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CSR and big pharma: Pfizer's McKinnell says CEOs should take corporate social responsibility very seriously.

Hank McKinnell, chief executive of Pfizer and chairman of the Business Roundtable, argues that CEOs are increasingly committed to social responsibility because it is linked to their profitability. Here are excerpts from a conversation originally conducted for The New York Times:

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Q: We've heard about corporate social responsibility for decades. Is something really changing?

What's changing is a recognition, at least among the larger companies, that we can't behave as if we had only one group of stakeholders, which are our shareholders. Obviously, they're still No. 1. But rather than being seen as part of the problem, there's increasingly a recognition that in health care and in the community, we have to be seen as part of the solution.

Q: You think the social and political environment around you affects your ability to make money?

If we're seen by the community as providing goods and services that enable people to live a happy, long life, society will want us to succeed. Otherwise, society will hope that we will fail. If we continue to be disrespected, it makes us a target. People will say, "regulate them."

A Gallup survey asked the public about who they respected. Large organizations like mine came in very low. My view is that unless we rebuild public respect, regulation and litigation will affect all aspects of our business.

Q: Is the perception problem one that all of corporate America faces or just the pharmaceutical industry?

The pharmaceutical industry is a little different. We have recognized that this is a major issue for us, regaining public trust and public appreciation. For politicians, bashing the pharmaceutical industry gains votes. We've done considerable research on this. We're starting to use what little legislative muscle we have to improve the situation by working on the Medicare prescription benefit package. Those people can now get access to the medicine they need.

Q: The pharmaceutical industry was highly respected a few years ago, but it seems to have lost ground. What happened?

One factor was our direct-to-consumer advertising. We didn't do enough to strengthen and reinforce the importance of the doctor-patient relationship. It was a consequence of our success that we created visibility for products and many people in the public said, "That would be nice, but we can't afford it."

Q: Did you see the movie The Constant Gardener, which alieges that drug companies test products on unsuspecting Africans?

I saw it. It was a good movie. The cinematography was beautiful, but it had nothing to do with the real pharmaceutical industry.

Q: If you're concerned about your image, wouldn't the simplest thing be to lower prices?

Someone has to pay for the research. So there's a limit on what can be reduced. A better approach is to provide significant discounts and provide free drugs to those who need them. The next challenge is that we're going to have to do something about the more than 40 million Americans who don't have health insurance.

Q: So what is Pfizer doing in terms of social responsibility?

In 2004, we established the Infectious Diseases Institute in Kampala, Uganda, with infection disease specialists from the U.S. and Canada. It targets HIV/AIDS, malaria and tuberculosis. Basically, we train 350 doctors and 250 health care professionals from many African countries. They then go home and train others. This has enormous leverage in sub-Saharan Africa.

In South Africa, we decided to give away Diflucan, which is a medicine for fungal infections that a lot of patients with advanced HIV suffer from. We decided to give it away for free. We're now doing that in 44 countries.

When it came to relief efforts for the Southeast Asian tsunami, we donated $10 million in cash and $40 million in medicines, and sent in experts on supply chains and water quality. That made a real difference in the aftermath.

Q: One other example you'd like to mention?

The one I'm most proud of is the Global Health Fellows program, in which volunteers from Pfizer serve up to six months in very difficult geographies working against HIV, TB and other diseases. We've sent out 92 fellows and we're sending the next blast. It's a great way to get our people to understand what's happening. They come back more motivated by what we do.

Q: And you met with President George W. Bush, along with executives from Citibank, General Electric, UPI and Xerox, to talk about earthquake relief in Pakistan.

Yes, the president called on five CEOs, including me, to help increase awareness of the magnitude of the disaster. His emphasis was that Pakistan is a friend in the war on terror. The five companies set a goal of raising $100 million and we've raised $104 million, the last time I looked. We've distributed $5 million. We will now be engaging in the reconstruction of a large number of these schools and clinics. Hopefully, the people in Pakistan will appreciate it. If the international community had not stepped in, the door might have been opened for more radical Islamic influences.

Q: How much altogether does Ptizer give away?

Over $1 billion a year.

Q: And what percentage of your time, personally, is involved?

Between the Pakistan effort and the Infectious Diseases Institute in Uganda, which I chair, it's probably 5 percent to 10 percent of my time.

Q: Are these efforts improving the pharmaceutical industry's image?

A survey by Harris Interactive in April 2005 showed a rise over the previous year in the number of people who say we are doing a "good job," to more than 50 percent.

Q: Will all these efforts have an impact on the public perception of CEOs in general?

The scandal and criminal misbehavior in the mid- and late 1990s hurt all of us. But I'm pretty sure the perception is moving up now. In Congress, there's a recognition of that. I'm disappointed in how long it's taking to bring some of the people to justice. Ultimately, this will be seen as a sad piece of business history that's past us.
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Title Annotation:MANAGEMENT AND POLICY; corporate social responsibility; Hank McKinnell
Publication:Chief Executive (U.S.)
Article Type:Interview
Geographic Code:1USA
Date:Jun 1, 2006
Words:1009
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