The SDGs: Influencing Global Pharma Companies
Green Transition 26 February 2019 Alan Kao Anna Essehag
Living good and healthy lives is what most people humbly dream of. However, for millions of people, this stays a dream. Infused by competition and influenced by governments, NGO’s and not least the Global Development Goals, the pharmaceutical sector is opting the game to contribute and report on their contribution to good health and well-being. In this article we set the scene to examine how the UN SDG’s affect the sector to do more good.
By Alan Kao, Anna Essehag, and Martin Christiansen
Of UN Global Compact’s 13174 participants, a grand total of 419 partners from the health sector are now striving to achieve the SDG’s by 2030.
The majority of them have zeroed in on SDG #3 (Good health and well-being). This means commitments globally to eradicate malaria, tuberculosis, AIDS, and many other communicable diseases by 2030. In addition, it also seeks to reduce child mortality, improve maternal health, offer a universal health coverage, and provide safe and affordable medicines for all. This clearly is not possible without a significant and concerted effort from the pharmaceutical industry – a highly competitive and regulated industry with total revenues of 1,1 trillion US dollars.
Good health and well-being is an omnipresent challenge. Even if many developed countries may never have to deal with tropical diseases like malaria; obesity and type 2 diabetes is already eroding the good health of millions. So how does this influence pharma-companies in the years to come?
From triple bottom-line to SDGs
One global case is Novo Nordisk. Novo has reported on environmental progress since the 1990’ies, and their 2001-report, labelled ‘Triple Bottom Line Report – Working with dilemmas,’ was their first report with a broader, more holistic outlook.
Now, the Sustainable Development Goals have taken center-stage. This aligns well with the Novo Way which also entails more reporting, transparency, and enhanced monitoring to quantify the returns on investments. For instance, the Danish insulin manufacturer has worked to quantify the impact on clinical outcomes, cost savings for health care payers, and how to achieve SDG target 3.4 specifically in China (pre-mature mortality from non-communicable diseases to be reduced by 1/3 in 2030). According to Novo, one of the results was bringing more people with type 2 diabetes to treatment, reducing overall premature mortality by 43.1%.
So even if the corporate world is still full of tough calls, working towards a better world is less of a dilemma since doing good and doing well is two sides of the same coin. For the pharma industry, this was spelled out some years in advance of the UN SDG’s.
Rewards for the pharma industry
In 2011, Michael Porter and Mark Kramer published their seminal article on the shared value concept in Harvard Business Review. Building on that, the Shared Value Initiative released the report ‘Competing by Saving Lives’ in 2012. A report that made some startling claims for the health industry. It asserted that healthcare companies create more shared value when they compete based on the number of lives they save in low and middle-income countries. Since most of these countries are developing or emerging economies, the economic rewards for investing in the growth story of the most underserved regions in the world can be tremendous.
The good news is that the private pharma sector has responded positively to this shared vision. Novartis Access, Becton Dickinson’s Odon Device, and Novo Nordisk’s Changing Diabetes® are just some of the popular examples.
The latter even has a spin-off in Cities Changing Diabetes. As stated on their website, Novo Nordisk pursues partnerships around goal #11 (Cities and communities) and #13 (Climate Action) in addition to their core focus areas of Good Health, Well-being, and Responsible Consumption & Production. To this, Novo President and CEO, Lars Fruergaard Jørgensen, states:
“There is a growing acknowledgement of the importance of the private sector working with institutions, governments, and others, to solve problems – and Novo Nordisk is ready to forge new partnerships".
Securing access to medicine
Access to Medicine Foundation (AMF), the Netherlands based non-profit, has come up with Access to Medicine Index. The index quantifies global pharmaceutical companies’ contribution towards making medicines more accessible to the global population.
The index reviews the organizational efforts thoroughly - and there is mounting evidence that pharma companies are taking proactive and determined steps in the direction of making medicines more accessible to people in the developing world. For instance, there were many cases of pharma companies making sizeable investments into urgently needed medicines, even though there were absolutely no commercial incentives for them to do so. GlaxoSmithKline tops the list for the fifth consecutive year.
One of the top priority targets of SDG #3 is women and child health. More than 6 million children die before their fifth birthday each year. Maternal mortality ratio in the developing regions is shockingly high at 14 times the ratio in the developed world. Clearly, there is a lot more to be achieved.
The health industry, for its part, has committed itself to achieving this target too. In fact, a concerted effort involving governments, NGOs, academia, philanthropists, and others is being made through Every Woman Every Child movement in this direction. As per the Access to Medicine Foundation’s report, seven of the 20 pharma companies analyzed are committed to this movement. A movement which currently possesses a total of 100 different partners in the health sector.
2 steps forward, one back
New ways of working and thinking also applies to companies’ business models, financial reporting and incentives systems. According to the UN, an unnamed pharmaceutical company has gone the extra mile and introduced a mixed business model which accepts longer-term returns for certain areas of the business. The company’s Developing Countries and Market Access Unit combines social and financial objectives with Country Managers incentivized on the basis of the volume of medicines distributed, rather than purely by profit delivered.
However, not all companies put their money where their mouth is. A recent report by Oxfam firmly establishes that a bulk of the large enterprises in the US used their lobbying power primarily to lower the taxes for themselves, although they were highly vocal in discounting President Trump’s political positions against climate change and sustainable development efforts.
Scrutinising seven sectors, including the pharmaceutical sector, Oxfam found that of 70 companies in total, 56 of them made public statements in favor of the Paris Agreement and climate actions spending some 12 million dollars in lobbying Congress 157 times on climate change as well as diversity and inclusion. By contrast, only 30 companies made public statements on tax reforms, yet they lobbied Congress 552 times on tax - spending nearly 44 million dollars on this effort alone.
Achieving the SDGs
Large pharma companies thrive in a multi-faceted environment where equations do not always result in zero sums. In fact, that is one of the foundations of the shared value concept. The companies can continue to lobby for more tax reduction while simultaneously using their resources towards achieving the SDGs.
Whether their contributions are significant and making any difference is something that can only be analyzed with robust metrics, monitoring, and benchmarking.
While SDG #3 may intuitively appear to be the goal where the pharmaceutical sector can have the greatest impact, a recent study on the Sustainable Development Goals identified five additional SDGs for which the pharmaceutical sector is particularly important: SDGs #4 (Quality Education), #6 (Clear Water and Sanitation), #9 (Industry, Innovation, and Infrastructure), #11 (Sustainable Cities and Communities), and #14 (Life Below Water).
Summing up, we urge the sector to think broadly about where each company can make an impact on achieving the SDG’s and which of many possible actions will have the quickest pick-up time both at company level and local level for the end user.
For pharmaceutical companies looking to accelerate their take on sustainable business, Ramboll has developed an SDG Impact Assessment Tool. Click the hyperlink to read more and gain access to the tool.
About the authors
Alan Kao is a senior sustainability expert based in Ramboll’s Boston, Massachusetts office while Anna Essehag holds a similar position working out of the Stockholm office. Martin Christiansen is Communications Director for Ramboll Management Consulting based in Aarhus Denmark.