................................................................... 6 3.1.1 3.1.2 3.1.3 Educational Centers............................................................................................................. 7 Shelter home for children ..................................................................................................... 7 Mid-day Meal project ........................................................................................................... 7

3.1.4 Access to medicines .............................................................................................................. 7 3.2 Research and Development Initiatives towards Community.......................................................... 8 3.3 Investing in developing world healthcare infrastructure ................................................................ 8 3.4 Disaster response ........................................................................................................................ 8 4. 5. 6. WHAT DOES GSK DO FOR ITS EMPLOYEES? .......................................................................... 8 Accolades for GSK .......................................................................................................................... 9 MARKET PLACE OF GSK ............................................................................................................ 9 6.1 6.2 6.3 6.4 7. GSK Follows Recognized Marketing Codes ............................................................................. 9 Marketing Code Exercise and Execution ................................................................................ 10 Facilitating a Culture of Compliance ...................................................................................... 10 Scientific Engagement and Marketing .................................................................................... 10

HOW DOES GSK AFFECT ITS ENVIRONMENT? ..................................................................... 11 7.1 Some initiatives taken by GSK:.................................................................................................... 11 7.2 Use of water resource in GSK operation....................................................................................... 11 7.3 Managing waste: .......................................................................................................................... 12 7.4 Destination of hazardous waste .................................................................................................... 12 7.5 Carbon neutral value chain........................................................................................................... 12 7.6 Packaging .................................................................................................................................... 13

7.6.1 8.

7 Rs ................................................................................................................................. 13

Analysis......................................................................................................................................... 15

Bibliography ......................................................................................................................................... 16

1. EXECUTIVE SUMMARY
The idea behind this report was to analyse the importance of CSR in the pharmaceutical sector. We start with the introduction to the Pharmaceutical Sector which has played a historical role in the development and upliftment of people. The Pharmaceutical sector has a long history with regards to its involvement in CSR activities and is an apt industry for a CSR report. GlaxoSmithKline was selected because it is actively involved in various CSR activities which have direct and indirect influence on a vast majority of people. This Report provides a varied outlook on influence of GSK on its community, workplace, employees, marketplace and finally the environment at large. Analysis of each sector is followed by our critical analysis and the recommended way forward for its sustainable development.

2. THE PHARMACEUTICAL SECTOR


The pharmaceutical industry develops and markets treatments for various human illness. Without this industry, many therapies would not be introduced to the market, and many health problems would remain unsolved. The prescription drugs spending is rapidly increasing and people across the world have unequal access to these drugs due to the unequal distribution of wealth. With the development of insulin in the 1920s, the introduction of antibiotics in 1940s and many other drugs and vaccines to maintain sound health, the pharmaceutical industry has been considered as a leader in CSR and a key player in the area of global health. Even though a large amount of their funds go into R&D and promotional activities, many pharmaceutical companies have made CSR a fully integrated element of their strategies and operations. The pharmaceutical industrys overall spending in R&D for neglected diseases has increased by 90% in the past decade. Many pharmaceutical companies go beyond their primary Responsibilities, and help solve health issues for people who are impoverished around the world.

2.1 OVERVIEW OF THE MAJOR ISSUES PLAGUING THE NATIONAL AND GLOBAL HEALTH SCENARIO
Often times when we think about health issues we think of those directly affecting our lives. It is rare to think about health issues around the world, because our perception of health tells us that these issues are not really something that we need to be concerned about. Perhaps this is because the continents are separated by water, and somehow this allows us to feel that we are safe where we are as long as we are not traveling to places that have certain health issues and diseases.

The Graph given below summarizes the major causes of deaths in the world:

Major Causes of Deaths in 2011


Ischaemic heart disease 4% 24% Stroke and other cerebrovascular disease Lower respiratory infections Chronic obstructive pulmonary disease Diarrhoeal diseases HIV/AIDS 21% 11% 12% Trachea, bronchus, lung cancers Tuberculosis Diabetes mellitus 4% 5% 5% 6% 8%

Source: (WHO Report, 2012) DEATH DISTRIBUTION WORLDWIDE

Source: (India Current Affairs, 2011) Looking at the major causes of deaths in the world and the death distribution chart, we can infer that a major portion of the deaths can be prevented or delayed through effective use of medicines which is the motive of global pharmaceutical majors such as GSK.

