The Next Step: Can CSR Programs in Indian Drug Firms Help Fight Neglected Disease?
The recent news that the Government of India has formalized an international assistance program mirrors a wider trend in the country—philanthropic giving is on the rise.* Private industry is no exception, and corporate social responsibility (CSR) programs and foundations have become common additions to firms. Although the largest social programs belong to industrial and IT firms, such as the Tata Group, Infosys and Wipro, the Indian pharmaceutical industry has started its own corporate giving effort. The drug industry is big business in India; the Indian Department of Pharmaceutical estimates that between 2009 and 2010 turnover reached $21.7 billion. Given the volume of sales that drug firms enjoy, many have been able to set aside some funds for social programs. Cipla, Glenmark, Lupin, Natco, Ranbaxy, Dr. Reddy’s Labs, Wockhardt, ZydusCadila and others all have foundations or dedicated CSR programs. Although it’s difficult to find data on how much these programs disburse, informal conversations suggest that firms often allocate .5%-2.0% of sales to invest in social programs. Some foundations, like Biocon’s, are driven by the personal wealth of the firm’s senior management. In 2009-2010 Glenmark, Lupin and Ranbaxy invested (very roughly) $200,000; $700,000 and $6 million, respectively, in their social initiative.** Although the level of funding contributed is small, the resources available for social initiatives will grow along with the firms.
So far, drug firms have focused their giving on community-based programs largely in health and education. These programs provide needed services, such as access to water, sanitation, schools and health care to low-income communities in India. Although these are important activities, there may ways for drug firms to better maximize the impact of their philanthropic investments by leveraging their R&D capabilities.
Supporting neglected disease R&D or access to neglected disease technologies could be a very natural fit for Indian drug firms. After all, many western pharmaceutical companies have made a name for themselves through large drug donations, the contribution of IP to collaborative R&D initiatives and partnerships with non-profit Product Development Partnerships (PDPs). Many Indian firms already have business models oriented around bringing down the price of medicines. Given that their core business often benefits patients afflicted with neglected disease, their social initiatives could build upon this success.
Contributions could include direct financial support to product development activities, in-kind support (through contract research or manufacturing) to PDPs, or programs that allow scientists to spend a defined percentage of their time on neglected disease R&D. All of these capitalize on the ability of drug firms to carry out due diligence for scientific projects, a difficult task for most funders new to R&D, and their existing base of networks and expertise. Glenmark has expressed an interest in tapping into its R&D talent and conducting R&D for respiratory disease as a part of its social initiatives. If the firm can identify the right partner and make this transition, then it will be an important step forward for the industry’s involvement in neglected disease through CSR.
There may be a few natural barriers to shifting CSR strategies. For one, if firms have made long-term investments in communities, then it may be damaging to redirect funding, but this still leaves room for allocating additional future investments to R&D projects. The relatively modest amounts of funding allocated to CSR may also inhibit firms from taking-on pricey product development activities, but if firms join existing collaborations or offer up their in-house expertise, then even small amounts of funding can have significant impact. Finally, it may just require a shift in mentality amongst senior management. Many firms express a desire to benefit local communities through their foundations and CSR programs and view service delivery as a concrete way of doing-so. However, for as long as India’s dual burden of communicable and non-communicable disease continues, contributions to fighting neglected diseases will ultimately serve local populations.
Corporate giving amongst Indian pharmaceutical firms is still in its infancy and will likely evolve in the coming years as the industry continues to grow. As the breadth of social initiatives increases, it will be interesting to watch whether the social arms of firms will join their business counterparts in increasing the availability of neglected disease technologies.
* FSG and Centre for Emerging Market Solutions (2012). Catalytic Philanthropy in India.
** Interview with Glenmark, email correspondence with Lupin Foundation, Ranbaxy Annual Report 2009-2010