Astrazeneca And CsrEssay Preview: Astrazeneca And CsrReport this essayIn this essay I am going to look at AstraZeneca PLC one of the world’s top pharmaceutical companies. By describing several relevant cases and commenting on them I will try to evaluate the extent to which the Company acts under the principles framing its corporate governance and corporate social responsibility policies.
To give brief overview, AstraZeneca PLC, formed on April 6, 1999, by the merger of British Zeneca Group PLC and Swedish Astra AB, is one of the biggest pharmaceutical companies in the world. It is well illustrated by some key facts listed on the Company’s website:
“Our products are available in over 100 countries; sales in 2005 totalled $24 billion, with an operating profit of $6.5 billion; we spend over $14 million every working day on the research and development of new medicines that meet patient needs (total R&D spend in 2005: $3.4 billion); we employ around 12,000 people in research and development at 11 R&D centres in seven countries: Sweden, the UK, the US, Canada, France, India and Japan; we have some 14,000 people at 27 manufacturing sites in 19 countries, in total, we employ over 65,000 people worldwide: 58% in Europe, 28% in the Americas and 14% in the rest of the world” (AstraZeneca, 2006).
As AstraZeneca make more than 97% of its sales in prescription pharmaceutical sector, naturally, the Company’s main activities are discovering, developing, manufacturing and marketing those medicines for various areas of healthcare; to cite several examples, cardiovascular, gastrointestinal, neuroscience, oncology, infection, respiratory and inflammation. The best-selling AstraZeneca’s products include Arimidex, Crestor, Nexium, Seroquel and Symbicort. Due to the Company’s specialisation in prescription pharmaceuticals, AstraZeneca’s marketing activities are mainly aimed at physicians (both primary care and specialist) and other health care specialists. (NYSE Group, 2006)
It is a fact that if the corporation is large, it is bound to attract certain amount of attention. That is the price of being at the top. Therefore, when a company gets as big as AstraZeneca is, there are always some responsibilities to deal with. The days when corporations were only required to make profits for their shareholders are gone. For that reason, today companies are expected to act in a way that would bring most benefit to all stakeholders (i.e. “individuals or groups which either: are harmed by, or benefit from, the corporation or whose rights can be violated, or have to be respected, by the corporation” (Crane & Matten, 2004). It seems that AstraZeneca knows how to play the game.
To begin with, not only have the Company its CR (Corporate Responsibility) policies and principles set, it also makes every effort to assure that these are being held. To support this, AstraZeneca has employed a Non-Executive Director with responsibility for supervising CR within company. Moreover, the Company has the whole Global Committee established to develop the CR framework, which adapted a little bit according to each area’s national, functional and site issues and priorities is used in the Company’s branches all over the world. In addition to these, AstraZeneca utilizes several different ways of evaluating the Company’s performance. All that information is available at the Company’s website to anyone interested. Paraphrasing what AstraZeneca representatives say, these measures are taken in order to make people actually believe in their proclaimed commitment to transparency and openness.
At this point one may consider whether it is enough. Should we assume that the Company has anticipated all that could have been expected? Not quite. While it is undoubtedly good that the Company acts with regard to certain regulations and is accountable to the public, still it only does what it has to do. Abiding law is obligatory. AstraZeneca might have been thinking along the same lines, when it decided to go beyond the extent of corporate governance.
The main directions of AstraZeneca’s corporate social responsibility policies are reflected in their motto:“To ensure that our community activities focus on bringing benefit in ways that are consistent with our business of improving health and quality of life, and on promoting the value of science among young people” (AstraZeneca, 2006).
The Company has established a global community support database, which allows to share relevant information among the Company’s branches, and to monitor financial information. The database also helps AstraZeneca to make sure that right proportions of money are allocated to each initiative the Company contributes to. Usually, the biggest donations go to healthcare and science & education sponsorships. As the Company tries to contribute to disaster relief efforts; however, the proportions of money donated to those initiatives may change; e.g. in 2005 the more money were donated to help those, who were affected by the earthquake in Pakistan and by Hurricane Katrina in the US.
Pie chart ٠AstraZeneca, 2006If asked about the motives behind the participation in community support activities, AstraZeneca most likely would say something about its wish to contribute to the local communities’ well-being. One may get such impression from various statements on people being valuable assets, that the Company keeps on making. However, several cases of AstraZeneca’s past behaviour might suggest the Company having rather different scale of virtues…
To introduce first case, In June, 2003, Wilmington-based AstraZeneca’s branch had to pay a $355 million settlement to resolve criminal charges and civil liabilities for a kickback scheme (kickbacks — illegal marketing, when doctors or other healthcare specialists are offered money or other benefits to induce them to change a current prescription to the sales representative’s product. (Kelton, 2004). In their first law offence, AstraZeneca distributed thousands of free prescription pharmaceutical Zoladex (goserelin acetate), which is used for prostate cancer treatment, samples to doctors, knowing that they would later charge their patients and insurance programmes for them. During the second offence, the Company inflated the drug’s price
Ђ, but received no profit and went on the record of its misappropriation of the money by the CompanyÐ⁴n it had received over the subsequent two-year period. (AstraZeneca, 2004). AstraZenecaЂ™s share price was nearly 50% lower at ₹18,100 (the lower it was when the settlement was reached due to excessive leverage) a few months later (Caterton, 2007).
The Company was also a party to two other lawsuits, most of which were settled by individuals not associated with the Company who either were not involved in the CompanyÐ⁴n the business or who had no role to play in the law enforcement or criminal investigationsÐ⁴n when it came to the CompanyÐ⁴n the practice of selling prescription medication. For example, in June 2009, a man was sentenced to 25 years (4 years in prison) in a California court for fraud, but sentenced to 10 years in prison in New York, where he was treated for minor injuries, despite admitting the charges. His lawyer, Peter Chaudry, had the following to say about the trial:
“This is one case where a judge was given an extraordinarily long and very narrow discretion when deciding what it takes to bring a criminal case. You can find that judges have a range of interpretations to decide, but they generally have the discretion not to find criminal allegations against patients with whom they are engaged. This trial, by contrast, has three jurors: first, the jury that considered what Mr. Holmes did. Second, the jury that had determined what an offence might be. And third, the jury that made the decision. In all three cases the Judge took the jury to believe the defendant and the alleged fraud and deceit. This is a case where every case that the judge takes to trial requires an enormous and often very broad discretionary discretion if a jury is to find the relevant charges. This trial, however, is not one of those cases. It is probably the least constrained of the three. My question is why are we taking the jury to believe the defendant and the alleged fraud and deceit, at the cost of a wide-ranging and sometimes exceedingly limited discretionary discretion?”
(Caterton, 2007). In 2007, an article on OxyContin was published in the New York Times Magazine that reported the company’s illegal marketing and sale of OxyContin in the United States. The article included several graphic illustrations of what appeared to be illegal prescription drug advertisements appearing in newspapers and magazines of newspapers around the United States, and it described one of the drugs as a pill that “was made to kill all addicts (sic) who have to wear a tube.”
The US Anti-Recovery Act prevents pharmaceutical companies from providing medical services and from giving discounts on the distribution or sale of products under their own brands