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A Project Report

on

Analysis of CSR in Health Sector :

GlaxoSmithKline

Chetna

08-Aug-12


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Table of ContentsIntroduction................................................................................................................................................... 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 Profitresponsibly! ............................................................................................................... 11

Facing Ethical DilemmasThe 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 ......................................... 6Figure 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 highin 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


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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 arefalling 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 askilled health worker has increased globally; however, in the WHO Africa and South-

East 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 infectedwith 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

choleraeO139, SARS corona virus, highly pathogenic avian influenza virus A, and novel H1N1influenza 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 200epidemiologists, 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 andwherever 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


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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 ofCapability 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 committedto 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 forpreventive 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.


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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


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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 sustainabilityand 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 Profitresponsibly!

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 thatcould be taken to improve access to better healthcare.

Facing Ethical DilemmasThe 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 reportlists 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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BibliographyGlaxoSmithKline. (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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