Along with the accelerated pace of globalization, the concept of corporate social responsibility presents the trend of expansion and complexity (Smith 2003). Enterprises include the internationalization of enterprises and multi-national corporation, thus protection to stakeholders not only related to their own interests, but also includes the protection of the interests of the individual host country, such as charity, rational exploitation of resources, abide by business ethics and maintain organizational reputation (Smith 2003).
However, the multi-national corporation in the global business has repeatedly occurred the event that against the corporate social responsibility, which affects the social image of multi-national companies and caused harm to all aspects, so the research on the social responsibility of pharmaceutical enterprises has important significance in both theory and practice (Wilson 2012).
Consequently, pharmaceutical enterprises are facing the reform and opportunities, also plays a significant role in social responsibility, but most of current pharmaceutical companies is not clear or misunderstood for its social responsibilities range, resulting in major responsibility issues in some companies such as Pfizer bribery of local officials, as well as doctors in multinational, so as to obtained the recognition of the regulatory and prescription, which expanded sales (Silverman 2012).
This report attempts to assess the business ethics and corporate social responsibility of pharmaceutical companies, especially the company Pfizer. The main arguments for stance on Pfizer are considered, followed by the most serious bribery case involving Pfizer recently, including the reaction and impacts connected with overseas bribery and responsibility. Furthermore, analyzed the challenges and risks, because of the medical bribery violations of ethics and social responsibilities.
Finally, the report will show how the company could improve the management of corporate social responsibility on the consciousness and structure. The stance of Pfizer The world’s largest pharmaceutical companies-Pfizer Inc, expanding activities to established a corporate image in all aspects (Pfizer annual review 2011). Due to the growing concern, the corporate took the remedial actions such as commit to examine the compliance plan and annual training colleagues around the world about the Pfizer’s code of conduct (Policy and Medicine 2012).
Read (2012) the CEO of Pfizer claims that except for taking transparency in the public policy, in the medical aid, participating in a public organization for the treatment of “tropical diseases”. In addition, the investment of Pfizer bring them the capability to combat the bribery and corruption, thus established mechanism which against the international bribery, in order to cause the attention of people and seek supervision (Pfizer annual review 2011). 2. 1 Theories of corporate social responsibility and ethics
In the business activities, enterprises have to enhance the enterprises’ interests, social responsibility and obligation, take the forms of considering the moral value when make the business decisions, follow by the respect for the community and the environment, such as running their own businesses to solve the problem of employment, also ensure sustainable development and the product quality or customers’ safety which are the basic responsibilities (Kolk et al. 2010).
With regard to the impacts on CSR, enterprises may have the ability to be socially responsible by means of protect environment, eliminate poverty and improve the quality of human life, if the enterprise ensure these, which would be conducive to the development of the enterprise, also promote the company’s profit (Kolk et al. 2010). Credibility is the fundamental of the business, companies should not only consider how much profit it can bring to the enterprise, but also consider whether it meets the business ethics (Cuillla 2011).
Similarly, ensure that enterprises to fulfill their social responsibilities, and reject the behavior of violate the business ethics, especially in aspects of the commercial fraud and bribery (Palazzolo 2011). Commercial Bribery distorts the rules of fair competition, so that the value of law can’t play a role properly, hindered the normal operation of the market mechanism and development of market economy (Badcott 2012). Therefore business ethics is related to the corporate social responsibility to some extent. . 2 Pfizer’s stance on CSR and ethics In the 2006 Pfizer’s CSR report, it illustrated the people’s health concerns for Irish, and committed to let people live in a healthy environment and make better life. The next four years, Pfizer’s stance has great impact on science and technology and social in a number of different ways, the majority of drugs were developed in order to help those people who can’t be cured (Pfizer annual review 2011).
In spite of this, the obvious benefit for patients and stakeholders is created value and satisfied profit, with respect to the social impact in relative terms, the company investment worldwide such as products and fund (Pfizer responsibility 2012). Moreover, Read (2012) estimates that when people need the “Pfizer Helpful Answers,” they will get the prescriptions free of charge, as far as sustainable development is concerned, in particular, greenhouse gas emissions, they contributed to control the emissions successful.
According to the Pfizer annual review (2011), the business ethics of Pfizer emphasis on the moral commitment, including the international anti-corruption and bribery. The Commission was established in 2011 to strengthen the enterprise’s monitoring and opened the public policy on the internet voluntary, such transparency also manifested in the legitimacy of the product (Policy and Medicine 2012).
