The United Nations Sustainable Development Goals and Big Pharma:
Partnerships across Varieties of Capitalism
MASTER’S THESIS INTERNATIONAL BUSINESS & MANAGEMENT: Maurice Zwolle
S2345951
m.a.zwolle@student.rug.nl
Supervisor: Dr. C.H. Slager Co-Assessor:Dr. H.U. Haq
18 February 2021
ABSTRACT
This thesis is about how multinational enterprises (MNEs) from two different varieties of capitalism (VoC) form partnerships in order to contribute to the United Nations Sustainable Development Goals (UN SDGs). This thesis analyses the top fifteen MNEs in the
pharmaceutical industry, one of the world’s largest industries. The fifteen companies are headquartered in six different countries with either a liberal market economy (LME) or a coordinated market economy (CME). This study has been performed because there is a research gap on specific MNE commitment to the SDGs and the role of partnerships in this endeavour. This thesis applies a qualitative research method to answer the question how pharmaceutical MNEs form partnerships to contribute to the achievement of the UN SDGs and with whom they form these partnerships. The role of MNEs as well as partnerships between different sectors are highly emphasised in the UN SDGs, which is why this thesis focuses on partnerships of MNEs. Furthermore, the VoC of a country has an impact on how corporations coordinate with other corporations and institutional actors. Therefore, this thesis incorporates the VoC theory to theorise whether the VoC of the HQ country has an impact on the degree to which pharmaceutical companies partner with other actors in the market to achieve their goals. This study finds that there are differences between pharmaceutical
companies from different VoC, in that the types of partnerships differ across countries as well as the extent of transparency of the information provided in corporate reports.
CONTENTS
INTRODUCTION ... 4
LITERATURE REVIEW ... 8
Sustainable development and the SDGs ... 8
Corporate social responsibility (CSR), sustainability management (SM) and corporate sustainability (CS) ... 9
Similarities and differences between CSR and the SDGs ... 11
Varieties of Capitalism ... 13
Partnerships: MNEs and interorganisational collaboration ... 15
METHODOLOGY ... 17
Case selection ... 17
Data collection... 18
Data analysis ... 19
FINDINGS ... 25
Differences in collaborations between LME and CME ... 25
Differences in arm’s-length relationships between LME and CME ... 26
Differences in interactive collaborations between LME and CME ... 27
Differences in intensive management alliances between LME and CME ... 28
Conclusion ... 29
SDG 3 “Good Health and Well-Being” ... 30
Current activities and progress ... 30
Use of partnerships in contribution to SDG 3 ... 30
Differences between LME and CME pharmaceutical companies ... 33
SDG 13 “Climate Action” ... 33
Current activities and progress ... 33
Use of partnerships in contribution to SDG 13 ... 34
Differences between LME and CME pharmaceutical companies ... 36
DISCUSSION... 37
Summary of findings ... 37
Practical implications ... 39
Limitations ... 39
4 INTRODUCTION
In September 2015, the United Nations General Assembly (UNGA) ratified the 17
Sustainable Development Goals (SDGs), which are a fundamental aspect of the 2030 Agenda for Sustainable Development (UNGA, 2015). The SDGs were unanimously adopted by all 193 UN member states after a large stakeholder consultation spanning over three years
(Kharas & Zhang, 2014) which involved governments, companies, civil society organisations, and knowledge institutes, and included the input of over one million citizens worldwide (UNDG, 2013). The goal of the SDGs is to enhance a variety of sustainable development themes. In addition to the 17 SDGs, the UNGA formulated 169 targets in order to achieve the overarching SDGs. The SDGs are seen as a significant shift from contemporary models of sustainable development, such as the Millennium Development Goals (MDGs). The SDGs urge a transition from the “state-centred, duty-based, and negatively framed agreement aimed at developing countries” (Van Zanten & Van Tulder, 2018: 209) to a collaboration that focuses on partnerships and opportunities and which is aimed at developing and developed countries alike.
The SDGs are aimed at global sustainable development, and its framework revolves around five important principles used to steer agents’ effort: People, Planet, Prosperity, Peace, and Partnering (UNGA, 2015). Even though the research on the SDGs – and the
much-emphasised role of the private sector in achieving them – is relatively scarce, there is an emphasis on the fact that the goals cannot be achieved without the active participation of corporations (UNGA, 2015; Van Zanten & Van Tulder, 2018). This, coupled with the five principles, has led to 17 SDGs, and among them is a Goal specifically aimed at
interorganisational and cross-sector partnerships (CSPs): SDG 17. We know from the 2030 Agenda for Sustainable Development (UNGA, 2015) that SDG 17 is specifically formulated to capture the importance of the private sector in the SDGs (UNGA, 2015).
5 One area of research that has been analysed extensively and can be linked to the SDGs is that of Corporate Social Responsibility (CSR), which refers to situations where the firm performs actions that seem to advance a particular social good and which is not required by law (McWilliams & Siegel, 2001; McWilliams, Siegel & Wright, 2006). The SDGs share several commonalities with the concept of CSR. One of these shared characteristics is that both concepts aim to resolve social and environmental issues, while simultaneously integrating business concepts (Schönherr, Findler & Martinuzzi, 2017). Furthermore, CSR and the SDGs are not legally binding, meaning that corporate commitments are encouraged, but not legally enforced (UNGA, 2015).
Furthermore, we know that different countries have different varieties of capitalism (VoC) or national business systems (NBSs) (Hall & Soskice, 2001; Matten & Moon, 2008; Matten & Moon, 2020). This has implications for how corporations resolve coordination problems. We know that corporations from one VoC resolve coordination problems through the market, leading to more arm’s-length relationships. On the contrary, corporations from the second VoC resolve problems through strategic relationships (Hall & Soskice, 2001). In line with this, we also know that CSR differs between NBSs, in that corporations from different NBSs tend to make their CSR activities more explicit or implicit, because corporations in one NBS are required to provide more transparency to their shareholders than in the other NBS (Matten & Moon, 2008; Matten & Moon, 2020).
Considering the similarities between CSR and the SDGs, we would thus expect that firm engagement to the SDGs differs between countries based on their NBS. However, we do not know this for certain, because the SDGs are relatively new and research has focused primarily on addressing the challenges faced in implementing the SDGs (Scheyvens et al., 2016) and on developing frameworks to help actors implement the SDGs (Collste et al., 2017). More importantly, some authors argue that CSR and sustainable development (inherent to the SDGs) are two different concepts (for example, Milne & Gray, 2013). These authors argue that CSR is much more focused on the firm’s own problems, while sustainable
development requires a system-wide orientation, integrating different parts of the system and collaborating with partners across sectors (Milne & Gray, 2013).
6 impact on societal and environmental issues, both positive and negative. In addition, to
successfully manufacture and distribute their products, pharmaceutical companies establish many partnerships with suppliers, governments, nongovernmental organisations (NGOs), local healthcare providers and communities. Furthermore, pharmaceutical companies are highly globally dispersed, meaning that they are active in many different countries and thus in many different NBSs.
