The pharmaceutical industry is one of the most important industries in any economy. Other than maintaining good health, it is a very import source of income. Generally, the industry deals with research, production and marketing of medicinal drugs. There are both brand and generic medicines. Nonetheless, the drugs are subjected to strict laws and regulations. In the past, human beings depended on traditional medicines. However, the industry has tremendously developed into a modern and effective industry. Insulin and penicillin were among the first medicinal drugs to be discovered. As the industry matured, regulations were institutionalized to ensure safety and order. Thanks to the industry, people in various regions of the world can access medication for various illnesses.
Key words; pharmaceutical, medicine, drugs, genetic and brand medicines,
The pharmaceutical industry deals with medically effective chemicals that are taken in dosage forms depending on the type of sickness. It is an extensive industry that covers the processing and distribution of various kinds of medication. Just like all industries, the industry is governed by work ethics and laws of medical science. In the United States, the industry is a multibillion dollar business that is regulated by the government. Generally, it balances between investing huge financial resources in the creation of drugs and the ability to earn profits when sold. Research and development of drugs is a very expensive exercise that required continuous financial support. Drugs can also be harmful if they are not used as prescribed. This calls for careful management of the industry. This paper seeks to give a comprehensive evaluation of the pharmaceutical industry, starting from the history to its rating in the modern world.
According to Taggart (1993), the pharmaceutical industry began way back, when pharmacies and apothecaries offered traditional remedies for sicknesses. However, the industry as we know it today began in the 19th century. Although ideas of experimentation and rationalisms had spread in the 17th century while the industrial revolution began in the 18th century, the two concepts merged in the 19th century to benefit human health. A German company, Merck, was the first in the business with its manufacture of alkaloids in 1827. Similarly, although efforts by GlaxoSmithKline can be traced back to 1715, Beecham became fully involved in the production of medicine in the 19th century. It first patent medicine was produced in 1842.
In the US, two Germany immigrants formed Pfizer in 1849. Although the company began as a fine chemical business, it expanded into manufacturing antiseptics and painkillers to help the casualties of the American civil war. Two army commanders that were very influential in transforming the industry in various ways were Colonel Eli Lilly and Edward Robinson Squibb. The two were motivated by the need to supply the Union armies with medication. Switzerland also made historical developments in the pharmaceutical industry. Swiss manufacturers realized that their dyes had antiseptic properties that could be used as pharmaceuticals (Taggart, 1993). However, unregulated field of trade, national rivalry and conflicts resulted to a less delineation between chemical and pharmaceutical industries. It also impacted on the developing industry: Bayer was seized off its US assets and aspirin trademark during the First World War, while ‘American’ Merck was split off from ‘Germany’ Merck.
The discovery of insulin and penicillin marked a huge breakthrough in the industry. International collaboration of companies such as Pfizer, Merck, and Squibb resulted to mass production of the drugs that saved thousands of soldiers during the Second World War. After the war, the introduction of social healthcare system created a structured system that regulated the prescription and reimbursement of drugs. In 1957, a price fixing scheme was introduced by the NHS, making it practical to invest in the industry. The Thalidomide scandal that occurred in 1961 necessitated stricter testing and regulation of drugs. The US Food and Drug Administration was implemented in 1962. Taggart (1993) alleges that developments in chemistry and biology led to mass production of new drugs like contraceptives, ulcers and cancer drugs among others. Towards the end of 1970s, the industry shifted towards profit making. However, this breakthrough was also a threat to the industry especially when some companies began to imitate their competitors by creating counterfeit drugs for profits. Nonetheless, biotechnological innovations in the 21st century promise a brighter future for the industry.
Corporate Stakeholders and Response to their Issues
The three main corporate stakeholders in the industry are Pfizer, GlaxoSmithKline, and Johnson and Jonson.