2.2 DEFINING CSR FOR PHARMACEUTICAL COMPANIES


The 10 largest pharmaceutical companies contributed a total of $2.2 billion in health-related programs in developing countries between 1998 and 2002. GlaxoSmithKline reaffirmed its commitment to global public health by dedicating a $300,000 facility to manufacture Albendazole for World Health Organization (WHO) global program to eliminate lymphatic filariasis (GSK, 2010). With an expected delivery of an additional 300 million treatments of albendazole per year, this investment is the largest drug donation program in the history of pharmaceutical industry. These examples show that some pharmaceutical companies are doing a good job in making medicine and health care more accessible. However, there are still loads to do. Another issue that pharmaceutical companies have been criticized for is the affordability of their products. Corporate Watch accused the pharmaceutical industry of many crimes, including high prices, immoral marketing, unethical presents to medical doctors, abandoning the rights of poor, no money-no cure attitude, clinical trials in the south and industry government alliances. With these issues and examples of CSR activities in mind, many industry veterans have attempted to define the CSR of pharmaceutical companies. Many Prominent Industry veterans have argued that discovering and developing new drugs and vaccines is the primary corporate social responsibility of pharmaceutical companies. For some, recognizing the need for new products for neglected diseases is a clear example of pharmaceutical companies CSR. (International Researcher, June 2012)

3. GSK CSR ACTIVITIES THAT IMPACT THE COMMUNITY


GSK makes a positive contribution to the communities in which they operate. It invests in health and education programmes and partnerships that aim to bring sustainable improvements to under-served people in the developed and developing world.

3.1 Rural Initiative


GSK India undertakes a number of Rural Development initiatives through its trust GRAMIN AAROGYA VIKAS SANSTHA (GAVS), a Rural Health Development Organization. As a part of its Rural Tribal Development mission, GSK collected data from 92 villages around Nashik in the year 2005, to identify the most under-served village communities which need support. GAVS works in 15 of the villages in PethTaluka, Nashik District (GSK, CSR Report, 2007) GSK offers Medical check-up and treatment at Trusts Mobile Van. Mobile Clinic covers a distance of 160 km each day and visits a cluster of five villages in rotation, covering a total of 15 villages. A qualified medical practitioner along with two healthcare workers visits the villages five days a week. (GSK, CSR Report, 2007)

3.1.1 Educational Centers GAVS operates a Balwadi (pre-school) for under five year age group children of rag-pickers community in a slum pocket called Amrapali in Nashik. In addition to inculcating good civic norms, these techniques train and educate their minds with impact.(GSK, CSR Report,2007). GAVS have also launched three Vocational Training Centers in PethTaluka. The centres were launched in the beginning of 2008 in collaboration with Mumbai based partner organization, Kherwadi Social Welfare Association. Over 700 youths have been trained and a number of them are currently gainfully employed.(GSK, CSR Report,2007) 3.1.2 Shelter home for children GSK India in collaboration with Pratham, a Non-Government Organization (NGO), started a Shelter home for children under the age of 16. The project aims at prevention of children migrating to bigger cities in need of work and falling prey to child labor and anti-social elements. 3.1.3 Mid-day Meal project GSK Pharmaceutical has been supporting the Mid-day meal program for Municipal school students from the year 2005.(GSK, CSR Report,2007) 3.1.4 Access to medicines Every year Hundreds of millions of people die from curable or preventable infectious diseases or suffer unnecessary ill health because they do not have access to basic healthcare services, including essential medicines or vaccines. There are two main barriers in the developing world. Distribution network for medicines is poor. Poverty To address the twin problems GSK has come up with the following approach. Increasing availability GSK is trying to expand availability of its medicines and vaccines to as many of the people who need them as possible. The company is broadening its portfolio by introducing new products and making sure that existing products are more widely available to the health needs of people in developing countries. Improving affordability Pricing is one factor that impacts access to medicines and vaccines. GSK wants to ensure that the medicines are not only available but also affordable to everyone in the world. So the company continues to take substantive steps to reform its core practices, including adopting a range of flexible pricing models. The company is introducing medicines in smaller pack sizes to make it more cost effective. In the Least Developed Countries, the prices of the patented medicines and vaccines are fixed at not more than 25% of prices in the developed countries.

