USE THIS INDEX
USE THIS INDEX
? SHORT INTRODUCTION(HALF PAGE ONLY)
WHAT THE PURPOSE OF THE REPORT IS
WHAT YOUR QUESTION/PROPOSAL IS
? LITERATURE REVIEW
INCLUDE DEFINITION/KEY CONCEPTS
ONLY REVIEW SOMEONE USE IN YOUR MAIN REPORT
? MAIN ARGUMENT
HOW YOU ARE ANSWERING THE QUESTION
WHAT EVOLUTES YOU HAVE
WHAT ALTERNATIVE ARGUMENTS THERE MAY- BE
HOW YOU JUSTIFY YOUR ANSWER
WHAT ARE THEY
? OVERALL SUMMERY
? REFERENCE LIST
1. Introduction 1
1.1 Concept of Social Responsibility 1
1.2 Concept of CSR 1
1.3 Carroll’s CSR Definition 3
1.2 Pharmaceutical Industry 4
2. Research question 5
3. Research objectives 5
4. Research methodology 6
5. Literature review 7
5.1 Theories of CSR 7
5.2 Advantages of CSR to Every Industry 8
5.3 CSR in the pharmaceutical industry 9
5.4 Major pharmaceutical company and CSR programs 11
6. Arguments on positive impact of CSR on pharmaceutical industry 13
7. Evaluation of alternative answers 17
8. Recommendations 18
9. Conclusion 19
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1.1 Concept of Social Responsibility
As the part of society, every individual has the responsibility towards the society where one lives. It is the obligation or responsibility of every individual or organization to perform or fulfill the duty towards the society. Individual live in society and take a lot from the society. Therefore an individual should also fulfill the civic duty and perform the action that would benefit the whole society (Friedman, 2007).
1.2 Concept of CSR
CSR stands for Corporate Social Responsibility. To find the world widely accepted definition of Corporate Social Responsibility is difficult as the activity which is considered as socially responsible in America may not be considered as socially responsible in Asia, Africa, South Africa, Europe, etc. Organization should perform the activities that benefit the society where they are operating. Corporate Social Responsibility refers to the initiative of the company to fulfill its responsibility towards society and environment. As the part of CSR company initiate different actions such as waste management, pollution reduction, contributing resources for the educational program, health program and so on. Corporate social responsibility in present era is not the matter of choice for the company. For the sustainable growth and profitability, company should focus on fulfilling its responsibility towards the society. CSR states that organization should not be only responsible to shareholders but also to stakeholders. CSR program can be domestic and international (McWilliams and Siegel, 2001). Business takes input from the social process it and provides output to the society. Therefore no business can operate without the society or get detached from the society. A company which fulfills the responsibility towards the society In order to gain the public trust and increases public image company should be responsible towards the society. Corporate social responsibility should not be taken as the financial burden by the company but as the investment. CSR may not produce the benefit in short term but in long run, company would be certainly benefitted (Holme and Watts, 1999). Today understanding the importance of Corporate Social Responsibility every big and small company is contributing some portion of resources to the development of society. Company while operating are emitting different waste materials and chemicals. These emissions have a negative impact on the environment. If the company only focuses on earning a profit and not contributing to the development of society then society may boycott the company from the society or avoid the product and services of the company. CSR has become the standard business practice (Schwartz, 2017). Development of Corporate Social Responsibility strategy has become the major and inevitable part of the business organization. CSR is the broad concept which includes human rights, corporate governance, health and safety, environment, working conditions, contribution to the economic development and so on. Therefore there are numbers of way and area through which a company can be socially responsible or contribute to the development of society. CSR is known by the different term such as Johnson ; Johnson, BP, Novo Nordisk, and Proctor ; Gamble state it as Sustainable Development. Likewise, Ford, Intel, GE, and Novartis state it as Global Citizenship or Corporate Citizenship (Matten and Moon, 2004).
There are numbers of the company all around the world which are actively participating in the sustainable development of the environment and society. For example, Unilever is a multinational company, it incorporates consumer, employees, investors, supplier, and communities in its CSR strategy (Thompson, 2017). Google is another multinational company that spends billions on the Corporate Social Responsibility. Likewise, Amazon, Toyota, Facebook, TATA, etc all are focusing on the CSR as they are aware that through CSR it would be easy for these company to position their product and services in mind of customers.