Finally, Pfizer expressed great support and encouragement in the field of human rights, so it seems likely that the stance on the company will become a significant strategy in comparison with the disclosure of the bribery case within Pfizer (Pfizer annual review 2011). 3. Bribery of Big Pharma’s 3. 1 Overseas Commercial bribe In recent years, the multinational pharmaceutical industry in overseas bribery phenomena have occurred, such as GlaxoSmithKline, Pfizer, Bristol-Myers treasure, AstraZeneca and other pharmaceutical giants are frequent disclosure of a bribery scandal (Kelton 2012).
And industry bribery has become the “rules” of the multinational pharmaceutical companies. Take one of medical bribery case for instance, the Serbia doctor of the institute of radiology named Borojevic, because of accepted the bribes from the international pharmaceutical companies to be disclosed, finally he hung from a tree, and in the suicide note he said “I couldn’t take it anymore” (Vasovic and Hirschler 2012).
Since the multinational pharmaceutical company focused on the field of prescription patent medicine, whether the government approval to enter the market or in the sale of a doctor’s prescription, depending on the final sales of the products (Badcott 2012). Thus it can be seen that the issue of commercial bribery in medicine field growing dramatically, the statistics show that the pharmaceutical industry in the commercial bribe in the list of scores also reached 6. 4 when compare to the other industries (see figure 1). [pic]
Figure 1: The corruption score of Pharmaceuticals and health care (FAIR 2012) 3. 2 Pfizer in bribery crisis Recently, the U. S. Securities and Exchange Commission with the U. S. Department of justice jointly alleged that the world’s largest drug manufacturer, Pfizer for overseas bribery in the local official which in violation of the United States’ FCPA (News Briefs 2012). Silverman estimates that (2012) Pfizer pharmaceutical agreed to pay a fine of $ 60 million, and reached a settlement with the above-mentioned institutions.
There was a new medical bribery scandal following the GlaxoSmithKline (GSK) spend money to settlement medical bribery (Warner 2012). According to the allegations, Pfizer ‘s employees and agents in China, Bulgaria, Italy, Russia and a subsidiary of Serbia bribed to local officials and doctors, in order to obtain the prescription approval and expand sales, covered up bribery behaviour by the name of legitimate expenditures in different ways such as training, journey and clinical testing session (Silverman 2012).
Furthermore, it is understood that the Pfizer acquisition of Wyeth in 2009, its overseas subsidiaries also have bribery activities through the concealment of false invoices (Silverman 2012). 4. Reaction and negative impacts Almost all the enterprises will adopt these activities. It is quite natural that people from different backgrounds may have divergent attitudes towards it (Badcott 2012).
Currently the headquarters of Pfizer in response to said that the company has adopted a series of measures for anti-corruption action, implementing internal audit of the global anti-corruption, also established the compliance department, and check the risk of commercial behavior of the non-US market (Police and Medicine 2012). Furthermore, the overseas medical personnel and government officials would be close monitored, strengthening anti-corruption training in order to completely eradicate this behaviour (Police and Medicine 2012).
From the point of view of the competitors such as Johnson and GlaxoSmithKline, have listed in the overseas bribery investigation of multinational enterprises, it would be very difficult for them to prohibit bribery as the companies quell the events by means of a fine, Evans (2010) points out that they are not to regard it as right, because from the year of 2008 to 2012, these Companies’ fines and penalties are small part of their income when compare to the revenue (see figure 2).
With aspect to the international, a definite trend is increasingly strict supervision of the relationship between physicians and pharmaceutical company, their future will face more problems and pressure (Policy and Medicine 2012). Along with the rapid development of media, they have a large amount of information, because there are far more covert information exists between the consumers and the enterprises, media take advantage of the spread of the fake drugs and bribery events to consumers (Zavyalova et al. 012). When face the lag of government regulatory, the media provided clues and relevant information about drug problems and disclosed bribe events to raise public awareness of pharmaceutical more than the Pfizer Inc (Ball 2012). Consequently, most of them hold the opinions are accused and negative when came to the on the Pfizer bribery as well as the failure drugs (Salzman 2012).
Undoubtedly, Pfizer bribery event is violation of the corporate social responsibility and business ethics, also contrary to the the Pfizer corporate social responsibility report and corporate governance, including the conduct of combat bribery and against the corporation that report referred (Pfizer annual review 2011). Since the pharmaceutical companies has been disclosed bribery, Salzman indicates that except for the reputation of enterprises have been seriously affected, the Pfizer’s stock market declined, it also showed a downward trend, and this scenario seems likely to continue in future. pic] Figure 2: The revenue of the pharmaceuticals companies from 2008 to 2012 (YCHARTS 2012) 4. 1 Risks of Pfizer Even if Pfizer’s bribery brings the negative influence to the society, stakeholders and consumers, the future of this company is not optimistic, and in addition restore the reputation and establish a new mechanism for the public still has a long way to go (Verschoor 2012). U. S. ales of the top 10 patent drugs will face patents expire, the $ 30 billion market by the threat of generic drugs and many large pharmaceutical companies are seeking for new alternatives (Pfizer annual review 2011). It is not realistic for Pfizer to rely on the research and development of a new product to save the future of the company. Read (2011) points out that the patent of drug expiration is a challenge and difficulty for them, while Pfizer as much as possible to make up for the patent expires by means of reduce the marketing costs (Silverman 2012).
