CORPORATE SOCIAL RESPONSIBILITY PRACTICES BY SELECTED PHARMACEUTICAL COMPANIES IN INDIA By Dr. Deepak R. Raste[1]

Abstract

A well-defined and enforced corporate governance provides a structure that works for the benefit of everyone concerned by ensuring that the enterprise adheres to accepted ethical standard and best practices as well as to formal laws. One of the ethical standards of Corporate Governance is the practice of Corporate Social Responsibility (CSR) by an enterprise. Considering the pharmaceutical industry, as a key player in the area of global health, the paper discusses CSR practices carried out by14 selected listed and unlisted pharmaceutical Indian companies. The different broad areas of CSR practices identified are Corporate Social Responsibility Initiatives, Access Programme for Medicines, Patients Awareness Programme, Medical Education Programme (Doctors / Nurses / Para Medics), External Awards / Recognition, Capacity Building initiatives in Healthcare related projects in India and Collaboration or Partnership with Government, Public, NGOs and others. Key issues of CSR practices with respect to pharmaceutical  industries are identified. The paper concludes with concerns arising from the study regarding CSR practices and suggestions for further CSR practices to meet the challenging issues.

INTRODUCTION

The World Business Council for Sustainable Development in its publication “Making Good Business Sense” by Lord Holme and Richard Watts, used the following definition. “Corporate Social Responsibility (CSR) is the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” The same report gave some evidence of the different perceptions of what this should mean from a number of different societies across the world. Definitions as different as “CSR is about capacity building for sustainable livelihoods. It respects cultural differences and finds the business opportunities in building the skills of employees, the community and the government”. HenceCSR is about business giving back to society.The goal of CSR is to embrace responsibility for the company’s actions and encourage a positive impact through its activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, CSR-focused businesses would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. The term “corporate social responsibility” came in to common use in the early 1970s, after many multinational corporations formed. As health of the society at large is a key driver of economic development the expectations from pharmaceutical industry to contribute towards CSR for the health of the society than any other industry.

OBJECTIVES

The paper discusses the CSR practices in the area of Corporate Social Responsibility (CSR) Initiatives, Access Programme for Medicines, Patients Awareness Programme, Medical Education Programme (Doctors / Nurses / Para Medics), External Awards / Recognition, Capacity Building initiatives in Healthcare related projects in India, Collaboration or Partnership with Government, Public, NGOs and others by 14 leading pharmacy companies. The selected companies are Aventis Pharma Ltd., Associated Capsules Pvt. Ltd. (ACG Worldwide),Baxter (India) Pvt. Ltd. , Bayer Pharmaceuticals Pvt.Ltd.,Eisai Pharmaceuticals India Ltd., Eli Lilly & Company (India) Pvt. Ltd., Genzyme India Pvt. Ltd., GlaxoSmithKline Pharmaceuticals Ltd., Merck Ltd., MSD Pharmaceuticals Pvt. Ltd., Novartis India Ltd., Novo Nordisk India Pvt.Ltd.,Pfizer Ltd., Piramal Healthcare Ltd. The first part throws a light on CSR practices by pharma companies in developed countries  second part discusses CSR practices by selected Indian pharma companies, the third part  identifies scope for further CSR practices in India to meet the global standard and forth  part concludes with the findings and suggestions.The main objectives of the paper are outlined below

  • To identify areas of CSR practices by Indian selected pharmaceutical companies
  • To examine CSR practiced by pharmaceutical companies in developed countries
  • To compare the CSR practices between Indian selected pharmaceutical companies and CSR practiced by pharmaceutical companies in developed countries

METHODOLOGY

To fulfil the objectives Fourteen leading Indian pharmaceutical companies are selected to assess their CSR practices. The regular CSR practices are examined irrespective of any specific period. Fourteen leading Indian pharmaceutical companies are selected irrespective of listing of the stock on a stock exchange and even the type of the ownership weather privately or publically owned. The information regarding CSR practices is collected from published annual reports for five years from 2005-06 to 2009-10 in case of listed companies while in case of unlisted companies, information is obtained from the reports published by Organization of Pharmaceutical Producers of India (OPPI) in January 2011. CSR activities adopted by the companies of developed companies are obtained from conference proceedings and research papers.

