Keywords

1 Introduction

The pharmaceutical industry is situated at the crossroads of humanitarian problems, ethical requirements, regulatory constraints, and major economies. Healthcare, defined as a human need recognized as a right by the United Nations (Turcotte and Pasquero 2007, p. 200), is considered as a public good under the responsibility of governments. However, the fact that medical innovation is the product of private R&D rather than public (Mills 2002) makes global pharmaceutical companies the central performer of humanitarian and economic development (Boidin and Lesaffre 2011). Although this industry is recognized as a leader in “industrial sustainability” (Schneider et al. 2010, p. 421), it is still the object of numerous criticisms and controversies putting on the front page its corporate social responsibility (CSR). As such, investigating the manner in which global pharmaceutical companies contribute to a better society appears significant.

How can we define the responsible behaviors and practices in the pharmaceutical industry? Given the underlying question, how do these pharmaceutical companies carry out their activities in order to produce a positive impact on society? (Jenkins 2009). This chapter offers some insights into these questions. For this purpose, the authors constructed a framework. This framework is an extension of the taxonomy of the CSR strategies of Martinet and Payaud (2008), which, when looking at the value chain, identifies the dominant logics used by firms, in order to meet social expectations. During a financial crisis, societal awareness intensifies, inviting companies to deploy more CSR practices. The taxonomy of Martinet and Payaud enables forms of CSR exercises to be identified in this context. This framework fits in the CSR sociocognitive approach according to the classification of Gond (2011). It offers a heuristic reasoning to facilitate the understanding of the cooperative strategies used by firms and to qualify and characterize the socially responsible behavior of companies. The first section explains this demonstration. The second section presents the framework’s results obtained through an exploratory study for the ten biggest global pharmaceutical companies. They offer examples from these companies to describe their CSR projects. At the end, the chapter derives a bigger picture of the responsible behaviors and practices deployed by global pharmaceutical companies toward society. The financial crisis has had an impact on public health budgets; the chapter studies implicitly the manner in which global pharmaceutical companies develop their CSR approach in order to meet societal challenges including innovation, access of care for everyone, and the protection of the patients.

2 How Can We Define the Responsible Behaviors and Practices in the Pharmaceutical Industry? A Framework to Identify Practices alongthe Value Chain

How far does the responsibility of the company extend? The justification of the implementation of CSR within the company matches the representation that managers have about the role and the raison d’être of his own company (Capron and Quairel-Lanoizelée 2004). Tackling the question of CSR for a company thus implies consulting the main purpose of the activities themselves (Hoffmann and Saulquin 2009). From this point, the authors propose in this section some elements which defend the idea that the engagement of a company in a real CSR entails taking into consideration the challenges throughout the value chain. This approach takes into account the society as an influencing participant of CSR theory formation (Acquier et al. 2011). Firstly, they will show how this vision leads us in a CSR sociocognitive approach (Gond 2011).

2.1 Theoretical Scope: CSR as a Sociocognitive Construction

Companies evolve in society and not only in a market (Martinet 1984). By being situated at the company–society interface, CSR raises the question of the role of the company in society and the level of its social engagement beyond the legal frame (Turcotte and Pasquero 2007, p. 220). It deals with the relations between various actors which have more or less interests in common. The analysis of this interface explains the complex and multiform character of CSR and that is why its conceptualization is an ongoing construction. Academic publications underline that CSR is suffering from the lack of consensus on its definitions (Gond 2011, p. 38). For certain authors, if the notion of CSR was always vague, it is due to a lack of analysis of its “pluralist character inherited by its sociological version” (Gond 2011, p. 39). This is because, intrinsically, “the notion of CSR spreads not only the representation of the company, but also the representation of the society” (Gond 2011, p. 39). Gond (2011, p. 44) proposes to adapt the sociological lecture grid of Burell and Morgan (1979) to the field of management, in order to place a framework to the analysis of the theories in the work of CSR when the latter is designed by the prism of the company–society interface (Gond and Igalens 2014, pp. 44–59). The theoretical frame of Burell and Morgan (1979) aims to structure and sort the theories of the social world, derived from their political origins (Gond 2011) to the approaches of the theory of the organizations (Lewis and Grimes 1999). This graph consists of two axes. The first epistemological and methodological axis allows making a choice by which the investigators conceive the observed reality. Through a positivist and objectivist approach, the social reality exists independently from the observer. On the other hand, from a subjectivist approach, the social reality is dependent on the observer and the very fact that to seek understanding participates in its construction. The second axis of the graph specifies two research orientations, studies which aim to analyze the mechanisms of the social regulation, and those which aim to reflect on social change. It is due to this that Gond (2011, p. 45) defines four perspectives on the company–society interface, allowing the establishment of four different visions: Functionalist, Sociopolitical, Culturalist, and Constructivist. The author identifies research questions for each perspective (see Table 11.1).