Different scholars are defining the CSR for about the 40 years and have constructed the framework for the CSR paradigm. Bowen (2015) defines CSR as the responsibility of the company to follow those policies, to make those decisions or to follow those lines of action which are desirable in terms of the objectives and values of our society.
Frederick (2006) states that the actual meaning of CSR is the matter of debate from the beginning and the moral underpinnings of CSR are neither clear nor agreed upon.
1.3 Carroll’s CSR Definition
Carroll state that there is four model of CSR and they are a legal responsibility, ethical responsibility, economic responsibility and philanthropic responsibility.
Economic responsibility: (USE THIS WORD FINANCIAL)The first responsibility of company as the carol is the economic responsibility. The company has to earn a profit in order to fulfill its responsibility towards shareholders, employees, and customers. Shareholders are the major contributors of the capital of the company and it has to provide a return for the investment made by them. The company also has to provide a financial benefit to the employees and provide quality goods and services to the customers at an affordable and fair price.
Legal responsibility: After fulfilling the economic responsibility, another responsibility of the company is the legal responsibility. Laws and regulations lay the foundation for the business to operate in the society. The government has formulated and implemented various rules and regulation for the smooth running or operation of the company. Therefore the company has to fulfill the legal responsibility by complying with the all the rules and regulations of the country.
Ethical responsibility: (USE COMMUNITY RELATION WORD)Another responsibility of the company is the ethical responsibility. This responsibility states that company should focus on doing the right and fair things. Business has the ethical responsibilities towards employees, customers, and society. For instance, it has the responsibility to respect the customers, responsibility to provide the adequate information to the customers about the side effect of the use of products, etc.
Philanthropic responsibility: This is the highest level responsibility as per Carroll. This responsibility includes activities that support the rise of the living standards of the people such as donation and charity activities, sponsoring of the arts and sports program, an organization of recreational activities, etc (Carroll, 1999).
Carroll also suggests the types of response that company provides to the social responsibilities. He states that there are four common types of strategies that company adopt as the part of social responsiveness.
Reaction: Company adopting this strategy does not show any responsiveness towards the society or in other words company denies its responsibility towards the society.
Defense: Company adopting this strategy tries its best to avoid the social responsibility and do the minimum social activities.
Accommodation: Company adopting this strategy accepts the social responsibility and fulfills the responsibility as per the demand of pressure group.
Proactive: Company adopting this strategy is proactive to the social responsibility and goes beyond the industry norms in order to fulfill the social responsibility. The company does not take the social responsibility as the burden or compulsion but fulfill the social responsibility as the choice (Visser, 2006).
1.2 Pharmaceutical Industry
The pharmaceutical industry is the industry which is focused on developing or producing the drugs that are used for the medical purpose. They are concerned with producing, testing and marketing the different medicines. The pharmaceutical company is the important part of the society. They produce the essential commodity that is needed in the human life and make differences in life and death. Without the proper health, one will not be able to meet the other need. The pharmaceutical industry comprises of economic and intellectual power. With the help of both powers pharmaceutical industry will be able to solve the health problem and make the society the better place (Kola and Landis, 2004).
2. Research question
The research question is the important part of research activities. Research questions guide the whole research and help to determine the suitable research methodology. The research question is the answerable issue and it is the initial phase of the research project. Any researcher starts the research with identifying the issues that need to be solved or the area that researcher wants to study about. Research question can be taken as the foundation of research. Therefore without research question researcher cannot carry out the further research. Research question starts with the research problems or issue that need to be addressed. The good research questions must be feasible, clear, significant and ethical. In order to write the research questions, one need to first of all make the draft of the research questions, make the draft of purpose statement and finally make a revision and rewrite the research questions. While writing the research question one needs to understand the variables of research and make the questions suggesting the ways to test the questions. Research questions can be expanded as per the need by adding the variables or features. There are different variables such as connecting variables, mediating variables and moderating variables. Good research question lead to better and informative research project (Hulley, Cummings, Browner, Grady, Hearst and Newman, 2001).
The topic of this research paper is “Positive impact of CSR on the pharmaceutical industry”
The suitable research question for the project would be, “Does CSR poses a positive impact on the pharmaceutical industry?”
Alternative answers to the research question would be:
• Yes, CSR poses positive impact.
• No, CSR does not pose positive impact.
