Last month Astra-Zeneca announced a $400m investment in reforestation. A worthy investment and much-needed for an industry that is responsible for 4.4% of the global greenhouse gas emissions. In reality, the decision is not driven by morality, but business preservation.
The Paris Agreement has outlined targets to limit global warming and businesses are having to comply. For example, the NHS has outlined a roadmap for achieving carbon-neutrality by 2045, which it mandates its suppliers to follow.
The importance of environmental sustainability, social responsibility and corporate governance (ESG) for business was brought into focus in the wake of COVID-19. An analysis found that in the year following the pandemic, 19 out of 26 ESG-focused investment funds outperformed the broader market.
This echo’s the sentiment of BlackRock CEO, Larry Fink, the world’s biggest fund manager, who at the start of 2020 flagged “a fundamental reshaping of finance” towards sustainability.
The rise of stakeholder capitalism
While environmental issues and corporate governance often steal the ESG limelight (likely because they are easier to measure), the area that Pharma is best placed to deliver in is social responsibility.
Healthcare is a social responsibility after all. It’s that tension between balancing ‘good for patients’ and ‘good for profit’ that leads to the negative reputation the industry has.
But Pharma doesn’t help itself either. Behind the generic ‘commitment to patients’ promises is the reality of an industry that lacks transparency and authenticity and is built on a sales-first culture designed to benefit one audience above all: the shareholder.
As Larry Fink highlights in his latest CEO letter, this approach is no longer good for business. He states that, “a company must create value for and be valued by its full range of stakeholders in order to deliver long-term value for its shareholders.”
The reality is creating ‘value’ for healthcare systems, for doctors, patients and society goes far beyond medicines. Pharma’s social responsibility is to ensure all stakeholders have the best experience using their treatments – from public health awareness and equitable access to improving pathways and patient experience.
This notion of ‘stakeholder capitalism’ Fink explains is simply capitalism today, “…driven by mutually beneficial relationships between [companies] and the employees, customers, suppliers, and communities the company relies on to prosper.”
Pharma’s social responsibility
From my tirade, it might seem I think no good comes from the industry at all. That’s absolutely not the case. I know of, and have been involved in, some well-intentioned projects that have genuinely helped people.
But most of the time, they are hampered by product priorities. Disease awareness campaigns that try to get a specific group of patients to identify to doctors or support programmes that improve adherence for patient cohorts most likely to stay on treatment.
True social responsibility is letting go of the product shackles and focussing on what people need. This shouldn’t just be the focus of the Sustainability Department or Corporate Affairs. It should be prioritised across Brand teams.
An estimated $30billion is spent on medical marketing in the US every year, the majority of which goes to direct-to-consumer product advertising. Imagine if even 10% of these budgets was diverted towards social responsibility – the public benefit would be significant. While we know the US is a unique market, it demonstrates the point.
Much like the environmental targets, until governments intervene, it’s unlikely the industry will change course at scale. However, some Pharma companies are showing benefit for shareholders and benefit for society aren’t mutually exclusive.
Public benefit corporations
In 2010, the US State of Maryland introduced legislation for a new way to operate a business: Public Benefit Corporations (PBCs). These are for-profit organisations that do not just maximise returns for shareholders, but also prioritise having a positive impact on society and the environment. PBCs create a charter that outlines the company’s mission, that is protected by directors and the board. The legislation requires companies to be transparent with their social and environmental efforts and protects directors from liability when they prioritise long-term goals over short-term profit.
One of the biggest Pharma adopters of this legislation is Chiesi Group – a registered Benefit Corporation in the US, Italy and France (where the legal status exists) and a certified B Corp (the more widely known, but not legally binding, certification).
On achieving the designation in 2019, Chiesi CEO Ugo Di Francesco said,
“We are aware that we are part of a fragile system and that our success is intertwined with the success of the system itself. The society, the community, the patients, our people and the whole Planet are its living parts, that we have to protect and develop”.
Chiesi and other Pharma B-Corps such as Veramed and New England BioLabs recognise that being a triple-bottom-line business (focused on profits, people and the planet) helps build a positive reputation amongst customers and the healthcare community, as well as supporting employee acquisition and retention.
While no direct correlation can be sought, the 3 years since B-Corp certification (2019-2022) has seen Chiesi’s revenue grow by 38%, compared to 26% growth across the 3 years prior (2016-2019).
How do we move forward?
For now, the industry will continue to prosper. But it won’t be able to hide behind traditional product marketing forever. As Gen Z and Millennial ‘conscious consumers’ grow more wealthy and dominate boardrooms, Pharma is going to need to embrace its social responsibility.
You may be reading this as a Brand Manager or Business Unit Lead at a multi-national Pharma company and thinking ‘these decisions are above my pay grade’. And for B-Corp certifications or big environmental commitments, that might be true.
But social responsibility is very much within the remit of customer-facing teams. Those working at the coal-face who understand the pressing healthcare challenges and have the relationships with stakeholders needed to impact change.
It’s here that teams can run pilot projects. Measure the impact on both healthcare outcomes and brand outcomes (like salience, consideration and preference). Feed the results back up. And then increase investments in the areas that are driving the most benefit. Social good initiatives aren’t just box-ticking exercises, they are core to building stronger Pharma brands.
Our industry is built on the innovation of drug discovery. Let’s reflect this in the way we market medicines. Let’s be more ambitious and creative. Let’s realise the purpose that drives us and focus more on improving the health of people and society. Business can be a force of good and in healthcare, no-one is better placed to make an impact than all of us.
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