Source: (GSK, CSR Report,2011)

3.2 Research and Development Initiatives towards Community


GSK has a specialised R&D unit dedicated to developing drugs for patients in developing and least developed countries and championing their needs throughout the R&D operations. GSK conducts a focus on the Patient programme (GSK, CSR Report, 2011) that brings patients to GSK sites to speak directly to their R&D teams about their healthcare needs. This helps the company to make better medicines and inspires employees to do more to help improve patients lives. GSK is one of the few companies researching new vaccines and treatments for all three of the World Health Organizations priority infectious diseases, HIV/AIDS, malaria and TB.

3.3 Investing in developing world healthcare infrastructure


GSK reinvests 20% of its profits from medicines and Consumer Healthcare products into projects that improve local healthcare infrastructure. In 2011, GSK has set up new partnerships with AMREF, Save the Children and Care International to deliver future investments.(GSK, CSR Report, 2011)

3.4

Disaster response

GSK donates cash and supplies of its products to people affected by emergencies and natural disasters. In 2010 this included 250,000 to help the British Red Cross provide emergency safe water and sanitation for people affected by the Haiti earthquake and 170,000 to support communities affected by the earthquake in Pakistan.(GSK, CSR Report, 2011)

4. WHAT DOES GSK DO FOR ITS EMPLOYEES?


GSK was one of the 52 employers to get the Best Employers for Healthy Lifestyles award at the Leadership Summit sponsored by the National Business Group on Healths (NBGH) Institute on the Costs and Health Effects of Obesity.(Csrnewseurope,2003)

GSK received a Platinum Award - the highest honour - for its commitment to fostering a culture that supports healthy high performance. Also providing a healthy workplace and promoting a healthy lifestyle for employees and their families.

According to GSK's Christopher Viehbacher, President, US Pharmaceuticals, GSK plays a major role in creating a healthier, more spirited staff by planning health benefits that encourage the prevention and better management of chronic diseases and their costly complications.

5. Accolades for GSK


GlaxoSmithKline has received a perfect score of 100 per cent from the US Human Rights Campaign Foundation's 2005 Corporate Equality Index, an annual report card on corporate America's management of gay, lesbian, bisexual and transgender (GLBT) employees, customers and investors.(GSK US Press Release 2010) GSK Belgium has also won the award for the most desirable place to work in 2005.(www.gsk.com/about/diversity_awards.htm)

Corporate responsibility, including ethical marketing practices, is an essential part of their business. Sound business practices require us to operate in a manner that is responsible to all stakeholders, including their shareholders and society at large.

6. MARKET PLACE OF GSK


GlaxoSmithKline (GSK) is dedicated to ethical, responsible, principled and patient-centred promotional practices. Their interactions with healthcare professionals are intended to benefit patients and enhance the practice of medicine. In order to be truly successful in that endeavor, their practices conform to high ethical, medical and scientific standards that are determined by law and regulation, promoted by industry associations and embraced by the company. All GSK marketing and promotion is based on valid scientific evidence, is consistent with national prescribing information documentation and complies with all applicable laws and regulations established at national levels. Corporate responsibility, including ethical marketing practices, is an essential part of their business. Sound business practices require us to operate in a manner that is responsible to all stakeholders, including their shareholders and society at large.

6.1 GSK Follows Recognized Marketing Codes


As a multinational company, GSK sells products in more than 150 countries. The organisation is well thought out into four main commercial regions the United States, Europe, Emerging Markets & Asia Pacific, and Japan - exhibiting the size of some markets while recognizing the similarities amongst others. They abide by laws and industry codes for each of the four regions and have also adopted their own marketing codes for each region: (GSK Public Statement, 2011)

In the United States, they abide by the PhRMA Code on Interactions with Healthcare Professionals and the PhRMA Guiding Principles on Direct-to-Consumer Advertisements of Prescription Medicines. GSK also has in place a set of Commercial Practices Policies that were developed to provide clear rules on how GSK employees should conduct themselves in their job. In Europe, GSK observes individual country laws, regulations and industry codes, engulfing the European Federation of Pharmaceutical Industries and Associations (EFPIA) Code of Practice and has its own GSK European Promotion of Medicines Code of Practice

6.2 Marketing Code Exercise and Execution


New GSK representatives are trained by GSK on the medicines they encourage, the diseases the medicines are planned to treat and appropriate marketing practices. These include self-study based on company created materials, face to face in the field sessions with managers, web-based learning and in-house training courses. GSK also provides their marketing codes to employees when they are appointed to a position that requires an understanding of the policies, specifically sales, marketing, medical and dictatorial roles

6.3 Facilitating a Culture of Compliance


Various parts of the business, engulfing Finance, Human Resources, Legal, Compliance and Internal Audit, work together to ensure compliance with applicable laws and regulations, industry guidelines and their Codes. GSKs Internal Audit Department reviews sales and marketing on a regular basis to ensure proper procedures are in place and adhered to. This audit process allows us to identify areas that need to be addressed or are a reason for worry, and make any mandatory changes to enhance complete compliance with their policies.