• CSR poses both positive and negative impact.
3. Research objectives
Report objectives refer to the end result of the report. Report objectives provide the guidelines to the researcher. Report objectives are the results that researcher wants to achieve (Wilson, 2008). The major objectives of this report are:
• To identify the positive impact of the CSR on a pharmaceutical company.
• To evaluate the other possible answer to the research questions.
4. Research methodology
Research is the systematic study that is concerned with the collection of data and discovering the new factor information. Research is done through detail study, experiment, observation, keen analysis, comparison and so on. The major objectives of the research are to discover the new facts, test the important facts, analyze the events, develop new scientific tools and techniques, and find the solution to the existing problem and so on. Research methods refer to the procedures, framework, and algorithm that are used in the research process. Research methods provide guidelines for the collection of data and find solution or answer the research question. It is essential that every researcher choose the suitable research methodology for their research project. Therefore research methodology can be defined as the procedures by which the researcher will carry the describing and predicting phase of the research (Goddard and Melville, 2004). Before choosing the research methods researcher to have to check the suitability and efficiency of research methods. Majorly there are two types of research methods and they are quantitative research and qualitative research. Quantitative research method is concerned with numbers, logic and objectives. This type of research focuses on the unchanging data or fact and the converging reasoning rather than divergent reasoning. The major features of quantitative research are data is gathered by the use of structured research instruments, results or conclusion in quantitative research is drawn on the basis of sample size that represent the population (Trochim and Donnelly, 2001). Quantitative research conducted by one researcher can be repeated by another researcher and the result on the both research would be same. Therefore quantitative research method is highly reliable. Data in the quantitative research methods are presented by arranging in the table, charts, graphs, figures and other pictorial form to make it easy for the reader to understand. The popular tools used by the researcher in quantitative research method to collect the data are a questionnaire, computer software, etc. The underlying aim of a quantitative research study is to classify features, count them, and construct statistical models in an attempt to explain what is observed. Quantitative study describes how each objective of the study will be achieved. It provides enough detail to enable the reader can make an informed assessment of the methods being used to obtain results associated with the research problem. The major part of the quantitative study is statistical analysis. The findings are presented in a logical and sequential order (Kothari, 2004). The qualitative research method is the popular research method that is widely used in various academic disciplines. Qualitative research is concerned with the social and natural sciences. Qualitative research methods stress on the socially constructed nature of reality, the intimate relationship between the researcher and what is studied, and the situational constraints that shape inquiry. Qualitative research method seeks answers to questions that stress how social experience is created and given meaning. In contrast, quantitative studies emphasize the measurement and analysis of causal relationships between variables, not processes (Kumar and Phrommathed, 2005).
In this research paper both quantitative and qualitative research methods in use. The issue that CSR has a positive impact on the pharmaceutical industry is studied by reviewing various existing literature and the CSR activities data of the top pharmaceutical company is collected from the annual report to draw the conclusion on the basis of findings.
5. Literature review
5.1 Theories of CSR
There are three major CSR theories and they are:
The stakeholder theory of CSR: The stakeholder theory of CSR is developed by Edward Freeman with another scholar. Stakeholder theory focuses on the entity that is affected by the business activities. As per this theory company recognize every stakeholder and analyze the impact of business activities on every stakeholder. For instance, when the company produces any waste materials, it is its responsibility to manage the waste materials. But the stakeholder’s theory views the same phenomenon by enlisting the entities that are affected by the waste materials emissions. Company decision-making process is affected by the voice raised by the company stakeholders. The major stakeholders of the company are shareholders, company workers, customers and the potential customers of the company, government entities, creditors, suppliers, competitors and community (Roberts, 1992).
Business ethics theory of CSR: Business ethics theory of CSR advocates the bigger social obligation of the business towards the society. This theory explains about Corporate Social Responsibility on the basis of three interrelated ethical grounds. The first ground of this theory is the changing and emerging social responsiveness. This theory view CSR more as philanthropic and ethical responsibilities (Beauchamp, Bowie and Arnold, 2004).
Shareholder value theory of CSR: The shareholder value theory of CSR is the perspective of CSR developed by Milton Friedman in 1970. This theory states that business organization participate in social activities to increase profit (Beauchamp, Bowie and Arnold, 2004).