Table 11.1 Research questions per form of CSR prospect (Adapted from Gond 2011)
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How can we define the responsible behaviors and practices in the pharmaceutical industry? This research question justifies a position in the studies which propose a sociocognitive vision of CSR. According to this perspective, CSR defines itself as “a product which is temporarily stable from a negotiation between the company and society, putting into play the identities, the values and the social problems” (Gond and Igalens 2014, p. 55). The companies and the stakeholders constantly negotiate the challenges brought by the concept of CSR in accordance with a negotiated order, with the possibility to reevaluate according to the strategies of all parties (Gond and Igalens 2014, p. 56). In this vision, the parties are free to propose new solutions of CSR, recalling the voluntary character of the concept, defended by the European Commission (EC). The EC indeed defines CSR as a concept in which the companies integrate the social, environmental, and economic preoccupations in their activities and their interactions with their stakeholders on a voluntary basis (Gond and Igalens 2014, p. 23). The EC invites all the involved parties to collaborate around the projects, allowing the deployment of a policy of CSR to be favored for the general interest. It also proposes to conceive the company as a partner which accepts to share the responsibilities with other involved parties. This multi-stakeholder partnership between the private, public, commercial, and non-commercial parties can become a solution for the general interest. Consequently, the way to define the responsible behaviors and practices of a company could be predicted through the relations and the projects deployed with stakeholders. The taxonomy of Martinet and Payaud (2008) offers this possibility, because the taxonomy allows the ways and means of cooperation adopted by the companies with the various stakeholders to be established.

2.2 Evolution of a Taxonomy of CSR Strategies: A Framework

The taxonomy of CSR strategies proposed by Martinet and Payaud (2008, p. 200) is intended to identify “ways and means of cooperation with various partners” while providing a priority of CSR practices (see Table 11.2). The taxonomy can be used to classify the CSR practices of a plurality of firms (Martinet and Payaud 2008, p. 201). The authors locate four levels of strategic commitment to CSR, from the weakest to the most intense: cosmetic CSR, peripheral, integrated and the CSR-BOP Bottom of The Pyramid. These four columns show six types of stakeholders within which the company can build co-responsible partnerships: The principal company and/or its subsidiaries; Business partners; Social Enterprise; No-Profit organization; Population shopkeepers, and Government and/or local authorities. This taxonomy reveals a minimum of 24 possibilities of collaborative situations resulting in dispersions of the CSR strategy practices.