By exploring how partnerships for the SDGs differ across countries, we learn how pharmaceutical companies establish partnerships, with whom, and what the intensity of these partnerships is, with the intent to commit to the SDGs. We also learn how differences in VoC/NBS (Hall & Soskice, 2001; Matten & Moon 2008; Matten & Moon, 2020) lead to differences in pharmaceutical companies’ tendencies to make their SDG commitments either explicit or implicit. Regarding CSR and sustainable development in general, we learn specific similarities of and differences between the two concepts and what this means for the SDGs.
Thus, this thesis focuses on MNEs in the pharmaceutical industry headquartered in two different VoC: liberal market economies (LME) and coordinated market economies (CME) (Hall & Soskice, 2001). MNEs are large organisations operating in multiple countries; they engage in foreign direct investment (FDI) and own, or control, value-added activities in their home and host countries (Dunning & Lundan, 2008). The MNEs are headquartered in two different types of state economy, divided over six countries: The United States (U.S.), the United Kingdom (U.K.), Switzerland, Germany, France and Japan.
Based on their 2019 revenue, the top fifteen pharmaceutical companies are selected. The goal of this thesis is to contribute to the gap in the SDG literature about MNE
commitments to the SDGs and the CSPs they establish to succeed in their endeavour. We are going to do this by examining CSR, corporate sustainability (CS) or annual reports (AR), to get a better understanding to which SDGs the pharmaceutical companies commit themselves. The analysis also serves to examine what types of partnerships they form to achieve these specific SDGs and how explicit the pharmaceutical MNEs provide transparency about these partnerships.
Following the literature review and the perceived gap in extant literature, the research question for this thesis is formulated as follows:
8 LITERATURE REVIEW
This thesis focuses on how multinational enterprises (MNEs) from the United States (U.S.), the United Kingdom (U.K.), Switzerland, France, Japan and Germany commit to the
Sustainable Development Goal (SDG) 17 (Partnerships for the Goals), one of the 17 SDGs adopted by the United Nations General Assembly (UNGA). In this chapter, literature on sustainable development and the SDGs will first be discussed, including the differences between CSR, sustainability management and corporate sustainability (CS). This section is followed by a literature review on the varieties of capitalism (VoC) and differences in national business systems (NBSs) between countries. Finally, literature on the
interorganisational partnerships established by MNEs will be discussed. Sustainable development and the SDGs
It is important to define sustainable development, because it will help to better understand the SDGs and how they work. Starik and Kanashiro (2013: 12) argue that the term sustainability can be described as “the capacity to maintain” or as “the capacity to endure and adapt”. The term sustainable development was first coined in the 1987 Bruntland Commission Report, to describe development “that meets present needs without sacrificing the ability of future generations to meet their own needs” (Starik & Kanashiro, 2013: 12; UNESCO, 2019). Van Tulder and Pfisterer (2013: 108) describe sustainable development as a “representation of the balancing act between the interests and positions of public and private, and profit and non-profit organisations”.
Regarding the specific SDGs, a distinction can also be made between internally and externally actionable SDG targets, and between SDG targets that seek to avoid harm and those that seek to do good. Van Zanten and Van Tulder (2018) examine the degree of
9 from different countries with respect to the SDGs. This thesis analyses if differences in
countries indeed lead to differences in engagement to the SDGs.
Corporate social responsibility (CSR), sustainability management (SM) and corporate sustainability (CS)
There is not yet much extensive research on the relationship between MNEs and the SDGs, which has implications for the theoretical basis of this thesis. It is thus necessary to link extant research to the subject. When MNEs work towards achieving the SDGs, whether or not
through partnerships, this can be seen as a form of Corporate Social Responsibility (CSR). There are many different definitions of CSR, but overall McWilliams and Siegel (2001)’s definition of CSR is the most widely referenced and applied (McWilliams and Siegel, 2001; McWilliams et al, 2006). They define CSR as situations where the firm performs actions that seem to advance a particular social good and which is not required by law. In doing this, the company goes beyond simple compliance and goes beyond its own interests (McWilliams & Siegel, 2001). Other authors have made distinctions in CSR besides its pure definition. Matten and Moon (2008), for example, make a distinction between implicit and explicit CSR. First, their definition of CSR is as follows: “CSR is the idea reflecting social imperatives and the social consensus”. It is made up of clearly articulated and communicated corporate policies and activities reflecting the responsibility of business to promote the wider societal good (Matten & Moon, 2008: 405).
Matten and Moon (2008; 2020) discuss different types of CSR in connection to differences in national business systems (NBSs). They make the distinction between implicit and explicit CSR, and investigate why U.S. corporations make their CSR commitments explicit, while European business responsibility to society has tended to be more implicit (Matten & Moon, 2008). The explanation of differences in explicit and implicit CSR is related to the VoC theory (Hall & Soskice, 2001). Corporations tend to differ in CSR approach due to differences in NBSs. Matten and Moon (2008: 408) explain these differences by illustrating the role of government in both the U.S. and Europe. The power of the state has historically tended to be greater in Europe than in the U.S., where “there is a greater scope for corporate discretion, since government has been less active there” (Matten & Moon, 2008: 407). In addition, they explain that the main financial source for U.S. corporations has traditionally been the financial stock market. Due to the stock market being the most important source of funding, U.S. corporations are required to deliver a high degree of transparency and
10 corporations are more rooted in an interconnected system with a small number of large
investors, where banks play a significant role. Within this European system, the focus is on preserving influence and power over the long-term. Moreover, in contrast to the U.S model, stakeholders other than shareholders play an important role, often one that is equal to or larger than that of shareholders (Matten & Moon, 2008: 408). Corporations in the European model are thus less obliged to provide transparency and accountability, considering that they have less responsibility to shareholders than U.S. corporations.
The motives for CSR have been researched extensively as well. It has often been assumed that executives are motivated by financial motives to commit to CSR behaviour. In fact, CSR has shown to improve the financial performance of a business. For example, Orlitzky, Schmidt and Rynes (2003) find a positive relationship between firm performance and CSR engagement. However, financial motives are not the only motive for executives to commit to CSR. Graafland and Mazereeuw-Van der Duijn Schouten (2012) analyse the executive motives to take responsibility with respect to labour, environmental and social aspects within their businesses. In addition to the extrinsic (financial) motive of CSR, they include in their study two intrinsic motives (ethical and altruistic) (Graafland and Mazereeuw-Van der Duijn Schouten, 2012). By using a sample of 473 Dutch executives, the authors find that the intrinsic motives to engage with CSR are stronger than extrinsic motives, which is in line with other research such as that of Van de Ven and Graafland (2006).
Seuring and Gold (2013) research the concept of sustainability management. They argue that sustainability management attributes to the improvement of the sustainability performance across the whole supply chain as one entity (Seuring & Gold, 2013: 2). One of the key starting points of sustainability management is including the stakeholders and their demands along the supply chain. Starik and Kanashiro (2013: 12) define sustainability management as the process of formulating, implementing, and evaluating environmental and socioeconomic sustainability-related decisions and actions at the individual, organisational, and societal levels. On an individual level, sustainability management can consist of reducing the overconsumption of energy. Sustainability management on the organisational level often involves similar decisions and actions, only on a larger scale. Societal level sustainability management, which could occur both in local communities and in entire countries, usually include environmental and socioeconomic aspects regarding, for example, transportation system planning or development (Starik & Kanashiro, 2013).