5.2 Advantages of CSR to Every Industry
Corporate Social Responsibility is important for every profit oriented, non-profits and Government Company. CSR brings different sustainable benefit to the company. The different advantages of CSR are:
Satisfied employees: Satisfied employees are the assets of the company. An employee will feel proud working in the organization which is contributing the most for the sustainable development of society. Employee will have positive attitude towards the company and become loyal as well as committed towards the company. Employee would sincerely work in order to achieve the goal of the company. Committed and loyal employees lead to increase in the profit of the company.
Satisfied customers: Customers are the king of market and their satisfaction is the goal of every business organization. When the customers feel that company is contributing for the development of society and community they would be loyal towards the product and services of the company. In present period, customers are being more aware about the company and product they are buying or consuming. If the company is able to demonstrate that it is responsible to the society and is contributing as much as it can for the sustainable development of society then people would support the company by sticking to its product and services. Through CSR company can achieve the sustainable competitive advantage as study or research have shown that customer prefer to buy from the product that actively participate in societal development activities (Weber, 2008).
Increase public image: CSR is most effective promotion way of business. Nowadays, business has to no longer spend on expensive advertisement campaign. Through involvement or participation in the social work business is able to create good public image and generate the free publicity.
Reduction in cost: CSR activity is not an expensive campaign. Through proper planning of CSR activities, company can use reduce the cost. Reduction of cost occurs through the retention of skilled employees, implementation of energy saving program, less investment in advertisement campaign and so on.
Increase in business opportunity: CSR open the new door for business. During the participation in the CSR activities company will get exposure or chance to communicate and work with new customers, suppliers and other business entity. This interaction with different parties leads to the creation of new business opportunity for the business (Burke and Logsdon, 1996).
Attraction and retention of talented employees: Talented or skilled employees are the assets of the company and they want to work or get engaged in the company which contributes towards the development of the society. Therefore by participating in the Corporate Social Responsibility activities company will be able to attract and retain the skilled pool of employees.
Easier to access capital: Capital is the lifeblood of the organization and business need regular flow of capital to the business for the smooth operation and development. When business is socially responsible, people and other institutions will trust the will the company and provide the supply of und when firm need it. Banking institutions also support the growth and expansion of business.
Better financial performance: When company became socially responsible every related entity of business such as customers, suppliers, government, etc. provides the positive support to the operation and growth of business. Customer will be loyal to the product and services, suppliers will make the timely delivery of quality raw materials which would contribute to the increase in financial performance of the company (Du, Bhattacharya and Sen, 2010).
5.3 CSR in the pharmaceutical industry
CSR in the pharmaceutical industry is an emerging philosophy and it can be taken as the additional responsibilities in conducting business. In present world, stakeholders are educated and demanding from the operation of business. No any business is to allow to exploits the environment or human beings for their operation and profitability. As pharmaceutical industry is the part of society people expect that it would be the responsible corporate citizens. CSR in the pharmaceutical industry is significant as in the other industry. There are different positive and negative aspects on the pharmaceutical industry. There are many pharmaceutical companies that have contributed to the development of the world and distributed the life saving medicine worldwide (Leisinger, 2005). In pharmaceutical industry there are many unethical marketing practices that make the inaccessible the life saving medicine to many people. CSR in pharmaceutical industry is different than in other industries because it produces the primary or lifesaver commodity i.e. medicine which is most essential commodity for the well being of human life. When people cannot afford the expensive and luxurious items such as branded car, big mansion do not make the people worry. But medicine can save the life of people and make differences between life and death. So the income differences among the people should not make them unable to take the medicines (Nussbaum, 2009).
In the present period due to market and patent platform many medicines are not affordable by people even with the support of government and insurance. Many medicines are not accessible by people due to lack of affordable alternatives to patented medicines. This reality is unacceptable and while taking poll in US the result shows that pharmaceutical industry is most unethical industry. One of the poll taken in the 2005 i.e. Harris Interactive Poll shows that only 15% of respondents state that pharmaceutical industry serve good to the customers. Medicine is not just the commodity for many people and pharmaceutical industry take huge profit margin in their product which is considered as unethical (Heal, 2008). One philosophy of the CSR states that organization has to do something extra activity beyond the routine activities that would support the development of society. Another philosophy of CSR emerges in 1990 that states organization should focus on the economic, social and environment sustainability. Group of scholars of Case Western develop new paradigm of CSR which state that organization should go beyond all past indigenous measurements of success. CSR help any business industry to increase the market base, customer base and become the reputed and financially strong company of the world. One of the major corporate responsibilities of pharmaceutical industry is to make available the medicine at affordable price (Visser, 2011). Pharmaceutical industry can be socially responsible by making the drugs available to low income group people at low price.