Table 11.2 Taxonomy of CSR’ strategies of Martinet and Payaud (2008)
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The actions which come from the base of a cosmetic CSR are the actions qualified as being light, that aim only to fulfill the legal conditions, without a permanent project using the stakeholders. The so-called peripheral CSR describes the actions of the involved CSR but without a direct connection with the activities of the company. Gifts to charities supporting a particular societal project come into this category. The integrated CSR thus concerns the implicated actions in relation to the activities of the company. They, therefore, impact its performance. These are measurable actions on the piloting chart on the balance score-card or the sustainability score-card in the KPMG office (Klynved Main Goerdeler, KMG; Peat Marwick International, PMI) (Martinet and Payaud 2008, p. 203). The CSR-BOP, bottom of the pyramid, concerns the actions which apply to people living off less than two dollars per day. The companies willing to help such people choose to put in place radical innovation policies which affect prices, the product, and the methods of management at the same time, enabling them to create an economically viable environment (Martinet and Payaud 2008, p. 203). A large number of responsible practices were developed over the last ten years due to the multi-stakeholder partnerships, integrating in a more operational manner the companies with local issues (Martinet and Payaud 2009, 2010). The analysis of the partnerships that the company will build is essential for the evaluation of the responsible practices work (Martinet 2006, pp. 9–18). Identifying these partnerships along the value chain allows researchers to understand how its relations contribute to a better society. In this reflection, the value chain allows the company to select the CSR challenges at each stage. A number of stakeholders intervene along the value chain it is, thus, the occasion for the company to create partnerships to solve sustainable issues identified. The taxonomy of Martinet and Payaud (2008, p. 201) allows the “form of the CSR exercises” to be defined. The taxonomy does not seek to qualify one company or one industry in particular. With the aim of defining the responsible practices deployed by global pharmaceutical companies, the authors propose to develop the taxonomy in order to have it in direct view of the value chain (see Table 11.3). They propose to add another column, to inform about CSR issues in which companies have chosen to be involved. Issues identify steps of the value chain that projects impact. The number of projects that were identified with the implementation of the taxonomy is reported per form of CSR along the value chain. The stakeholders are mentioned in the framework to visualize to what extent the maintained relations with them contribute to the social, environmental, and economic issues. The scope of the analysis proposes a heuristic method allowing response to questions such as: What level of the value chain do companies get involved in? (column Value Chain) In response to what challenge of CSR? (column CSR Issues) With what kind of partners? (column Stakeholders) For which projects and for which practices? (column Number of CSR projects).

The proposed reasoning translates the companies’ willingness to consider the repercussions of its activities on society and reflects the obligations which they think it must assume toward it. The authors consider this approach pertinent for the global pharmaceutical companies because the CSR investigation is complex as it covers the product, management practices, and the mission which holds the industry together all at the same time (Turcotte and Pasquero 2007, p. 199).

Table 11.3 A framework to define CSR along the value chain
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3 An Exploratory Study in the Pharmaceutical Industry

3.1 Methodology

This qualitative study is based on the analysis of websites and CSR reports from 2013 of the top ten global pharmaceutical firms in terms of turnover, representing 39.7 percent of the world market (IMS-Health): Novartis, Pfizer, Sanofi, Merck&Co, Roche, GSK: GlaxoSmithKline, Johnson & Johnson, AstraZeneca, Teva, and Lilly. The CSR reports take into consideration the interests of the different stakeholders and take part in a process of negotiation and transaction (Hoffmann and Saulquin 2009, p. 44). In that, they represent the relevant secondary data to analyze with the goal of a constructivist approach. The authors complete this collection of secondary data with the observational and various expert reports. “The type of information which was researched does not require deepening by the data collection from the primary source” (Martinet and Payaud 2008, p. 201) due to their objective character. The CSR reports from global pharmaceutical companies clearly describe the projects for which they were engaged. It is, therefore, possible to find the goal of the action, the partners associated with the projects, the time taken, and the expected and/or obtained results. Each project is the object of an analysis, thus enabling the study to proceed with several mini-cases. These projects fit into issues which are well defined by pharmaceutical managers. The authors identified 12 of these (see Table 11.4).

Table 11.4 Main CSR issues defined by pharmaceutical companies
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To specify these major issues for which pharmaceutical managers claim to base their projects is an important step since they implicitly interpret the challenges related to the CSR sector along the value chain. Three hundred and thirty projects have been identified.

The researchers first employed the taxonomy on the strategies of CSR of Martinet and Payaud (2008) for each of the ten pharmaceutical groups as recommended by the authors. They counted the number of projects per form of CSR and along the value chain, and they reported the number of projects in their framework.