6.4 Scientific Engagement and Marketing


The new standards apply to all scientific and medical interactions with any external groups, including healthcare practitioners, payers, governments, patient groups and the media. They believe that if their scientific activities appear in any way to be promotional, their credibility will be undermined and they will lose the trust of their stakeholders. These standards therefore support their aim of being seen as a trusted and valued scientific partner in developing medicines and vaccines that enhance patient care. (Employee Guide To Business Conduct,2010)

7.

HOW DOES GSK AFFECT ITS ENVIRONMENT?

GSK is thriving hard to align its business operations with environmental sustainability as it feels the need to meet the environmental challenges. These environment challenges are also seen as an opportunity keeping in mind the changing business environment. Lately, GSK has been stressing upon its value chain to be carbon neutral. There is a strong urge to reduce the carbon footprint, 20% reduction in water use across the value chain and keeping the waste to zero for landfill by 2050. (GSK, CSR Report, 2011)

7.1 Some initiatives taken by GSK:


On-going R&D by doing the life-cycle assessment of integral parts of business like technologies, packaging etc. to give birth to sustainable alternatives. A new guideline is set for procurement teams wherein the suppliers can be measured to integrate sustainability. GSK achieved the status of global certification by the Carbon Trust Standard. A significant partnership with the Singapore Economic Development Board by funding 24 million to execute research on green and sustainable manufacturing. (GSK, CSR Report,2010)

7.2 Use of water resource in GSK operation


Water Kaizen approach has been taken by GSK to judiciously use water. This approach was first used in England at their Worthing and Maidenhead sites and 25% savings was noticed. This was done by fixing aerators to taps, optimisation of service water flows etc. The Kaizen approach also enabled the company with the choice of using wasted water in other facilities rather than extracting fresh potable water. Water consumption

Source: (GSK, CSR Report, 2010)

7.3 Managing waste:


The PET waste is used to manufacture bottles for Ribena. This waste of 700 tonnes is recycled to make Ribena bottles and resultantly saving a huge chunk of 700,000 and over 3,000 tonnes of CO2-equivalent emissions a year. (GSK, CSR Report 2011)

7.4 Destination of hazardous waste


214,520 tonnes of waste in 2009 was lowered to 191,470 tonnes in 2010. A total of 81.6% was recycled, 5.3% was incinerated with energy recovery. Only 0.2% went to landfill.

Source: (GSK, CSR Report,2010)

7.5 Carbon neutral value chain


The impact of transport, operation and inhalers due to increased production volumes has come down due to the constant effort of stressing on carbon neutral value chain by 2050 (GSK, CSR Report,2011) The trend of CFC gases emissions since 1998 has been displayed in the below diagram. In 2010 our climate tranformation impact, engulfing operational energy, travel, transport and other direct sources, and inhalers used by patients, was 6.9 million tonnes of CO2, 9.2% lower than in 2009. This engulfs 4.6 million tonnes from inhalers used by patients, down by 10.1% from 2009. Climate change impact from operations, transport and inhaler use

Source: (GSK, CSR Report,2010)

The consumption of energy used by operations and transport has decreased by 6.6% that is from 26.0 million GJ in 2009 to 24.3 million GJ in 2010

7.6 Packaging
In order to reduce the impact on environment, GSK is set to source 50% of its paper requirement from sustainable sources by 2015 and further 90% by 2020. Furthermore, the concept of 7 R was also implemented in 2010 as a part of sustainable packaging strategy

7.6.1
Reduce

7 Rs
FOCUS EXAMPLE The mass of materials, complexity The redesigned Ventolin and the life cycle footprint of canister will save 125 packaging tonnes of aluminium and 1,200 tonnes of CO2 per year Materials with sustainability or Removing the PVC tray for EHS Nicoderm saved over 8 Issues tonnes of material and 20 tonnes of CO2 every year Recycled materials in packaging Reusing trays, pallets and (subject to regulatory drums saves plastic and requirements Wood which mean this is a major challenge in pharmaceuticals) Design for recyclability Moving the desiccant required in Niquitin bottles to the cap means bottles can be recycled Working with suppliers to change a carton material for Aquafresh to a fully green substitute, reducing 30 tonnes of material and 250 tonnes of CO2 Use materials and energy from For paper-based packaging renewable sources we increasingly buy materials made from recovered fibres. Improve the environmental Sustainability is a key impact of element in the selection and the total GSK packaging supply continued management of