LITERATURE REVIEW

Khanna (2006) was of the view that pharmaceutical industry has a corporate social responsibility (CSR) towards HIV/AIDS. Measures taken to increase awareness of HIV/AIDS, availability and accessibility of potent and patient-friendly FDCs / Kits for adults and children will go a long way in increasing awareness and acceptance of this disease and its therapy. This will improve adherence, lower resistance and facilitate better disease management. Heal(2004) proposed an economically coherent analysis of  (CSR), and suggested how it is reflected in financial markets..As per Rosen (2003) Enron Board’s Finance Sub-Committee’s approval of the first bankrupting Raptor transaction, Talon, is examined in as much detail as published documents allow. In so doing, this article examines a failure of CSR. Sacconi (2004) in his paper first set a definition of  CSR as an extended model of corporate governance and then accounts for a voluntary approach to CSR, meant as voluntary compliance with CSR strategic management standards, in terms of an economic theory of self- regulation based on the concepts of social contract, reputation and reciprocal conformism. In the opinion of Rubin and Barnea (2006) in recent years firms have greatly increased the amount of resources allocated to activities classified as CSR. While an increase in CSR expenditure may be consistent with firm value maximization if it is a response to changes in stakeholders’ preferences, As per Idowu (2004), The last few decades have seen an increase in awareness on the part of corporate entities in Western democracies that they are morally obliged to give something back to society. An entity that fails to make a positive contribution to society will be perceived as being socially irresponsible! to demonstrate that they “care” about the people and environment they operate in, organizations have taken different courses of action. The  CSR reports which have now become an annual report in addition to the traditional annual financial reports is one of the vehicles used to demonstrate how caring they have been over the financial period that has just ended and how they intend to continue to be even more so in future periods. The research paper of Morimoto et al (2004) examined the possibility of developing a new CSR auditing system based on the analysis of current CSR literature and interviews conducted with a number of interested and knowledgeable stakeholders. Haigh and Jones (2007) identified epistemological, theoretical and methodological problems in a potentially influential subset of the interdisciplinary corporate responsibility  literature, that which appears in the management literature. Horrigan (2007) examined key aspects of the emergence across a number of jurisdictions of a distinctive body of comparative corporate law and regulation relating to CSR. Jenkins (2009) was of the view that there are three dimensions to corporate social opportunity (CSO) innovation in products and services, serving un served markets and building new business models.

 

CSR PRACTICES BY SELECTED PHARMESCEUTICAL INDIAN COMPANIES

ACG Worldwide

(i)        Blood donation camp

  • School bag distribution
  • Donation of computers to  Residential School
  • Along with the donation, a three-month training session on basic computer knowledge has been started by
  • Donation of books to engineering colleges & management institutes..
  • Teachers training program

BAXTER (India) Pvt. Ltd.

  • Blood donation to Thalassemia Society through Rotary Club in May 2009.
  • 10 Baxter India staff spent a meaningful day at SOS Children’s Villages of India tending to the repair and maintenance of the community center.
  • Conducted a medical check-up
  • One day house building activity to put a roof over the head of a family in Bawana, with Habitat for Humanity.
  • Helped the Blind Relief Association set up stalls to sell their products at locations, manning them and helping raise funds.
  • Therapy Option booklets & Patient counseling videos for patients making them aware of choices that are available for treatment of end stage renal disease
  • Launch of “Hospitalization reimbursement policy for peritonitis in collaboration with Oriental Insurance Company.
  • Medical Education Programme (Doctors / Nurses / Para Medics)
  • Collaboration or Partnership with Government, Public, NGOs and others

BAYER

  • Rain Water Harvesting Project (vi) Support to local school
  • Mangrove plantations (vii) Tree Plantation
  • Tsunami Relief Centers (viii) Jammu & Kashmir Earthquake Relief
  • Bangladesh Cyclone Relief (ix) Andhra Pradesh Cyclone Relief
  • Child Care Program (x) Educational / Environment

EISAI PHARMACEUTICAL INDIA PVT.LTD.

Eisai practices HHC(human health care) philosophy worldwide by giving first thought to patients and their family members and generating HOPE.

  • (i) 66 Memory clinics” across India                        (xii) Access Programmes for Medicines:
  • (ii) Patients Awareness Programmes                         (xiii) Medical Education Programme for doctors
  • (iii) External Awards / Recognition                        (xiv) Environmental Initiatives
  • (iv) Healthcare related projects in India                                   (xv) Collaboration with NGOs,Government, Public
  • (v) Media awareness programs for general public (xvi) Screening of awareness films
  • (vi) Awareness camps for senior citizens through medical professionals (xx) Training of caregivers
  • (vii) Diabetes Conversations                            (xvii) Lilly Hands and Hearts
  • Medical Education Programme                     (xviii) Global Lilly MDR TB Partnership Street Play Performance
  • (ix) Road Safety Program                                      (xix) Epidemic disease state awareness Program
  • (x) H1N1 program               (xx) Yoga Classes
  • (xi) In house Doctor

GSK PHARMACEUTICALS LTD.

  1. Tribal welfare projects in PethTaluka, Nashik, Maharasht (iv) Shelter home for Children:
  2. Medical centre in garbage dumping ground: (v) Institute of Child Health, Kolkata
  • Healthcare project, Institute for Indian Mother and Child, Kolkata (vi) Mid-day Meal Project:

MERCK LTD.