4 Results

4.1 On What Stages of the Value Chain Is the Pharmaceutical Industry Engaged? To Respond to Which Challenges?

Table 11.5 structures the analysis. It shows that the commitments of CSR in the pharmaceutical companies’ studied rest on all the stages of the value chain. They, therefore, revolve around their job, their mission, and the peripheral actions representing only 4 percent of the total actions which were gathered in the study. The pharmaceutical industry is an engaged sector, 56 percent of the actions are integrated and 23 percent of these are at the service of the poorer population across the BOP programs. These first results corroborate other studies which prove that the pharmaceutical sector is recognized as a leader in industrial sustainability (Gateaux and Heitz 2008; Schneider et al. 2010; PWC 2013).

The innovation, the access to care for everyone, and the protection of the patients are three major issues which account for statistically 19, 27, and 23 percent of the total projects that were studied. They specify the challenges that the global pharmaceutical laboratories want to assume toward the society in particular. Therein, the authors will focus the analysis of this communication on them.

The CSR challenges identified along the value chain aim to respect the implied contract which links the pharmaceutical companies to society. For a number of authors, the establishment of the license to the protection of the intellectual property forms the basis of this contract. On the one hand, society protects the companies by guaranteeing the return of the investments, on the other hand, society expects laboratories that they financially invest in the research of revolutionary molecules to respond to the medical needs which are still unsatisfied, while being in a position of responsibility (Turcotte and Pasquero 2007, p. 214).

Table 11.5 Defining CSR at the top ten biggest pharmaceutical companies
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4.2 With Which Partners? For Which Practices and with Which Projects?

The stakeholders with whom the global pharmaceutical companies negotiate and put in place its responsible projects are public, private, commercial, and non-commercial partners.

Innovation. Investing in research of medications to respond to the medical needs which are still unsatisfied, such as certain types of cancer, orphan diseases, and tropical diseases affecting third-world countries, is the responsible behavior which is expected by society.

Pharmaceutical manufacturers have understood the challenge of responsible innovation by registering it in an efficient restructuring of their R&D and for better productivity. The nature of the diseases targeted by new drugs is more complex and scarcer, and many molecules are being tested and many of them fail in clinical trials in humans (Cavazzana-Calvo and Debiais 2011). In order to provide more upstream potential impact of a molecule and thus improve their productivity, the laboratories are developing new public and private multidisciplinary collaborations (Boidin and Lesaffre 2011, p. 332) with the goal of a better understanding of the physiopathology of diseases. For example, “Roche Partnering signed 73 new agreements in 2013, including eight product transactions, 54 research and technology collaborations and 11 products out licensing agreements” (Roche 2013a, p. 45) and AstraZeneca: “We are creating a more porous research environment that will help us Achieve Scientific Leadership by fostering collaboration between scientists both within and outside AstraZeneca” (AstraZeneca 2013, p. 37). These alliances are sealed under the form of licenses or R&D contracts (Belis Bergouignan et al. 2014). These rational expert partnerships transform the clinic research procedure and contribute to the progressive emergence of the biotechnological medications. These offer new therapeutically hope in treating more or less long-term, serious pathologies not benefiting hitherto an efficient treatment (Cavazzana-Calvo and Debiais 2011). The research on biotechnological medications targets a particular patient to the singular genomic profile: it demands an ethical, cultural, and environmental adaptation (Boidin and Lesaffre 2011). This is why certain pharmaceutical firms choose to create research facilities in emerging and developing countries, meeting thereby the societal needs of the latter in terms of public health policies. For example, “The Novartis Institutes for BioMedical Research (NIBR) is the innovation engine of Novartis. Its goal is to change the practice of medicine and it is achieving this primarily by discovering novel medicines that address unmet patient needs” (Novartis 2013, p. 26).