11 (Donoher, 2017: 49). Donoher (2017) adopts a legitimacy perspective to advance the
understanding of the circumstances in which MNEs decide to engage with sustainability management and try to contribute to sustainable development. As he also mentions, MNEs have been researched extensively on matters such as financial performance or legitimacy issues, but the literature regarding MNE sustainability activities has “not yet reached a critical mass” (Donoher, 2017: 57). Here lies an opportunity for further research and this thesis tries to contribute to fill this gap.
Bansal and Song (2017) research the differences between corporate responsibility and corporate sustainability. They state that both concepts “tackle the relationship between business and society” (Bansal & Song, 2017: 105). The concepts were initially different during their inception, but the lines between the two have become increasingly blurred and unclear, resulting in a deeply entangled mix. This results in researchers of both concepts referring to the same business risks and opportunities (Bansal & Song, 2017: 105).
Traditionally, corporate responsibility researchers challenged the boundaries of capitalism by applying normative reasoning and welfare economics to assess the suitability of corporate actions. On the other hand, corporate sustainability researchers focused on the consequences for the planet’s natural resources. This group of researchers pleaded for corporations to implement sustainable development into their operations as to not deplete the natural resource limits. Bansal and Song (2017) studied the earliest definitions of corporate responsibility and corporate sustainability. They find that the early definitions of the two concepts were
significantly more distinct than modern definitions. Early research on responsibility dealt with social issues, while research on sustainability addressed environmental issues (Bansal & Song, 2017).
Similarities and differences between CSR and the SDGs
12 activities, the SDGs are not legally binding, meaning that corporate commitments are
encouraged, but not legally enforced (UNGA, 2015). In addition, Schönherr et al. (2017) argue that CSR and the SDGs share some commonalities. Both concepts, for example, aim at integrating business concerns, meaning generating shareholder returns, with sustainable development concerns, such as corporate impacts on environmental and social issues (Schönherr et al., 2017).
The main difference between CSR and the SDGs is that CSR is much more internally oriented than the SDGs. For example, Milne and Gray (2013: 24) posit that CSR does not necessarily lead to sustainable development, because businesses tend to focus their efforts on issues about themselves. On the contrary, the SDGs address issues that are much more system-wide, such as environmental degradation, extreme poverty and hunger. These environmental and social issues are so large that they exceed the solving capacity of single actors (Castillo-Villar, 2020), increasing the need for partnerships and collaboration across all sectors (UNGA, 2015). The magnitude of these issues and the need for cross-sector
partnerships (CSPs) has specifically resulted in SDG 17, Partnerships for the Goals, to emphasise the importance of CSPs.
Other authors argue that CSR has evolved over the past few years, due to the increased role and prominence of the SDGs. These authors argue that the SDGs impact CSR research and behaviour, and that the SDGs can be used as a framework for CSR rather than being an advanced form of CSR. For example, ElAlfy, Palaschuk, El-Bassiouny, Wilson and Weber (2020) argue that the SDGs provide a shared vision, one where businesses can strategically link their firm-level CSR efforts to national and international sustainable development agendas. In their analysis, ElAlfy et al. (2020: 15) identify that corporations have an
increasingly important role to play in resolving social and environmental issues to the benefit of the well-being of society. Instead of describing CSR and SDGs as being similar, they posit that the SDGs influence corporate strategy and CSR agendas, because the prominence of the SDGs has led to changing stakeholder expectations and regulatory requirements (ElAlfy et al., 2020: 15).
13 corporate contributions to the SDGs. We will define this as explicit SDG commitments and implicit SDG commitments. In this case, pharmaceutical companies from LMEs would tend to be more explicit with respect to their SDG commitments, while pharmaceutical companies from CMEs tend to be more implicit. Like implicit and explicit CSR (Matten & Moon, 2008), this distinction can be explained by the differences in NBSs: for LME corporations the financial market is their main source of funding, while for CME corporations, funding comes from a small group of large investors. Therefore, LME corporations are required to disclose more information on their SDG commitments than CME corporations.
Varieties of Capitalism
In order to determine if there are indeed differences, we need to establish a theoretical framework appropriate to analyse and theoretically explain differences between
pharmaceutical companies from different countries. The most widely applied theory on the differences between countries are the varieties of capitalism (VoC) by Hall and Soskice (2001). Hall and Soskice (2001) developed a framework in which they elaborate the institutional similarities and differences between developed economies. The VoC approach takes an “actor-centred” stance, meaning that the terrain of political economy is populated by multiple actors searching to improve their own interests through strategic collaborations with others (Hall & Soskice, 2001: 6). Hall and Soskice (2001) argue that the quality of
relationships the firm establishes, both internally and externally, is critical for the success in resolving coordination problems (Hall & Soskice, 2001: 6). The authors focus on five spheres in which firms establish relationships to resolve coordination problems (Hall & Soskice, 2001: 7): industrial relations, vocational training and education, corporate governance, inter-firm relations, and employees. With respect to these spheres, national political economies can be compared regarding the manner in which firms solve their coordination issues (Hall & Soskice, 2001).
To do this, Hall and Soskice (2001) distinguish between liberal market economies (LMEs) and coordinated market economies (CMEs). In LMEs, firms address coordination issues mainly by means of hierarchies and competitive market arrangements. Market relationships are primarily defined by arm’s-length exchange of goods and services (Hall & Soskice, 2001: 8). On the contrary, firms in CMEs depend more on non-market relationships to coordinate collaborative activities with other firms. This type of coordination is
14 relationships that are not completely influenced by market forces, but the incidence of
different types of relationships differs considerably across nations (Hall & Soskice, 2001: 9). In another string of theory, Matten and Moon (2008; 2020) discuss different types of CSR to determine differences in NBSs. They make the distinction between implicit and explicit CSR, and investigate why U.S. corporations make their CSR commitments explicit, while European business responsibility to society has tended to be more implicit (Matten & Moon, 2008). The explanation of differences in explicit and implicit CSR is related to the VoC. Corporations tend to differ in CSR approach due to differences in NBSs. Matten and Moon (2008: 408) explain these differences by illustrating the role of government in both the U.S. and Europe. The power of the state has historically tended to be greater in Europe than in the U.S., where “there is a greater scope for corporate discretion, since government has been less active there” (Matten & Moon, 2008: 407). In addition, they explain that the main
financial source for U.S. corporations has traditionally been the financial stock market. Due to the stock market being the most important source of funding, U.S. corporations are required to deliver a high degree of transparency and accountability to their investors (Matten & Moon, 2008: 408). In contrast, European corporations are more rooted in an interconnected system with a small number of large investors, where banks also play a significant role. Within the European system, the focus is on preserving influence and power over the long-term. Moreover, in contrast to the U.S model, stakeholders other than shareholders play an
important role, often one that is equal to or larger than that of shareholders (Matten & Moon, 2008: 408). Corporations in the European model are thus less obliged to provide transparency and accountability, considering that they have less responsibility to shareholders compared to their U.S. counterparts.