This is the highest selling pharmaceutical company in the world with various drugs under its name. Its head office is in New York. It produces drugs both for animals and human beings. Pfizer was involved in a scandal in September 2009, amid accusations of illegal marketing of drugs. The firm was allegedly involved in promoting the use of drugs for unapproved treatment with the aim of misleading or defrauding the public. The United States Department of Justice fined Pfizer $2.3 billion for the criminal and civil suit. No other company has ever been fined such a huge fine in the history of the US. Additionally, the company was ordered to make drastic reforms in its management. Other than financial problems, the company lost key employees as a result of the allegations (Taggart, 1993).
In 1996, Pfizer was very influential in the fight against the outbreak of cholera, measles and meningitis in Nigeria. Its representatives flew to Nigeria to treat the patients. Unfortunately, this noble gesture brought more problems to the company. Over fifty children died while those who survived suffered from physical and mental infection. As a result, the Nigerian government and affected families filed lawsuits against the company. They accused Pfizer of administering unproved drugs to human beings and treating children without the consent of their parents. In addition, the government of Nigeria warned against using Trovan drugs on claims that the drugs had adverse effects of the liver (Taggart, 1993). The downfall of the company continued when a former employee claimed to have been paralyzed by a genetically modified virus designed by Pfizer.
GlaxoSmithKline operates in more than 150 countries. It has spent more than $3 million on research and made over $21 million in sales. Its core products continue to be very influential in treatment of serious illnesses in the society. According to Jacobsen & Wertheimer (2010), terminal diseases that had troubled humanity for many years can now be treated by the company’s products. As much as the company operates in many countries, it has been criticized for inaccessibility of its drugs. Most families in poverty stricken regions cannot access drugs while the company makes so much money from the sick. The top management has been shaken by this dilemma.
Critics argue that the company has done very little to improve the health of people in the developing countries. However, the chief executive officer recently released a statement indicating that the company has a strong corporate responsibility strategy. The statement indicated that GSK’s social responsibility is focused on making positive contributions to the world. The firm is also committed to research, production as well as the distribution of medicinal products.
In reaction to public criticism, GSK established the orange card scheme that targets low income earners. GSK also aims at subsidizing the prices of essential drugs, especially in the developing countries. Recently, it stated that it was committed to providing anti-malaria and anti-retroviral drugs at reasonable prices that would ensure a safer community. Another major criticism about the company is that it does not inform the public on possible side effects of the drugs. Its advertisements are mainly meant to increase their sales as a business entity but lack the human element and empathy (Jacobsen & Wertheimer, 2010). The consumers of pharmaceutical products also undergo immense frustration as try to seek alternative forms of treatment whenever they lack the right medicine for their illnesses.
Johnson and Johnson
This is an American company that is mainly involved in the manufacture of medical drugs, consumer package drugs as well as medical devices. Most people know it for its continued support for international education programs. Although its head office is in New Brunswick, it has subsidiary companies in more than fifty countries across the world. Its annual sales are estimated at $24.6. Like the other two companies, Johnson and Johnson has been faced with various criticisms. However, the most memorable one occurred in 2004 when the Chinese government threatened to sue it on allegations of contaminated baby products. Many parents complained that Shampoo manufactured by the company had allergic effects on their babies. The response from the company was that the cause of the allergies must have originated from the production process but it was not an intentional move by the company. The statement affirmed that its products were safe and that the compounds that caused the allergic reactions were dioxane and formaldehyde (Jacobsen & Wertheimer, 2010). However, it also stated that these compounds were in very small amounts. Indeed, subsequent investigation by the Chinese government confirmed that the compounds were in lower levels that were within the maximum limits set by the law.
In 1905, the Red Cross had been registered as the trademark for the company’s medical plasters in the country. However, the American Red Cross and the US military were also using the Red Cross on their emblem. This created some confusion that was later addressed in the Geneva Conventions. Later, Johnson and Johnson was allowed to use the trademark domestically but only on the medical products. It was restricted from using the trademark on structures or automobiles. This move validated the use of the Red Cross by the company. However, there was a turn of events in 2007 when the company sued the American Red Cross for using the symbol of the Red Cross on products that it sold to the public. Johnson and Johnson argued that the humanitarian organization was only permitted to use the Red Cross symbol on non profit ventures. Nonetheless, the two organizations reached to a consensus and agreed to settle the matter out of the court. This prompted the case to be dismissed.