  1. Patients Awareness Programmes (iv) Medical Education Programme
  2. External Awards / Recognition (v)  Healthcare related projects in India
  • Collaboration or Partnership with Government, Public, NGOs and others

MSD PHARMACEUTICAL PVT.LTD.

  1. The Drishtee Foundation: Reduction of Mother Mortality Rates in Assam
  2. LV Prasad: Building Human Resources for Eye Care
  • PHFI: Health Literacy Project on Diabetes and Cervical Cancer
  1. Bombay Veterinary College: Pilot Rabies Control Project
  2. Access Programs for Medicines
  3. Therapeutic food for tribal children suffering from severe acute malnutrition and the clinical care
  • Provide iron and other necessary supplements that rural women in Assam require to support a healthy pregnancy as well as facilitate institutional births
  • Corrective eye care and proper screening made accessible to rural villagers to prevent blindness
  1. Facilitate access to proper rabies care and prevention by educating rural populations on post-exposure treatment and the need to seek a qualified health official
  2. Patient Awareness Programs
  3. SPARSH Health line for diabetes management
  • GuardYourself Program – Cervical Cancer Prevention Progra
  • Medical Education Programs
  • Women’s Health programs
  1. Capacity Building Initiatives in Healthcare Related Projects in India
  • Collaborations or Partnerships with Government, Public, NGOs, and others

NOVARTIS INDIA LTD.

  1. Leprosy Care Association
  2. The Indian School of Business scholarship
  • Donation for the education and health of underprivileged children
  1. Child Support Centres and a Vocational Training Centre as well as a Women’s Empowerment Centre
  2. Environment protection
  3. Access Programmes for Medicines
  • Glivec International Patient Assistance Program
  • Patient Awareness Programmes
  1. Alzheimer Awareness Activities
  2. Elder’s Day Walk
  3. Macalvit Healthy Diet Day
  • Capacity Building initiatives in Healthcare related projects in India

PFIZER LTD.

  1. Product Donations (iv) Access Programmes for Medicines
  2. Patient Awareness Programmes (v) Medical Education Programme (Doctors / Nurses / Para Medics)
  • Healthcare related projects in India(vi)Collaboration with Government, Public, NGOs and others

CONCLUSION

Most of the selected companies have reported their CSR practices in the field of Society, Users and Environment. The CSR toward employees are not reported by any of the selected companies. NO company has reported total cost incurred on CSR or percentage of net profit used for CSR. Only activities are highlighted. In 2012 there is a significant move made by ministry of corporate affairs of India making mandatory for all listing company to spare 2% of net profit for CSR. This provision will mandatory for Indian companies to disclose CSR activities in terms of qualitative as well as financial aspects.

REFERENCES

Haigh, Matthew and Jones, Marc (2007), “A Critical Review of Relations between Corporate Responsibility Research and Practice”, Electronic Journal of Business Ethics and Organization Studies, Vol. 12, No. 1.

Heal Geoffrey M. (2004), “Corporate Social Responsibility – An Economic and Financial Framework”, Available at SSRN: http://ssrn.com/abstract=642762

Jenkins, Heledd (2009), “A Business Opportunity Model of Corporate Social Responsibility for Small- and Medium-Sized Enterprises”, Business Ethics: A European Review, Vol. 18, Issue 1, pp. 21-36, January 2009.

Horrigan, Bryan T. (2007), “21st Century Corporate Social Responsibility Trends – An Emerging Comparative Body of Law and Regulation on Corporate Responsibility, Governance, and Sustainability”, available at SSRN: http://ssrn.com/abstract=1087133

Idowu, Samuel O. (2004), “A Comparartive Study of the Contents of Corporate Social Responsibility Reports of UK Companies”, Management of Environmental Quality: An International Journal, Vol. 15, No. 4, pp. 420-437.

Khanna AK. (2006), “Pharmaceutical industry’s corporate social responsibility towards HIV/AIDS”,  J Postgrad Med [serial online] 2006 [cited 2011 Feb 3];52:194-6. Available from: http://www.jpgmonline.com/text.asp?2006/52/3/194/26559

Morimoto, Risako, Ash, John and Hope, Christopher (2004), “ Corporate Social Responsibility Audit: From Theory to Practice” University of Cambridge, Judge Institute of Management Working Paper No. 14/2004, Available at SSRN: http://ssrn.com/abstract=670144 or doi:10.2139/ssrn.670144

Rosen Robert (2003), “Risk Management and Corporate Governance: The Case of Enron”,  Connecticut Law Review, vol.35, No.1157.

Rubin, Amir and BarneaAmir(2006), “Corporate Social Responsibility as a Conflict Between Shareholders”,  EFA 2006, Zurich Meetings.

******

[1] Associate Professor in Accountancy, Shree SahjanandVanijyaMahavidyalaya, Ahmedabad