15 Partnerships: MNEs and interorganisational collaboration
MNEs are often faced by issues that cannot be solved, or at least not easily, by acting individually. These issues require at least some degree of interorganisational collaborations. Interorganisational collaborations are commonly cited as “an emergent process between interdependent organisational actors who negotiate the answers to shared concerns” (Gray, 1989: 12-13), as “working in association with others for some form of mutual benefit” (Huxham, 1996: 1) or as “any joint activity by two or more agencies working together rather than separately” (O’Leary & Vij, 2012: 508). In order to address issues within the value chain and to develop innovative solutions, MNEs collaborate with external organisations such as national governments, transgovernmental organisations, firms from within and outside of the own industry and NGOs (Dahan, Doh, Oetzel & Yaziji, 2010). These collaborations serve to develop or adapt solutions to external issues that cannot be solved by firms alone (Dahan et al., 2010).
Cross-sector partnerships (CSPs), for example partnerships between MNEs and NGOs, have become increasingly interesting considering the extended research on social partnerships in developing or emerging countries (Hamann, 2014). CSPs revolve around the idea of shared responsibility, meaning that no individual party determines the behaviour of other parties and in which a certain minimum degree of cooperation is necessary because one party is unable to solve the problem alone (Hamann, 2014). In order to form a true
‘partnership’, it is important that the parties in the partnership have similar degrees of
dependence, as well as considerable reciprocal influence (Van Tulder & Pfisterer, 2013: 110). CSPs are often formed as a combined response of MNEs and external organisations, such as governments or NGOs, to institutional challenges, for example weak host country governance. The parties in such partnerships often lack the capabilities and resources to overcome institutional challenges by themselves. CSPs enable the partners to combine and share their resources to overcome difficulties emanating from cultural, economic, institutional and geographic features of the market (Hamann, 2014: 60). In a broad sense, partnerships thus can be described as governance arrangements, which emerged following the blurring lines between the public and the private sectors (Van Tulder & Pfisterer, 2013: 110).
16 The term NGO has gained popularity in describing all sorts of societal actors operating
outside of the UN framework, in both international and national contexts. Over the last years, the term NGO has become widely accepted in the academic world, but the exact meaning of the phrase remains unclear (Martens, 2002). Martens (2002) approaches the term from several contexts, amongst which a sociological approach. She states that sociological approaches to NGOs describe them by explaining what NGOs are not: the main aspects of NGOs are that they are non-governmental, non-profit-making, are present in multiple countries
simultaneously, and are non-violent (Martens, 2002: 278). Schoener (1997: 538) defines NGOs as non-profit entities that seek to affect law on issues where nations resist change. In other words, NGOs seek to advance predetermined goals, such as its members’ interests or a community’s claims. This definition of NGOs is applied in this thesis, to make a clear distinction from MNEs, whose primary aim is to generate profit.
17 METHODOLOGY
The aim of this thesis is to investigate how MNEs in different VoC collaborate with other parties, such as other MNEs, governments and NGOs to form partnerships, and, in turn, to achieve the SDGs. This thesis uses a multiple case study in order to find an answer to the central research question. When conducting a case study, one performs “an empirical inquiry to investigate a contemporary phenomenon within real-life context” (Yin, 2014). Considering that multiple MNEs from different VoC are being researched, this thesis specifically applies a multiple case study (Blumberg, Cooper & Schindler, 2005). In the following section, the case selection, data collection and data analysis will be described.
Case selection
The pharmaceutical industry is one of the largest industries in the world, with a total industry revenue of US$1.25 trillion over the year 2019 (Mikulic, 2020). It is therefore easy to imagine the impact of this industry on people around the world. Furthermore, the pharmaceutical industry is under constant scrutiny, due to, for example, allegations of corruption and bribery, resulting in civil fraud lawsuits like the one filed by the U.S. government against Novartis in 2013 (Reuters, 2013); suspected linkages of Johnson & Johnson to the opioid crisis (Rees, 2019); setting excessively high drug prices, such as Turing Pharmaceuticals in 2015 (Mole, 2015); or complicating the access to medicines in developing countries resulting from patenting practices and anti-competitive behaviour (Morris, 2010). The pharmaceutical
industry naturally relates to SDG 3 (i.e., Good Health and Well-Being), where pharmaceutical companies invest significant amounts of money in research and development (R&D) in discovering new and improving current medicines to improve the public health.
It is interesting to see if the different VoC of pharmaceutical headquarters countries have an effect on the intensity of collaboration between the pharmaceutical companies and governments, NGOs, and other (pharmaceutical) companies. As mentioned in the literature review, this is interesting because the theory on VoC and differences in NBSs suggests that these differences lead to different types of and varying intensity in partnerships, as well as the information disclosed about these partnerships.
18 Table 1. Overview of countries in the different varieties of capitalism
LME CME
United States Switzerland
United Kingdom France
Japan Germany
The MNEs are all active in the pharmaceutical industry and operate in different VoC. The top fifteen pharmaceutical companies are selected based on their 2019 revenue (EY, 2020). The fifteen companies are headquartered in six different countries. The companies per variety of capitalism and the respective countries examined in this thesis are depicted in Table 2.
Table 2. Overview of pharmaceutical companies based on 2019 revenue in € mln (EY, 2020)
LME 2019 revenue CME 2019 revenue
Pfizer (United States) 44,358 Roche (Switzerland) 45,600 Johnson & Johnson (United States) 37,699 Novartis (Switzerland) 33,693 Merck/MSD (United States) 37,299 Takeda (Japan) 25,790 AbbVie (United States) 29,719 Sanofi (France) 25,677 GlaxoSmithKline (United Kingdom) 28,185 Bayer (Germany) 17,962 Bristol Myers Squibb (United States) 23,357
AstraZeneca (United Kingdom) 21,784 Amgen (United States) 20,871 Eli Lilly (United States)
Gilead Sciences (United States) 20,055
Data collection
19 Data analysis
The company reports were analysed through content analysis. Content analysis is an appropriate method for this thesis, considering that documents need to be coded. Content analysis is also appropriate for the analysis of qualitative interviews, or the analysis of textual secondary data (Blumberg et al., 2005: 287). In part due to the current COVID-19 pandemic, and in part because of the global dispersion of the companies, the former form of secondary data collection and analysis is not possible. The collection and analysis of data is thus completely dependent upon the reports.
The content analysis in this study was an iterative process, consisting of four steps: a manual analysis to code raw data regarding any sort of partnership, grouping the codes based on commonalities, identifying patterns within the data, and interpreting the patterns. The data analysis was done in ATLAS.ti, version 8. The data consisted of CSR/CS and annual reports from the year 2018 or 2019. The coding method was designed according to the “Gioia method”, which is depicted in table 3 (Gioia, Corley & Hamilton, 2012). The activities performed by the pharmaceutical companies were coded based on the collaboration theory of Rondinelli and London (2003). This was done to categorise the different activities undertaken by the companies and to assess the degree of intensity of the activities.