The Social Role of the Industry
Most companies have always been keen on having a strong social responsibility in societies they operate in. Similarly, the pharmaceutical industry at large plays a very significant role in both the physical and social well being of the society. Pharmaceutical companies are always keen to have annual activities in their corporate social responsibility strategies. Some of these activities include supporting education programs, community health care programs, tree planting and sports activities to raise funds for the physically disabled among others. The CSR has become a very important aspect in the business community. It implies that other than adhering to a socially responsible model, pharmaceutical companies should take up responsibilities to improve the healthcare of the people, especially in the third world countries. For instance, as part of its CSR program, Pfizer distributes anti-retroviral drugs to South Africa for free or at a subsidized price depending on the situation. This has been very effective in the fight against AIDS. The company has done the same in Thailand and this has helped to improve the physical health of the public (Jacobsen & Wertheimer, 2010).
The industry has been very keen on ensuring that medicines can be supplied to as many parts of the world as possible so that people do not die because they did get the required drugs. Although his has been challenging, there has been a great improvement in accessibility of drugs. For instance, GSK is committed to supplying free albendazole drugs to the World Health Organization which in-turn gives it to the less fortunate. Therefore, GSK should be acknowledged for its commitment to fight lymphatic worms out of the world. Currently, there are over fifty partnerships between various private companies and the public sector. All these are aimed at improving the healthcare sector. Many companies work with the UN under the Accelerating Access Initiatives to supply medicinal products to Africa and other parts of the world.
According to Walsh (2007), pharmaceutical companies have also been impressive in the fight against malaria under the Medicine for Malaria Venture. Other than drugs, major companies are committed to research to provide more efficient drugs. For instance, the industry is actively involved in the Global Alliance for Vaccine and Immunization that is boosting the efficiency and access to vaccines. Additionally, the industry has partnered with over thirty partners to develop cost effective drugs for tuberculosis. Although the pharmaceutical industry is not known to be leading in CSR, it has made tremendous steps in improving global health.
The Economic Role
Thousands of people work in the pharmaceutical industry. It has created many jobs, directly or indirectly. Although some of the economic benefits might not be in the actual production and distribution of drugs, many companies depend on the industry. For instance, the chemical and glass manufacturing industries sell their products to the pharmaceutical industry that uses them for research. There are so many drugs stores across the world and they offer employment to thousands of people. Therefore, so many people benefit from the industry at various points in the whole chain. In the US, the industry is estimated to be worth more than $380 billion.
Jacobsen & Wertheimer (2010) assert that the pharmaceutical industry does not only comprise of patients and physicians but group buyers, schools, government institutions and insurance companies. Individual countries earn over $3 billion of income per year from various corporate stakeholders in the industry. Nonetheless, the industry incurs huge expenses that affect the world’s economy. As the industry grows, more money is spent on drug prescription every day. In most cases, there are more than two types of drugs to choose from thus increasing the expenses on prescription.
Role of the Industry in Political Setting
Political policies in various countries have impacted on the industry in various ways. For instance, in the US, the pharmaceutical industry supported candidates in the last election. Over $24.4 million from the company was used to fund campaigns. However, there were accusations that the industry had increased the prices of its products so as to raise money to fund political campaigns. However, this was a strategic move by the industry because it was keen to ensure that it supported candidates who would introduce policies that would create a good working environment for the industry (Walsh, 2007). The strategy turned out to be successful as most of the candidates continue to fight for the interests of the pharmaceutical industry.
Domestic and International Ethics
The pharmaceutical industry is controlled by rules and regulations that are reviewed regularly. Nonetheless, there is an ethical code of conduct that governs every industry. For instance, every company has to be honest in its deeds. All pharmaceutical industries are required to produce products that have none or list side effects on the users. Major chemical components of the drugs should also be indicated on the packs of drugs so that consumers can be aware of what they are taking and avoid drugs they might be allergic to (Jacobsen & Wertheimer, 2010).