Access to treatments for everyone. The health authorities are the privileged partners at the core of discussions about the access to treatments. The financial resources are very unbalanced from one state to the other. The lack of harmonization of practices between countries obliges the laboratories to adapt their CSR strategies according to the local needs and the social expectations which are more or less wide. The pharmaceutical laboratories aware of these societal and economic stakes have gradually transformed their market access approach. With their subsidiaries, these companies create real operational structures entirely dedicated to access to medicines. Building the most efficient project with authorities to make drugs available to patients is the mission of these Market Access departments. Currently, these new governance standards allow the pharmaceutical industry to fully play its role in access to medicines in poor countries. To illustrate: “Johnson & Johnson strives to provide leadership in advancing a world in which all people have access to affordable, innovative and sustainable solutions for healthy living. Market access is determined by Policy and Regulatory constructs we must navigate to ensure our products and services can be accessed health by patients” (Johnson and Johnson 2013a, p. 26).

The access to care for everyone and the relocation of the facilities of R&D enter also in the biggest scope of development of the multi-stakeholder partnerships, which are at the core of the BOP programs in health. However, beyond the financial constraints that require innovation and access to medication, developing countries lack medical structure to ensure a delivery of care and products in the appropriate sanitary conditions. The necessity of a global and collaborative approach progressively imposed itself (Mills 2002). Thereby, the compromises which seal the cooperative strategies permit the raising of funds, competence, and expertise from R&D (Mills 2002). The partnership between Sanofi and the Drugs for Neglected Initiative permitted the development of the ASAQ, a combined medication to fight against malaria at a fixed dosage making it easier to use (Sanofi 2013, p. 23). GSK and the Bill & Melinda Gates Foundations (BMGF) are working jointly in order to develop vaccinations which are more resistant to heat, thus reducing the need for refrigeration. GSK and BMGF are dedicating a combined sum of 1.8 million dollars (GSK 2013a). The donation programs of Mectizan® and of albendazole including respectively that Merck&Co and GSK aim to eradicate river blindness and lymphatic filariasis. They rest on the long-term partnerships between World Health Organization (WHO), the World Bank, Task Force for Global Health, African Program for Onchocerciasis Control, Onchocerciasis Elimination Program for the Americas, health authorities, development organizations, and local communities in the countries concerned (WHO 2013; Donation Mectizan® Program 2013). Since 1987, in the fight against river blindness, Merk&Co have donated nearly USD 5.1 billion, that is 1 billion doses of Mectizan® to more than 117,000 communities in 36 equatorial African and Latin American countries as well as Yemen (Merck&Co 2014). GSK “commits itself to supply albendazole to treat one billion people in more than 80 countries. GSK equally provides subsidies and personal expertise to support the formation activities and communication with the World Alliance for the elimination of lymphatic filariasis” (GSK 2013b, p. 52). Since 2003, “the Lilly group through its “Lilly MDR-TB” carries the ambition to stop the spread of multi-drug resistant tuberculosis (MDR-TB). This program is done in collaboration with WHO. It is based on a transfer of technology and expertise in the production of antibiotics, but also in the establishment of health monitoring and implementation of training programs on prevention for nursing staff. MDR-TB kills more than 150,000 people each year. Lilly group has already contributed $ 135 million for this program” (Lilly 2013, p. 14).

A number of other examples of BOP projects could have been cited confirming the commitment of the pharmaceutical companies at their partners’ side, to respond to a major societal issue which is the access to treatments in poorer countries.

The protection of the patients. The global pharmaceutical companies integrate the challenge of the protection of the patients at the core of its value propositions. Collaboration with private enterprises, associations of patients, NGOs, hospitals and authorities allows them to develop a global services approach around this medication. These are aid programs for the proper use of the drug, medical training and teaching tools to accompany patients to better understand their disease and their treatments. Concretely, the laboratories propose Support Programs to Patients. For example, the program of Sanofi, developed alongside the Mezzanine society, offers to new patients suffering from diabetes an educational and nurse-escort program and a monitoring by SMS (Sanofi 2013, p. 19).

4.3 Values Contribution of the Pharmaceutical Industry Toward the Society

Social contributions from industrialists take several forms:

  1. 1.