Table 3. Overview of the three types of partnerships (based on Gioia et al., 2012)
Examples of coded data Subtype of collaboration
Description Type of collaboration
We believe that corporate responsibility is critical to our business success and can provide us with new opportunities to create shared, or integrated, value — that is, addressing social issues through business solutions (Merck/MSD ESG Report, 2020: 23). Add social value to products Activities to add social value to products Arm’s-Length Relationships Through our medicine donation program, we
continue to support low- income countries in their efforts to treat patients for neglected diseases and to provide medicines in areas impacted by natural disasters and extreme poverty (Novartis ESG Report, 2020: 27). Corporate contributions, donations and gifts Activities to support partners
20 These programs include Amgen Volunteers,
through which volunteering by staff in the United States and Puerto Rico triggers a donation from the Amgen Foundation, a Matching Gifts Program, which provides a 1:1 match for staff donations to eligible nonprofit organizations from $50 up to $20,000 annually per staff member (Amgen RHR, 2019: 18) Corporate matching of employee gifts Activities that match employee donations
We maintain a wide range of collaborations to address global health security and pandemic preparedness. Specifically, we collaborate with the Biomedical Advanced Research and Development Authority (BARDA), part of the U.S. Department of Health and Human Services, to advance research and the development of solutions for a range of diseases with pandemic potential, including influenza, Ebola, COVID-19 and others (J&J HfH Report, 2020: 27).
Targeted project support Activities to focus corporate contributions on specific targets Interactive Collaborations In Latin America, we collaborate with Fundación
Educación in Peru, Colombia, El Salvador and Guatemala. Launched in 2016, Roche provides four-year scholarships for talented young people from low-income families at leading colleges and universities. Much like our Indian and South African scholars, these students also have a great likelihood (around 95%) of funding employment in their respective countries (Roche AR, 2020: 90). Educating stakeholders Activities to educate stakeholders and raise awareness
We are also participating actively in various research projects to develop assessment and reduction measures such as by acting as a
coordinator in the Intelligence-led Assessment of Pharmaceuticals in the Environment (IPIE) project in Europe, in which new models and assessment strategies to predict environmental risks are being developed. Bayer is actively involved in the stakeholder dialogue initiated by the German government with the goal of drawing up a strategy for dealing with trace substances in bodies of water. This process is aimed at
developing a strategy to prevent the water-polluting effects of certain chemicals, including active pharmaceutical ingredients (Bayer SR, 2020: 31). Supporting research Activities to support research
We work with governments and regulators to advocate for policies that encourage innovation, promote efficient management of healthcare spending and give patients the support they need (GSK AR, 2020: 16). Collaboration on business-government tasks Activities to contribute to governmental tasks
We aim to deepen our cooperation with social organizations so as to understand other
perspectives and jointly amplify the effects of our efforts. One example is the establishment of an external sustainability council in 2020, which is to be composed of independent experts who can give
21 us an outside perspective on our innovation,
mindset and strategy. The plan is for this external sustainability council to report annually on our efforts (Bayer SR, 2020: 10).
We produce waste in our labs and its disposal can have huge environmental impacts. To turn waste from a problem to a resource, we joined the Red2Green recycling program in Gaithersburg. This takes our regulated medical waste and turns it into plastic lumber material which is
manufactured into speed bumps, farm tools, park benches, and more (AstraZeneca SR, 2020: 43).
Waste reduction and reuse Activities to reduce waste and reuse resources
In 2019, we became founding members with Board representation of the Renewable Energy Buyers Alliance (REBA), an association for large-scale energy buyers working toward the creation of a resilient, zero-carbon energy system across the United States. We have collaborated heavily with non-governmental organizations and peer companies in the REBA membership, which has helped us progress our renewable energy initiatives (J&J, 2020: 91). Energy and water conservation Activities to conserve energy and water
Our new Carbon Neutrality strategy will help us focus on reducing our carbon emissions over the next two decades. This phased approach will allow us to care for our patients and our planet for the long term, in collaboration with our business partners and stakeholders (Takeda SR, 2020: 7).
Air and water pollution prevention Activities to reduce and prevent air and water pollution As we expand our resources and strengthen our
efforts to protect human rights, we plan to conduct broader and more frequent consultations with patient groups, local communities, health authorities and supply chain partners throughout our operations (Novartis ESG Report, 2020: 17).
Advancing human rights
Activities to advance human rights
The first step of the data analysis was to analyse and code the raw data from the corporate reports. This was done by using SDGs 1 through 17, in order to create codes for all the individual codes. As a result of the data analysis, the decision was made to not discuss SDG 17 explicitly as an individual commitment, but instead to discuss it in terms of the three collaboration types of Rondinelli and London (2003): Arm’s-Length Relationships,
22 contains all seventeen SDGs. The individual codes relate to both implicit and explicit
activities undertaken by the companies, because the companies do not always link their activities to a specific SDG. In order to prevent the coding process from containing too many codes, everything that could be linked to one or more SDGs was coded as an overarching SDG. For instance, all companies address climate change by aiming to reduce their greenhouse gas (GHG) emissions. However, activities relating to climate action can also consist of reducing carbon emissions or reducing waste water. These activities were coded as SDG 13 “Climate Action” which was coded as it is to label implicitly and explicitly
mentioned activities undertaken to contribute to climate goals. Another example is the code SDG 3 “Good Health and Well-Being” which coded implicitly and explicitly mentioned activities aimed at improving stakeholders’ health. This relates to increasing the access to medicine in developing countries, but it also relates to safe working environments for
23 reduction and reuse was created to label activities that aim to reduce and recycle waste
through partnerships. Activities relating to Energy and water conservation were coded as they are because these activities focus on increasing energy and water conservation. The code Air and water pollution prevention is created to label activities that focus on preventing air and water pollution by decreasing GHG emissions and waste water. Finally, the code Advancing human rights was coded as it is because it relates to activities aimed at addressing and solving human rights issues throughout the global value chains (GVCs) and within communities.
The second step in the data analysis was to group together the codes created during the manual coding process. As mentioned before, all codes for the individual SDGs were grouped together to form the code group SDGs. Furthermore, subtypes of collaboration were grouped together in order to form three large categories of collaboration. The following codes were grouped together to form the code group Arm’s-Length Relationships: Add social value to products, Corporate contributions, donations and gifts, Corporate support for employee participation and Corporate matching of employee gifts. Raw data coded as Targeted project support, Educating stakeholders, Supporting research and Collaboration on
business-government tasks were grouped together as Interactive Collaborations. Lastly, Obtain
external expertise, Waste reduction and reuse, Energy and water conservation, Air and water pollution prevention and Human rights were grouped together as Intensive Management Alliances.