Top pharmaceutical companies have adopted some form of CSR. For instance, pharmaceutical companies work together with NGOs in order to distribute the medicines or building the medicinal infrastructure in remote places. These domestic CSR program initiated by pharmaceutical company support the government for heath development in the nation. Citizens of developed country have easy access to the health services than the people of rural areas and pharmaceutical company can contribute to the societal development of the nation. Pharmaceutical companies initiating CSR program is the significant part of global social programs. There is always government and NGOs for developing health services but when private sector such as pharmaceutical company participate on sustainable development it increase the effectiveness of the campaign (Smith, 2003).
5.4 Major pharmaceutical company and CSR programs
There are different large pharmaceutical companies that are contributing for the societal development. Some example of pharmaceutical companies and their CSR activities are:
Pfizer: Pfizer is one of the world’s premier biopharmaceutical companies. It launched an international program called The Global Health Fellows Program in 2003 and 300 Pfizer employees have participated in this program. They work together with the local NGOs in developing countries and utilize their employees to positively affect the selected population. Pfizer also donate medicine to the poor and developing countries of Africa and Asia with the aim to eliminate trachoma. Pfizer support the campaign of WHO called Global Elimination of Blinding Trachoma by the year 2020 by providing Zithromax (Pfizer Inc, 2018).
Merck: Merck is leading Science and Technology Company in healthcare, life science and performance materials. As the part of CSR activity Merck has launches Mectizan donation program with the objectives of eliminating onchocerciasis (river blindness). This disease was spreading through bite of black flies which causes itching, eye lesions and eventually blindness. Mectizan donation program was one of the longest and most successful drugs donation program. Merck also focuses on donating drugs for HIV/ AIDS to developing nation. Merck foundation with Gates Foundation established African Comprehensive AIDS Project (ACHAP) with commitment of $106.5 million. Merck agreed to donate ARV medicines, Stocrin and Crixivan to Botswana’s national ARV treatment program. Merck also extended the donation and include Atripla and Isentress. Merck choose Botswana because it has the large number of population suffering from HIV/ AIDS. Merck also launched HIV/ AIDS program in China and spend about $30 million to educate the Chinese population on HIV/ AIDS (Merck Sharp ; Dohme Corp, 2018).
GlaxoSmithKline (GSK): GlaxoSmithKline is a British pharmaceutical company having it’s headquarter in Brentford, London. GlaxoSmithKline practices differential pricing to provide anti-malarial medicine access to all income level people. Differential pricing refers that GlaxoSmithKline offer the drugs at highly discounted price at developing countries in comparison to developed countries. Major idea of GlaxoSmithKline was earning profit in the developed countries and offering the drugs at low price in developing countries. GSK aimed to provide access to medicines and vaccines for about 800 million populations of developing countries. Developing countries GSK focusing includes 49 poorest nation defined by UN (United Nations). With differential pricing GSK also has strong program in which they work with multiple NGOs and INGOs such as Amref Health Africa (AMREF), CARE International and Save the Children, etc. GSK actively participate in training the healthcare worker and develop healthcare infrastructure in developing countries. GSK focus was on the diseases they are expert on such as malaria, tuberculosis and HIV. In 2001 GSK established African Malaria Partnership and focuses providing education to society about malaria and preventive measures (GlaxoSmithKline plc, 2018).
Astellas: Astellas Pharma US, Inc. is committed pharmaceutical company that provides patients, customers, community and employees with a bright future by changing tomorrow. It launches the international CSR program through Access to Health initiatives. Astellas is concerned with reduction of child mortality, improving maternal health and dealing with HIV/AIDS, malaria and NTDs. It has also constructed the birth centers and health clinic in order to reduce infant mortality rates in Indonesia. In India there was high infant mortality rate and to address that problem Astellas provides free medical care services with Save the Children to mothers and infant in north New Delhi via mobile health van. Astellas also donates money to Save the Children to support The Children’s prevention project in Tanzania. Astellas also work closely with Tokyo Tech and University of Tokyo to accelerate for production of drugs of Leishmaniasis, Chagas disease, African trypanosomiasis, and Dengue fever and pediatric formulation for Schistosomiasis (Astellas Pharma Inc, 2018).