Other risks included the failure of clinical trials and new drugs facing FDA rejected, take “Chantix pill” for example, this medicine is Pfizer researched and developed for people who want to quit smoking, however, caused a suicide will bring the company a hit, also Pfizer would pay enormous sum of money to compromise (Silverman 2012). Similarly, the results of the Alzheimer’s drug did not meet expectations by Pfizer and Johnson & Johnson (PharmaWatch: CNS 2012).
Thus requiring the urgent development of management and the consciousness of social responsibility, which would deplete the risks of all aspects. 4. 2 Change the implicit rule Depend on the fines to change the implicit rule of pharmaceutical industry is insufficient, the reasons mainly contribute to lack of the legislation and superficial cognition of the corporate social responsibility (Evans 2012). So it seems that the world’s largest pharmaceutical company not only has vulnerabilities in the most critical compliance system, also in the business management (Ball 2012).
However, these concerns could be solved by strategic intent, corporate governance and media supervision (Policy and Medicine 2012). Firstly, the enterprise management considerations, enterprise may have to implement the system and fulfill social responsibility, ensured the legitimate rights and interests of stakeholders which includes the duty to investors, it means publicly inform the investor enterprise resource utilized, the results and financial position (Pfizer 2012).
On the responsibility of consumers including pharmaceutical product quality liability, enterprises ensure the interests of the economy, also give full consideration to the prevention and control of diseases although the profit was low, society has a certain demand for production and supply of pharmaceutical products, which reduce the risk of illness and save social resources to achieve the maximization of social benefits (Esteban 2008).
Followed by the employee’s responsibility, mainly focus on the employee safety and welfare responsibility, the production of chemical drugs usually have a larger impact on the environment, corporations have a responsibility to take measures to be environmentally friendly, in addition, the enterprise should give charity activities, such as provide drugs and capital contributions for the victims and the impoverished area (Nussbaum 2009).
Secondly, the perfect legislative system will helpful to the medical violations, enterprises have to comply with regulations and the company’s code of conduct, such as the Environmental protection and compliance (Policy and Medicine 2012). Finally, under the strict supervision of the government and media, the approver initiative to provide information so that enterprises can reshape the reputation and prevent illegal behaviour of business ethics and social responsibility (Policy and Medicine 2012).
Conclusion In conclusion Pfizer as the largest pharmaceutical company, paid a fine for their own improper conduct, but the pharmaceutical industry continuous exposure of the scandal are reflected that lack of the corporate social responsibility. Although the CEO of Pfizer, Read (2012) states that enterprise management is inseparable from the company’s transparency, and consider the stakeholders’ interests, Pfizer made the greatest efforts to fight against corruption, and drafted the relevant code of conduct.
Due to lack of awareness and responsibility in business management, regarding pharmaceutical R & D,the negative drugs have been repeatedly reported and disclosed by the media (Sliverman 2012). These enterprises are still far away to earning the respect from society and public. Furthermore, the bribe events had a negative impact on society and the vast majority of stakeholders, if only plead guilty and punished, it can’t solve the fundamental issue (Lange 2012).
What Pfizer should be done is to implement the programme of anti-corruption and enhance the training of FCPA and compliance so as to make them better serve the public and the government’s interests (Policy and Medicine 2012). (Word count: 2524) List of figures Page Figure 1: The corruption score of Pharmaceuticals and health care………………………. 6 Figure 2: The revenue of the pharmaceuticals companies from 2008 to 2012………… 8 Bibliography Ball,P. 2012. GlaxoSmithKline’s bribes are evidence that Big Pharma isn’t working. [online] Available at: http://www. guardian. co. k/commentisfree/2012/jul/04/glaxosmithkline-big-pharma-not-working/print [Accessed Oct 26 2012]. BSR20. 2010. Case Studies Pfizer: Focusing, Refining, and Aligning CSR with a New Strategy. [online] Available at: https://www. bsr. org/en/our-insights/case-study-view//pfizer-focusing-refining-and-aligning-csr-with-a-new-strategy [Accessed Oct 25 2012]. Bailey, J. 2012. One Reason Novartis is Expected to Overtake Pfizer in Revenue: its Generics Business. [online] Available at: http://ycharts. com/analysis/story/one_reason_novartis_is_expected_to_overtake_pfizer_in_revenue_its_generics_business [Accessed Oct 26 2012].
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