24 Once the coding scheme was completed, the CSR/CS reports and annual reports of the pharmaceutical companies were thoroughly analysed for activities pertaining to SDGs and partnerships. As a result, it became clear what pharmaceutical companies are doing with respect to the SDGs, how the companies use partnerships to contribute to the SDGs and what the intensity of these partnerships is, as well as the differences in the types of partnerships between the VoC.
By applying the collaboration model of Rondinelli and London (2003), the differences in the intensity of collaboration between LME and CME pharmaceutical companies became evident as well. By comparing the average number of quotations per VoC/NBS, it is possible to make assumptions on the influence of the VoC/NBSs on the degree of collaboration of companies. For instance, if LME companies provide more explicit information on
partnerships than those in CME countries, we can assume that the LME VoC/NBS leads to more partnerships in general. In addition, differences between LME and CME countries regarding specific types of partnerships are compared as well. For instance, if LME
companies on average establish more interactive collaborations or management alliances than CME companies, we can assume that the LME VoC also leads to more intensive
collaborations.
25 FINDINGS
The findings from the qualitative data analysis in Atlas.ti 8 are presented in this chapter. Table 4 gives an overview of the number of times the SDGs are coded, both explicitly and
implicitly. The SDGs are ordered by importance, to show the most important SDGs for the pharmaceutical industry. Furthermore, the most relevant SDGs for the pharmaceutical
industry will be discussed, as well as how pharmaceutical companies use partnerships in their activities and how this differs per VoC.
Table 4. Overview of SDGs by importance
SDGs # of times coded (implicit/explicit)
SDG 3 “Good Health and Well-Being” 338 SDG 17 “Partnerships for the Goals” 293
SDG 13 “Climate Action” 167
SDG 8 “Decent Work and Economic Growth” 156
SDG 5 “Gender Equality” 98
SDG 10 “Reduced Inequalities” 78
SDG 4 “Quality Education” 74
SDG 12 “Responsible Consumption and Production” 58 SDG 6 “Clean Water and Sanitation” 44 SDG 9 “Industry, Innovation and Infrastructure” 44
SDG 15 “Life On Land” 24
SDG 14 “Life Below Water” 22
SDG 7 “Affordable and Clean Energy” 14 SDG 16 “Peace, Justice and Strong Institutions” 11
SDG 2 “Zero Hunger” 6
SDG 1 “No Poverty” 5
SDG 11 “Sustainable Cities and Communities” 4
As is clearly visible from table 4, the pharmaceutical companies mentioned four SDGs the most in their CSR/CS or annual reports, either by explicitly linking their activities to an SDG or implicitly by addressing issues such as GHG emissions and waste water. The most
important SDGs for this thesis are SDGs 3 and 13 in relationship to SDG 17, because of the impact the pharmaceutical industry can have on these SDGs through partnerships. This chapter will continue with a brief discussion on the current activities undertaken and progress made with respect to the three Goals.
Differences in collaborations between LME and CME
26 Differences in arm’s-length relationships between LME and CME
First, we will discuss the differences in arm’s-length relationships between LME and CME. During the data analysis, a total of 110 activities were coded as arm’s-length relationships for companies headquartered in an LME country. On average, this means that for every company 11 activities were coded as arm’s-length relationships. For companies headquartered in a CME country, a total of 33 activities were coded as a subtype of arm’s-length relationships. Considering the fact that five companies in the analysis are headquartered in a CME country, this comes down to an average of 6.6 activities coded as arm’s-length relationships for these companies.
This means that companies headquartered in an LME country are almost twice as likely to engage in an arm’s-length relationship with partners than are companies
headquartered in CME countries. These partnerships consist of activities to add social value to their products (corporate social behaviour), corporate donations, corporate matching of
employee gifts or corporate support for employee participation in volunteering work. These arm’s-length relationships of LME companies are mostly related to corporate contributions, gifts and donations. Corporate contributions, gifts and donations consist for a large part of donating medicines to charity so people in low- and middle-income countries can get access to medicine. Corporate contributions also largely consist of monetary funding to humanitarian organisations and NGOs, such as Direct Relief (AbbVie RAR, 2020: 36). Pharmaceutical companies in LME countries also sponsor communities through partners such as Patient Assistance Programmes (AstraZeneca, 2020: 13).
27 Foundation’s IMPACT (IMproving Patient Access to Cancer Clinical Trials) program, which is focused on improving patient enrolment, retention, minority participation and equitable access in oncology trials” (Amgen RHR, 2019: 12).
Furthermore, companies in the CME countries appear to form partnerships for the longer term, and make commitments and donations over several years. Pharmaceutical companies in LME countries appear to contribute larger amounts of medicines or money in order to support charity, whereas pharmaceutical companies in CME countries report on long-term commitments. Pharmaceutical companies in CME countries disclose more information in their sustainability reports on long-running partnerships, compared to pharmaceutical companies in LME countries. For example, Novartis mentions its donation programme with the WHO, which has been happening since 2005 (Novartis ESG Report, 2020: 27), whereas GSK explicitly mentions its partnerships with Americares, Direct Relief, IHP UK and MAP International to donate and distribute medicines for humanitarian and emergency response in 51 countries (GSK 2019 AR, 2020: 34).
These differences can theoretically be explained with both the VoC theory of Hall and Soskice (2001) and the collaboration model of Rondinelli and London (2003). In LMEs, companies tend to be more individualistic and competitive and market relationships are characterised by arm’s-length relationships, whereas companies in CMEs depend more on collaborations and non-market coordination (Hall & Soskice, 2001). The differences in the extent of disclosure between LME pharmaceutical companies and CME pharmaceutical companies can thus theoretically mean that pharmaceutical companies in LME countries portray their philanthropic activities more elaborately to improve their public image (Rondinelli & London, 2003) or to solve issues with the help of market relations (Hall & Soskice, 2001).
Differences in interactive collaborations between LME and CME
Second, the differences in interactive collaborations between pharmaceutical companies in LMEs and CMEs are discussed. During the data analysis, 340 activities were coded as interactive collaborations for pharmaceutical companies in LMEs, meaning that for every pharmaceutical company in an LME 34 activities were coded as an interactive collaboration. The total amount of activities coded as interactive collaborations for pharmaceutical
companies in a CME was 183 activities, averaging 36 activities coded as interactive
28 their interactive collaborations. The majority of activities of pharmaceutical companies coded as interactive collaborations were coded as Targeted project support, meaning that
pharmaceutical companies in both LME and CME primarily focus their corporate contributions on specific issues. Targeted project support by pharmaceutical companies ranges from strengthening healthcare systems through partnerships (e.g., AbbVie RAR, 2020: 28) to finding a vaccine for the current COVID-19 pandemic (e.g., Sanofi IR, 2020: 20) to expanding the life expectancy of patients with lung cancer (e.g., AstraZeneca SR, 2020: 26).
There appear to be no differences in the disclosure of information with respect to interactive collaborations between CMEs and LMEs. The number of codes does not differ significantly and the information disclosed about the types of partners is similar as well. Both types of pharmaceutical companies collaborate with NGOs, governments and communities in order to contribute to specific issues. This can theoretically be explained as the desire for both types of companies to build medium- to long-term philanthropic relationships with NGOs, governments and communities, as well as enhancing their social responsibility image (Rondinelli & London, 2003).