When pharmaceutical company launches health related campaign it certainly benefits the location or nation they work within with. Contribution of resources, time, information and drugs enhances the health of people and saves millions life all around the globe.
6. Arguments on positive impact of CSR on pharmaceutical industry
After the review of various research and studies on advantages of Corporate Social Responsibility, it is clear that there is positive impact of CSR in pharmaceutical industry if managed properly. In other words, when pharmaceutical industry participates in CSR, it certainly produces positive impact. For instance, when pharmaceutical company invests on the well being of the society it would spread the positive message about the company. It would increase the positive image of the company. Some of the positive impacts of CSR on pharmaceutical industry are it adds value to corporate financial performance. Most pharmaceutical companies are currently practicing CSR by considering environment, social, and economic strategies to manage their businesses and produce an overall positive impact. Quantitative study conducted by Adamu (2017), shows that CSR activities have positive impact on the financial performance. When people see that the particular pharmaceutical company is contributing a lot for the development of society then they would support that company. CSR activities also attract Government support. Government is the superior body of every nation. When pharmaceutical company supports the societal development activities they got the support from the government. Government would support the research activities and provides subsidies to the company. Corporate social responsibility also increases the customer base. When the pharmaceutical company involves in the CSR activities customer perceive it as the responsible company and prefer the medicine produce by the same pharmaceutical company. CSR also help company to attract and retain the talented employees. Talented and skilled employees want to work in the companies that work by thinking beyond profit. Many research papers have proved that people do not want to work in companies which are only concerned about profit margin and not about society. When the pharmaceutical company gets involved in the societal activities, employees of the pharmaceutical company become committed and loyal towards the company (Smith, 2008). They would work sincerely for the development and profitability of the company. Being socially responsible help the pharmaceutical company to increase the public image. When company become transparent, truthful and become socially responsible public trust on the company increase and they would be willing to support the research and social activities of the company. So many big pharmaceutical companies invest million in the social activities and donate medicines to eliminate the different diseases in the remote or rural areas and developing countries. Reputed company name is the biggest assets of the company and the feeling of the customers about the company name matters a lot. CSR program by the pharmaceutical company should conduct regardless the company size because the size does not determine the successfulness of the CSR program (Turcsanyi and Sisaye, 2013). Pharmaceutical company can use the scarce resources effectively for the success of CSR program. Involvement of pharmaceutical companies in the CSR activities also enhances the community relationship. Pharmaceutical company when personally visit the community and support the development of society it helps to builds the strong relationship with them. This strong relationship would help the company to initiate other program in the community and it would receive full support from the community. Therefore it can be stated that CSR provides businesses with opportunities ranging from benefitting brand equity and reputation to better access to emerging economies. Observing the benefits of CSR activities many pharmaceutical companies are including CSR in their business strategies. Some pharmaceutical company is conducting CSR activities to reduce the negative public perception of the respective company. Some pharmaceutical companies perform or get involved in the CSR activities with the aim to increase brand image. If pharmaceutical companies do not get involved in the social activities or does not comply with the need of society interest then brand image may fall. It may also leads to increased regulation by government, increase in fines and negative response by the customers. This would hinder the effectiveness of operation of company. CSR comes in various forms but the gist is that company must give back to the society where it operates. The initiation that pharmaceutical companies are taking by making the medication accessible to the people of rural areas and developing countries and building the healthcare infrastructure leads to long term profit for the company and increases the return of shareholders as well (Esteban, 2008)..