    Recurring and controlled medication donations using the example of Johnson and Johnson, through its Foundation, offers patients undergoing financial difficulty access to its medications for free and completes this process via an assisted program from Janssen, its pharmaceutic subsidiary. The program guides patients through the administrative process, while directing them toward humanitarian aid that would eventually accompany them through their period of illness. Between 2011 and 2013, the Foundation provided more than two million medications to over 300,000 patients in the USA (Johnson and Johnson 2013a, b). Pfizer proposes the same type of program under the name RxPathways™ (Pfizer 2013).

  2. 2.

    Laboratories adopt strategies of varying prices in order to adapt to circumstances in local sanitary facilities. They propose price reductions and discounts for NGOs, national organizations as well as bringing an end to exploitation rights (to allow firms that produce generic medications to sell them at a lower price). Thus, Roche committed themselves not to file intellectual protection patents within the poorest countries (Gateaux and Heitz 2008, p. 11).

  3. 3.

    They enrich their proposal of value aimed at health care professionals, patients and their families as well as supporting authorities developing sanitary structures. In certain countries, the contribution could become a technological transfer, integrating industrial expertise of R&D, training in medical services on the consequences when misused, patient protection and reinforcing the sanitary systems. In return, the laboratories can benefit from tax credits or be insured in advance by the purchase of their medical innovations that come at a certain price, a certain quantity, and within a specific time frame (Palazzo and Wentland 2011).

5 Discussion and Main Limitation

How can we then characterize the socially responsible behavior of the pharmaceutical industry? The analysis confirms that the implementation of responsible actions is strongly linked to respecting the implicit contract which links it to society. This is why strategies are driven by the parent company. The social expectations are integrated along the value chain, impacting business models. According to Teva “Our Corporate Social Responsibility program is a natural complement to our core business activities” (Teva 2013, p. 6), for Novartis “Responsibility is a core part of our business strategy” (Novartis 2015) and Roche “Sustainability is an integral part of the way we do business—now and in the future” (Roche 2013b). This final idea offers some prospects of research to provide insights into the role of CSR in transforming business.

It appears that global pharmaceutical companies do not evoke a particular change CSR management after the financial crisis and they adopt the same CSR strategy. This industry seems to have, therefore, taken the decision to work together for common good. Does the generalization of these practices in the developing countries, through behavioral mimicry in this industry contribute to the emergence of what Vogel calls “The Market for Virtue”? (Vogel 2006).

The main limitation is related to the data collection during the exploratory study. The authors needed to identify responsible projects according to the definition proposed by Martinet and Payaud (2008). The identification of the socially responsible projects also appears difficult because there are not any homogeneous guidelines in the structure of CSR reports. This mass of information requires a lot of time for deciphering, not to mention the possibility of a qualitative and/or quantitative error during the collection. Studying a significant quantity of responsible projects, here 330, allows the potential margin of error to be limited.

6 Conclusion

The goal of this chapter was to look at the manner in which global pharmaceutical companies carry out their activities in order to produce a positive impact on society. To answer this, the authors constructed a framework that allows responsible practices deployed by the global pharmaceutical companies to be detected along the value chain. Therefore, the authors initially showed that being at a company–society interface, CSR deals with relations between varying partners having more or less interests in common. Thus, CSR appears as an opportunity for dialogue and negotiations. In that role, it appears almost like a negotiated mandate, establishing itself as much in the construction of the company’s practices as in the resulting dynamics within society. This is why the analysis of partnerships which the company can create proves to be essential to define the responsible practices (Martinet 2006, pp. 9–18). In this purpose, the contribution of the taxonomy of Martinet and Payaud (2008) is very important because it allows cooperative strategies used by firms to be established. Identifying the implementation of these cooperative strategies along the value chain enables CSR to be placed as a business opportunity contributing to social, environmental, and economic needs of stakeholders. The framework allows for a descriptive analysis into this idea. In the pharmaceutical industry, partnerships seem to have allowed divergences of interest to be transcended for global common good. Partnerships may be a serious strategy in order to meet societal challenges in the post-financial crisis.