Differences in intensive management alliances between LME and CME
The final comparison between LMEs and CMEs is on the subject of intensive management alliances. The data analysis made clear that a total of 73 activities were coded as Intensive Management Alliances for LME pharmaceutical companies, meaning that for every LME pharmaceutical company an average of 7.3 activities were coded as such. For the CME pharmaceutical companies, the total amount of activities coded as such was 39, meaning an average of 7.8 activities for CME pharmaceutical companies. Thus, there appears to be no difference between LME and CME pharmaceutical companies with respect to intensive management alliances. The LME pharmaceutical companies discussed more partnerships that were linked to the codes Obtain external expertise, Waste reduction and reuse, and Energy and water conservation. The CME pharmaceutical companies, on the other hand, discussed activities that were coded as Air and water pollution prevention and Advancing human rights compared to LME pharmaceutical companies.
29 parties, compared to CME pharmaceutical companies. CME pharmaceutical companies are much more oriented towards strategic collaborations and on partnerships with specific third parties compared to LME pharmaceutical companies. LME pharmaceutical companies appear to engage in the market with several third parties with specific knowledge, such as research and development (R&D) knowledge (e.g., Gilead Sciences’ partnership with Galapagos), whereas CME pharmaceutical companies form strategic partnerships with governments, social organisations and other companies for the longer term to work together on multiple issues instead of a single issue (e.g., Bayer SR, 2020: 10).
Conclusion
There appear to be little to no significant differences between pharmaceutical companies in LMEs and pharmaceutical companies in CMEs. The differences with respect to interactive collaborations and intensive management alliances are particularly small. Both types of pharmaceutical companies disclose a similar amount of information on the types of partnerships and the partners included.
The largest difference between the two types relates to arm’s-length relationships. LME pharmaceutical companies form arm’s-length relationships almost twice as much as CME pharmaceutical companies. Pharmaceutical companies in LME countries collaborate with partners in arm’s-length relationships with the objective to improve their public reputation and enhance community relationships (Rondinelli & London, 2003), whereas pharmaceutical companies in CME countries engage more in interactive collaborations for the long-term to focus corporate contributions on specific issues (Rondinelli & London, 2003). This is typical for companies in LME countries, because this VoC is characterised by free market mechanisms and competitive behaviour between companies operating in these markets (Hall & Soskice, 2001). These types of collaborations are primarily focused on donating medicines or monetary gifts to support internal and external stakeholders, with the goal to improve employee morale, improve the company’s image of social responsibility and enhance the relationship between the company and the community in which it operates (Rondinelli & London, 2003).
The data analysis has provided a clearer understanding of the different types of collaborations formed by the pharmaceutical companies and the differences between
30 activities and progress will be discussed, followed by the types of partnerships used by the pharmaceutical companies to achieve the goals, concluded by an analysis of the specific differences in partnerships between LME and CME pharmaceutical companies, specifically linked to these two SDGs.
SDG 3 “Good Health and Well-Being” Current activities and progress
The main focus of pharmaceutical companies is to achieve good public health by providing patients with appropriate medicines. Furthermore, the activities performed by the
pharmaceutical companies also pertain to the health and overall well-being of their employees in order maintain a healthy and productive workforce. In order to meet unmet needs of
communities and address the issue of non-communicable diseases (NCDs), most
pharmaceutical companies have implemented medicine donation programmes. Furthermore, pharmaceutical companies work to improve patient access to medicines. They do this by implementing systems such as tiered pricing, where poorer communities pay less for medicines relative to richer communities. Some pharmaceutical companies, for example Novartis, have created a generics department that produces off-brand medicines which are more affordable than patented medicines.
Use of partnerships in contribution to SDG 3 Arm’s-length relationships
The pharmaceutical industry collaborates intensely with other parties in order to achieve this goal. The type of partnership depends on the type of activity a company focuses on.
Depending on the goal a company wants to achieve, the partnerships range from arm’s-length relationships, such as donations or funding, to intensive management alliances, such as collaborations to improve the environmental sustainability of company plants (Rondinelli & London, 2003).
Arm’s-length relationships with third parties most commonly entail corporate contributions, donations and gifts. Pharmaceutical companies collaborate with NGOs, governments and healthcare organisations to address unmet medical needs in developing countries or to strengthen healthcare systems. Arm’s-length relationships also consist of supporting research projects through funding or funding scholarships to enable people in low-income countries to obtain a college degree.
31 programmes. AbbVie is an example of this. On page 10 of their 2019 Responsible Action Report, they state:
“We maintain a pro bono research program where AbbVie researchers and development experts donate paid work time to collaborations with global health partners to address unmet needs and public health issues, particularly those affecting people in low- and middle-income countries. We also offer our expertise to help build health system capabilities where they are needed.”
However, partnerships are not only those in the literal sense of the word. Many pharmaceutical companies ‘partner’ with other organisations and companies through
donations or funding. These ‘partnerships’ often consist of donation programmes, where the company supports countries or organisations, such as the World Health Organisation (WHO), to provide people and communities in low- and middle-income countries (LMIC) with
medicines for neglected diseases, or to provide healthcare access in areas struck by natural disasters and extreme poverty. The people living in these parts of the world often do not have the financial resources to access proper healthcare or the country does not have a properly functioning healthcare system at all. In these cases, pharmaceutical companies step in to provide the help these people need through donations or tiered pricing. This latter method of providing healthcare pertains to making medicines affordable by adjusting the drug prices to the national income of a country, meaning that developed countries, often those in the Western part of the world, pay more for medicines than people in the poorer regions of the world.
One example of a pharmaceutical company donating medicines to eradicate certain diseases is the Swiss (CME) pharmaceutical company Novartis. Novartis manages a medicine donation programme to support low-income countries in their efforts to eradicate diseases. Like many other pharmaceutical companies, Novartis founded a foundation specifically aimed at philanthropy and partnerships (Novartis, 2020: 27):
32 Furthermore, Novartis has a generics department (Sandoz) that collaborates with World Child Cancer, a global charity with the goal to advance diagnosis and the access to treatment for children suffering from cancer living in LMICs, with a primary focus on the Philippines, Ghana, Mexico and Myanmar (Novartis, 2020: 28; World Child Cancer, n.d.). Interactive collaborations
Pharmaceutical companies rely heavily on interactive collaborations with third parties, such as NGOs, (local and national) governments and other companies. Most often these
collaborations are aimed at achieving some specific goal or addressing a specific target (Rondinelli & London, 2003).
For instance, AbbVie formed an innovative partnership with the state of Washington in the U.S. with the goal to eradicate hepatitis C. The partnership revolves around a
subscription-like pricing model, supported by AbbVie to help and “find, screen and link patients to treatment, and advance the knowledge and skills of nurses on the front lines of the elimination effort” (p. 29). This type of partnership is an interactive collaboration, specifically a collaboration between business and government on specific targets (Rondinelli & London, 2003).