However, there are specific domestic and regional laws applied on the pricing of pharmaceuticals. It is impossible to establish a specific international price for the products because of the differences in currency values. Similarly, the conduct of marketers of pharmaceutical products at the international and local levels is different. Nonetheless, they are monitored by bodies in the individual countries to ensure that the consumers are not exploited.
Ecological and natural resources
The industry depends on three major resources; social; human and built resources. The success of the industry depends on the interaction of the three. The ecological resources comprise of the rules, regulations, and connections among stakeholders. Proper human interactions can only work when there is a proper code of conduct to be adhered to. If there is no proper interaction among different people in the industry, it might collapse. This is why human capital is part of the ecological resources. Workers put in a lot of physical and intellectual labor to keep the industry efficient. The success of any industry depends on the contribution of human capital.
Build resources that play a key role in the industry include roads, equipment, physical structures like the labs and institutions. As much as these infrastructures may be expensive to put up, the industry cannot work without them. It therefore calls for huge investment by both the private and public sectors. Natural resources cannot be left out. For instance, mineral are very critical in the production of drugs. Some of the common minerals used include magnesium, iron, sulphur, and penicilium (Jacobsen & Wertheimer, 2010). Similarly, water is not only used as a solvent but as part of some drugs. The availability of most of these natural resources depends on the accessibility of natural metals. Not every country has these minerals. Therefore, they have to be imported from other countries. One major resource that cannot be forgotten is land. This is the foundation on which the structures that host pharmaceutical companies are constructed. Plants also provide syrups that are used as raw materials in processing drugs.
Some of the social issues affecting the pharmaceutical industry include negative side effects on patients. For instance, there have been cases of resistant drugs for malaria, TB and gonorrhea. Patients suffering from such effects live a very miserable life. Therefore, it is upon the marketers of the drugs to raise awareness about such cases and provide remedies if possible. Furthermore, pharmaceutical companies are supposed to test any new drugs before introducing them for human use. However, most companies have been accused of shortcuts where they force favorable results and testing on people without their consents (Taggart, 1993). They have also been accused of ignoring the poor who cannot afford treatment.
Rating of the industry’s CSR
Although there is so much to be done, I believe the pharmaceutical industry has had a great impact on the lives of many people. Most people, especially in the developing world have access to ARVs that have lessened the burden of fighting against HIV. Nonetheless, many cases of counterfeit drugs have been reported. Therefore, the industry needs to instill strict measures to address this problem. However, this can only be achieved with support from the government to arrest anyone selling fake drugs.
Rating of the Industry in Relation To the Core Values of Saint Leo University
Saint Leo University believes in excellence; respect; personal development; responsible stewardship; integrity and service to the community. While the pharmaceutical industry has been effective in achieving most of these values, there is so much that needs to be done in terms of respecting human life. The fact that a company can produce counterfeit drugs shows that it has no respect to humanity. Life is so precious and it should be safeguarded from greed. It is upon the industry to find and sue rouge pharmaceutical companies. Most companies are accused of being business minded and forgetting their service to humanity. The integrity of some of the chemists working in drug stores is also questionable. Some of them have been accused of being unqualified to prescribe drugs to patients.
Conclusion and Recommendation
As it has been demonstrated, the pharmaceutical industry has come a long way. Currently it plays a huge role in the global economy. Currently, companies like Johnson and Johnson, GSK and Pfizer are some of the major stakeholders in the industry. These companies have faced various criticisms but they have been able to fight back. They are committed to help the society in various ways through social corporate responsibility programs. However, it is necessary that they institute strict measures to fight counterfeit pharmaceutical products. Therefore, the industry should work very close with different government agencies to stop any scrupulous companies from endangering people’s lives.
Additionally, many poor people die from simple sicknesses because they cannot access drugs. Therefore, the industry should consider establishing subsidiaries in many developing countries to ensure that the poor can benefit from easy access to drugs.