To be socially responsible to pharmaceutical company they do not have to spend or invest millions of dollar. They can be socially responsible by contributing their medicines and some of the resources to the local NGOs and supporting the campaign launched by them in the rural areas or developing countries. When pharmaceutical company contribute the social development and disease eradication it would send the good message about the pharmaceutical company in the public and it would get a lot of support from the public. There are various pharmaceutical company receive that value from the customer perception. Pharmaceutical company must try to maintain the good image on the consumer perception in order to maintain the customer loyalty. When pharmaceutical company involves in the CSR activities it generates reputation capital (Leisinger, 2009). People or business entity wants to initiate partnership with company which is responsible to the society. Pharmaceutical industry in current period is facing different image problem for various reasons such suing the government of South Africa for violating TRIPs provisions while buying the AIDS medication form Indian drug company at reduced price for the people suffering from AIDS. Government of South Africa was just trying to help its citizen living with AIDS by buying the medication at low price but pharmaceutical company does not allow low priced competitors even if it is for the welfare of society. Later the 39 companies fear the public protest and drop the lawsuit. But these kinds of decisions were made repeatedly which result lack of trust of public in pharmaceutical companies. In order to regain the public trust and confidence pharmaceutical companies must stop such irrational decision and initiate domestic as well as international CSR program to illustrate that they also care about the society not only about the profit margins (Powers and Faden, 2006). Pharmaceutical industry believes that it would create positive brand awareness about the pharmaceutical companies through CSR activities. When these companies provide the positive support for the development of society certainly they would get positive response from the public. Pharmaceutical companies also show unethical payment behavior by paying the physicians for prescribing their product and different laws are formulated to stop this unethical practice. Pharmaceutical companies are also not allowed to take their customer to lunch which is overregulation. Overregulation can be reduced by participating in the social work. Positive social perception and community participation is better for the company. One of the research shows that 77 percent of sample refuse to buy the medication from the distrusted pharmaceutical company and 91 percent of the respondent buy from the trusted companies. CSR enhances the positive perception about the company among the customers. Societies repeatedly hear the negative activities of the pharmaceutical companies and perceive pharmaceutical industry as the profit reaper. But in reality in the 12 year period pharmaceutical industry have contributed about $94.8 billion for the development of world. But people or societies are not aware about their positive activity. In order to make people aware about the social contribution by pharmaceutical industry they need to communicate to stakeholders by the use of various media. When pharmaceutical company publish about their social activities then it would inspire other pharmaceutical company to carry out the social development activities and send good or positive message to customer about the pharmaceutical company (Pogge, 2008). Pharmaceutical companies also emit the different harmful chemicals during the manufacturing process which would pollute the different resources such as land, air as well as sound pollution. World is threatened by serious global climate changes and socioeconomic concerns. Most climate scientists agree that the major cause of the current global warming is the heat entrapped by the atmosphere. Society around the company may protest for shutting the company as it is distorting the resources as well as life of people. But if the pharmaceutical companies are contributing for the development of society and helping to build healthcare infrastructure then they would support the operation of such companies (Miller, 2013).
To provide the recognition to the social activities done by the pharmaceutical companies there is ATMI (Access to Medicine Index) which rank the pharmaceutical companies on the basis of their effort to make available medicine in developing countries. Index is published in every two years. This organization provides recognition to the pharmaceutical companies for their investment in the social activities. This organization measures 7 technical areas of the pharmaceutical companies and they are: access to medicine management, public policy and market influence, research ; development activities, pricing, manufacturing and distribution, patents ; licensing, capability advancement, and product donations. Pharmaceutical companies are ranked by ATMI on the basis of commitment, transparency, innovations and performance. The main objective of ATMI (Access to Medicine Index) is to increase the involvement of pharmaceutical companies in the social development activities. By ranking the pharmaceutical companies it create the feeling of competitiveness among the companies to increase their rank. Stakeholders or critics always claim that pharmaceutical industry is always engaged in the unethical activities and pharmaceutical companies claim that they are contributing to the development of society regularly. Study suggests that some pharmaceutical companies are fulfilling their duties towards the society and some are performing the unethical activities. Due to the mentioned reason society perceives negatively all of the pharmaceutical companies as bad in general. Therefore to change the perception of critics and society pharmaceutical companies need to contribute to the society and make people aware about their societal activities (Access to Medicine Foundation, 2016).
7. Evaluation of alternative answers
To the research questions of this research paper there are there answers. Out of the three answers one is selected and supportive argument is given. Other alternative answer such as CSR activities have negative impact on the pharmaceutical industry and CSR pose both positive and negative effect is not selected in this research paper. CSR is the emerging concept and consumers are becoming more aware about the every activities of the company. As discussed above in this research paper pharmaceutical companies are taken as the unethical companies and people do not trust them because of their various past records. The only way to regain the trust of the customers is to contribute for the societal development. Many literatures were reviewed and not so many of the literatures mention or explain about the negative effect of CSR activities on their studies. Every literature focuses on the advantage, positive aspect of engaging in CSR activities and encourages companies to involve in the CSR activities. Many literatures related to CSR were reviewed to choose the answer of the research questions and most of the literature focused on the benefits or advantages of CSR.