Pharmaceutical companies are also on the forefront in the fight against the current COVID-19 pandemic. Due to this crisis, the companies work closely with third parties to develop vaccines. Eli Lilly, for example, uses its expertise and resources to develop antibody therapies in collaboration with two external parties (Eli Lilly, 2020: 4):
“Given the urgent need for new medicines to prevent and treat COVID-19, we partnered with two companies to develop potential antibody therapies and with National Institutes of Health in the NIAID Adaptive COVID-19 Treatment Trial with baricitinib, our JAK inhibitor.”
This partnership is also an example of an interactive collaboration, specifically the subtype Targeted project support: the pharmaceutical company, in this case Eli Lilly, forms partnerships with other companies in order to develop a vaccine for COVID-19.
Being a pharmaceutical company, operating on the forefront in the fight against diseases, it is also important to work together with patient organisations, to provide patients, their families and carers the best possible support and treatments available. Most
pharmaceutical companies manage support programmes or collaborations with these
33 needs, but also those of patients’ families and carers. This also comprises the burdens of disease or unmet needs experienced by stakeholder groups. Takeda, a Japanese (CME) pharmaceutical MNE, is one of the pharmaceutical companies that explicitly mention their partnerships with patients, patient groups, caregivers and families:
“As a patient-first company, we partner with patients, patient organizations,
caregivers and other key stakeholders to understand the burden of disease and unmet needs that our core therapeutic areas can help alleviate. These collaborations make sure we are developing medicines and that our work is in partnership with patients, not simply for patients.”
Differences between LME and CME pharmaceutical companies
Both LME and CME pharmaceutical companies mainly collaborate through either arm’s-length relationships or interactive collaborations to contribute to SDG 3. The main difference between LME and CME pharmaceutical companies lies in the use of arm’s-length
relationships to provide medicines, improve access to medicines and improve healthcare systems. LMEs are characterised by competitive market mechanisms, where companies try to solve problems through arm’s-length market relations (Hall & Soskice, 2001). Thus,
pharmaceutical companies in LMEs form arm’s-length relationships (such as medicine donation programmes) relatively more than CME pharmaceutical companies in order to strengthen their competitive position and enhance their image of social responsibility (Hall & Soskice, 2001; Rondinelli & London, 2003). On the contrary, companies in CMEs focus on enhancing their competitive position by creating long-term strategic partnerships to address specific issues.
SDG 13 “Climate Action” Current activities and progress
Climate change is a major challenge, threatening the health and well-being of all life on Earth. Humanity exacerbates climate change by emitting GHG emissions resulting from the rapid depletion of fossil fuels and deforestation. In addition, humanity rapidly depletes fresh water sources and contributes to water pollution through waste water affluent from industry
(UNGA, 2015).
34 industry is increasingly aware of its impact on the environment and of the adverse effects of climate change related issues on patients’ health. Greenhouse gas (GHG) emissions and energy intensity are divided into three scopes. Scope 1 and Scope 2 emissions relate to the companies’ direct emissions, so those emissions culminating from on-site fuel combustion and site-purchased energy (for example, electricity, steam and chilled water). Scope 3
emissions relate to emissions resulting from activities from assets that are not directly owned or controlled by the company. These emissions emerge from the company’s value chain, and the company is thus indirectly impacted by these emissions (United States Environmental Protection Agency, 2020). Scope 1 and 2 are direct results from pharmaceutical plants, while Scope 3 often is the largest one, and which is also the most difficult to impact, because it occurs in the supply chain.
The industry is therefore taking action to reduce its environmental footprint.
Companies do so by innovating their own facilities and ingraining sustainability within their production processes. One way of doing this is by setting yearly goals of reducing carbon emissions and water use. In their 2020 Sustainability Goals Progress Update, Bristol Myers Squibb (BMS), for instance, set the following goals regarding their GHG emissions and their water use (BMS, 2020: 11):
“5% (absolute) or greater reduction of water and greenhouse gas (GHG) emissions from 2015 baseline […] Bristol Myers Squibb’s logistics operation is continually looking for opportunities to conserve energy and reduce carbon emissions, and sustainability is ingrained in our vendor management process. We look for and encourage our vendors to make changes that will lead to more efficient ways of transporting our products, and during our selection process, we carefully review the vendor’s sustainability score”
Use of partnerships in contribution to SDG 13 Intensive Management Alliances
35 external experts to gather knowledge and skills needed to reduce their impact on the
environment.
For example, Roche, the largest pharmaceutical in 2019 according to a study by EY (2020), takes extensive measures to reduce its impact on the environment by setting clear goals over several years. One way of doing this is by implementing product stewardship in its production processes (Roche AR, 2020: 80):
“Our main contribution to society is to deliver innovative diagnostic tests and medicines that save and improve lives, but we also do more. We take responsibility, along with other stakeholders, to minimise the impact of our medicines and diagnostic products on safety, security, health and the environment throughout the entire product life cycle. This is the essence of product stewardship. It actively supports sustainability programmes, which are an important part of Roche’s R&D activities and drug
manufacturing. Here, the use of environmentally friendly chemicals and materials and innovative technologies help minimise Roche’s ecological footprint.”
Interactive Collaboration
Management Alliances are not the only type of collaboration used by the pharmaceutical companies to contribute to SDG 13. Interactive collaborations between companies also plays a major role in addressing environmental issues, such as the environmental impacts from antibiotic residues in wastewater. This can lead to antimicrobial resistance (AMR), meaning that harmful bacteria become resistant to the medicine supposed to kill them and instead continue to grow. The collaboration on reducing AMR is an example on an interactive collaboration, specifically the subtype Targeted project support. Most pharmaceutical
companies are members of the AMR Industry Alliance to work on reducing AMR. Merck, for example, states the following in their ESG Report:
36 Efforts to reduce emissions also consist of partnering with suppliers and educating them on best practices to reduce GHG emissions. Takeda, for example, states that it will work with suppliers to reduce their Scope 3 emissions:
“The majority of our GHG emissions are Scope 3, which are emissions outside of our direct operational control […] Our Carbon Neutrality commitment, however, extends across our entire value chain, and we’ve committed to working with partners and suppliers to reduce indirect emissions wherever possible. Working together in the coming years, we’ll encourage suppliers to set science-based targets, measure progress regularly and create incentives for action to significantly reduce Scope 3 emissions. We’ll also report Scope 3 emissions each year and include suppliers in renewable energy projects (Takeda SR, 2020: 52)”.
Differences between LME and CME pharmaceutical companies
The differences between CME pharmaceutical companies and LME pharmaceutical
companies on environmental issues do not appear to differ significantly. In the case of SDG 3, where pharmaceutical companies aim to improve patients’ health, there was a clearer
difference between LME pharmaceutical and CME pharmaceutical companies. In the case of SDG 13, collaborations to address environmental issues are rather similar. Pharmaceutical companies in both CME and LME countries address similar corporate policies: both types aim to reduce their GHG emissions, both types aim to conserve energy and water and both aim to reduce the impact of antibiotic residues in the environment.