PRINCIPLE

Remove

Reuse

Recycle

Renew

Reward

Respect

chain, meeting the needs of patients, customers and consumers at lower cost Use responsible suppliers

dealers. It frames a vital part of the purchasing guidelines and general ways of working. We include social and environmental requirements as piece of our dealer selection method and we are creating more in depth basis for precise factors

8. Critical Analysis
GlaxoSmithKline is the leader in CSR activities and a key player in the area of global health. The companies is spending substantial amount of its funds into R&D and other promotional activities. The major source of death in 2011 has been non-communicable diseases. Such diseases are more common in rural areas where people do not have access to medicines. Around 14 million people die every year from communicable diseases, and in excess of 2 billion people lack facilities to medicines for treatable health conditions. To address this problem, GSK has expanded the availability of its medicines and vaccines and made it easily affordable to the common man. This has wiped out the no money-no cure attitude. In low income countries the major chunk of death relates to children under the age of 14. The major portion of the deaths can be prevented or delayed through effective use of medicines. To address this problem, GSK reinvests 20% of its profits from medicines and Consumer Healthcare products into projects that improve local healthcare infrastructure. Through its trust GRAMIN AAROGYA VIKAS SANSTHA (GAVS), GSK operates a Balwadi (pre-school) under than five year age group children. This is a 2015 millennium development goal towards achieving compulsory primary education. GSK has also set up Vocational Training Centers were over 700 youths have been trained and a number of them are gainfully employed. GSK has also started a Shelter home for children under the age of 16 to prevent children migrating to bigger cities in need of work and through its Mid-day-Meal project it has reduced hunger to a great extent. GSK is providing environmental friendly products by reducing its carbon footprint and achieving 20% reduction in use of water. GSK recycles the waste to manufacture bottles. In order to reduce the impact on environment, GSK is set to source 50% of its paper requirement from sustainable sources by 2015. GSK achieves sustainable packaging strategy through reducing carbon footprint, removing materials with sustainability issues, recycling materials in packaging, using renewable sources, rewarding customers at low cost and respecting responsible suppliers. GSK is increasing its investments and proposals to reduce the consumption of energy. GSK provides a healthy workplace and promotes a healthy lifestyle for employees and their families. GSK protects human rights and also takes care of its internal customers by providing them with work-life balance. Through such initiatives GSK has won the award for the most desirable place to work.

Bibliography
1. GSK,2010, Corporate Responsibility Report, pg 149-195 www.gsk.com/responsibility/downloads/GSK-CR-2010-Report.pdf 2. GSK,2011, Do More Feel Better Live Longer, Corporate Responsibility Report,pg 84100 http://www.gsk.com/responsibility/downloads/GSK-CR-2011-Report.pdf#our-planet 3. PR Newswire,2011,United Business Media, GlaxoSmithKline Wins Environmental Stewardship Award http:// GlaxoSmithKline%20Wins%20Environmental%20Stewardship%20Award%20-%20NAPERVILLE,%20Ill.,%20Feb.%2024,%202011%20%20PRNewswire%20%20-.htm 4. GSK,2007, Corporate-Ruralprojects http://www.gsk-india.com/corporate-ruralprojects.htm 5. World Health Organisation Report 2012 www.who.int/mediacentre/factsheets/fs310/en/index.html 6. India Current Affairs Report, 2011, The World health Statistics-2011 http://indiacurrentaffairs.org/the-top-10-causes-of-death-world-health-statistics-2011/ 7. India International Researcher Volume No.1 Issue No. 2 June 2012 http://iresearcher.org/1-9%20%202-8%20Final%20paper%20Moussa%20Berete.pdf 8. CSR News Europe,2003,GlaxoSmithKline named a top employer for promoting healthy lifestyle article, 26 http://www.csrnewseurope.com/article/26 9. GSK Public Statement, Gsk marketing practices,July 2011 http://www.gsk.com/policies/GSK-marketing-practices.pdf