The first not chosen answer alternative is “CSR activities have negative impact on the pharmaceutical industry”. The possible argument for this answer would be that CSR generates negative impact on the pharmaceutical industry. Though there are numerous advantages of participating or contributing in the societal development activities, it may also invite some disadvantages to pharmaceutical industry. Some reviewed literatures identified disadvantages of the CSR on the pharmaceutical industry are it increase the cost of the pharmaceutical companies and reduces the profit in short term. This answer was not chosen because when pharmaceutical companies get involved or participate in the CSR activities by spending millions and billions of dollar they want it to create positive effect on the brand image and to increase the public trust. If these CSR activities would create the negative impact on the pharmaceutical industry then no company would spend its money and other resources for the benefit of the society.
Another alternative answer to the research question is “CSR have both positive and negative impact on the pharmaceutical industry”. Some studies shows that CSR activities have both advantages and disadvantages but advantages always outweigh the disadvantages. The major disadvantages found of involving in the social activities by pharmaceutical companies are increase in the cost and decrease in the numerical profit. Pharmaceutical companies achieve more advantages while participating in the CSR activities.
From the discussion made above it is clear that CSR activities certainly bring the positive impact on the pharmaceutical industry. It certainly establishes the good image of the company among the public and increase the support of public. CSR activities brings the positive outcome, reduce overregulation of government and customer will perceive the pharmaceutical company good. Customer will be encouraged to buy the product from those pharmaceutical companies which have contributed to improve the healthcare facilities by donating medicines to the local NGOs campaign or by constructing healthcare infrastructure. The above discussion have made clear that pharmaceutical companies which work only for the profit and contribute none for the development of society then it will have bad image among the public and they will not be willing to buy the product from such companies. CSR activities certainly increase the brand image. For example, as mentioned in above discussion GSK has spent millions of dollars to contribute for development of the society. It has adopted differential pricing strategy offer the drugs at highly discounted price at developing countries. It used to earn profit in the developed countries and offer the drugs at low price in developing countries. GSK is aiming to provide access to medicines and vaccines for about 800 million populations of developing countries and it is working with different NGOs and INGOs for different societal development. After its active involvement in the development of the society it is perceived as the good pharmaceutical company. The sale of the company is also increasing as well as the revenue. People prefer the product of GSK on comparison to the other companies which is not contributing for the development of society. GSK is becoming the world famous pharmaceutical company and one of the reasons behind the popularity is its involvement in the CSR activities. Pharmaceutical companies get support from the government as well as public when they participate in the societal activities. Therefore it is proven that CSR activities have positive impact on the image, revenue and consumer perception so every big and small pharmaceutical company should contribute to the society where they operate. There effort for the development and uplifment of rural area people health lead to sustainability of company and increase in the profitability in long run.
In conclusion, CSR is important activity for every business organization for success and every organization understand the benefit of the CSR. So they are participating and contributing the resources as much as they can for the development society. CSR is also the best strategy for pharmaceutical industry to gain the public trust and support. When a company gets involved in the social activities or participates in the disease elimination campaign with local NGOs, society perceived it as good company and prefers the medication of such companies. From the discussion made above and the review of literature it is clear that there is positive impact of CSR in pharmaceutical industry if managed properly. When pharmaceutical industry participates in CSR, it certainly produces positive impact. When it invests on the well being of the society it would spread the positive message about the company. It would increase the positive image of the company. People or society would support that company when they see that the particular pharmaceutical company is contributing a lot for the development of society. CSR activities also attract Government support and avoid overregulation. With the help of CSR program the pharmaceutical company can help to change the negative perception that people have about the pharmaceutical industry as well as increase the profitability of the company. Through the CSR program pharmaceutical company would alleviate the health difficulties of the society, enhance the living standard of people and increase the reputation of the company. Pharmaceutical industry have the bad image among the public because of their some unethical action in the past and through participation in CSR program they are able to illustrate that they also care about the society not only about the profit margins. Pharmaceutical industry can create positive brand awareness about the pharmaceutical companies through CSR activities. Pharmaceutical industry while manufacturing or researching about the drugs pollute the
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