April 27, 2005
Pharma and Biotech Companies Just Starting to Pass the Transparency Litmus Test
by William Baue
oekom research rates the social and environmental sustainability performance of 27 pharmaceutical
and biotechnology companies, and finds disclosure lacking across the board.
Pharmaceutical and biotechnology companies: can't live with them, can't live without them. Both
provide medicines and therapies vital to human wellbeing; however, both are also embroiled in
controversy over how they dispense the significant influence and power afforded by this crucial
role they play in society. Truth in marketing and clinical trial findings, access to medicines for
the economically disadvantaged, and political contributions are just a few of the contentious
issues facing these sectors.
In its latest Corporate Responsibility Rating (CCR)
report, Munich-based sustainability rating firm oekom research assessed how 27 of the
largest listed pharmaceutical and biotechnology companies in the world on social and environmental
performance. As a whole, the sector received an average grade: C on a scale from A+ to D-.
Standout companies included UK-based GlaxoSmithKline (ticker: GSK) with a B followed by
Denmark-based Novozymes (NVZMF.PK) and Novo Nordisk (NVO) and US-based
Johnson & Johnson (JNJ) and Bristol-Myers Squibb (BMY), which all
earned a B. Bringing up the rear were three US-based companies: Gilead Sciences (GILD) and Genentech
(DNA) with a D+
and Genzyme (GENZ) with a D.
Transparency is the turnkey, cutting across all the above issues, with disclosure generally
disappointing the analyst team that performed the ratings--team leader Oliver Rüdel with Evelyn
Bohle, Till Jung, and Dietrich Wild.
"It depends on the topic, but overall they are just
starting to improve their transparency," Mr. Rüdel told SocialFunds.com.
example, the issue of transparency regarding what is referred to as "access to medicine" (ATM) for
the poor, particularly in developing nations.
"Many companies say, 'we make
pharmaceutical donations' but it's hard to get any clear information on the extent or who has
responsibility for these donations," Mr. Rüdel said. "Sometimes it seems that they are just trying
to get rid of old drugs by donating them to developing countries."
"This is one of the
main criticisms of pharmaceutical companies, who say 'we bring health to the world,' but they don't
comprehensively address diseases that occur in developing countries," he added.
companies generally have ATM programs in place addressing developing nations, most lack not only
transparency but also a clear strategy. One exception is sustainability rating leader
GlaxoSmithKline, which has research and development projects to develop vaccines for diseases that
disproportionately affect developing countries.
However, GlaxoSmithKline is also facing
criticism for allegedly withholding from the public negative findings obtained in drug trials for
its antidepressant Paxil, along with Merk (MRK) for its heart drug Vioxx.
"[S]everal companies state that their trials are conducted according to international standards
such as Good
Clinical Practices guidelines or the principles of the Declaration of Helsinki," the report states.
"However, only very few companies reported on the registration of new trials in openly accessible
databases at their inception."
Roche (ROG) has started a clinical trial
registry in an openly-accessible database, and GlaxoSmithKline is following in its footsteps, a
common phenomenon for those exposed to legal action to become first-movers.
On the issue
of political donations transparency, Schering-Plough (SGP) and Johnson & Johnson recently
followed in the footsteps Pfizer (PFE) by agreeing to comprehensive
disclosure. Prompting this move was a shareholder resolution filed by members of the Interfaith
Center of Corporate Responsibility (ICCR), a
consortium of 275 faith-based institutional investors with approximately $110 billion in assets.
ICCR thus withdrew the resolution at the two companies, but it has gone to vote over the past two
weeks at four other pharma companies: Eli Lilly (LLY), Wyeth (WYE), Abbot Laboratories (ABT), and Merck (ICCR
is still compiling results).
However, the positive move by Schering-Plough and Johnson &
Johnson on this one issue is unlikely to sway oekom's assessment significantly.
have only a small effect on the overall rating, even if it's an important topic at the moment and
even if they are forerunners in the moment," said Mr. Rüdel.
Indeed, Johnson & Johnson's
rating improved this year as compared to last, while Schering-Plough's deteriorated--best practice
on social and environmental sustainability must cross multiple areas in order to buoy ratings