Building reputation is a long-term endeavour yet as pharma moves away from a traditional B2B model to embrace patients, it is becoming a crucial success factor
Although pharma has come late to the corporate reputation party, it has no reason to nervously stand in the corner. "If you only read the news or speak to industry experts, you will think the industry's reputation is at the level of tobacco companies or arms dealers when this is simply not true. The reputation of the pharmaceutical industry among the general public is average," says Kasper Ulf Nielsen, executive partner at the Reputation Institute, a leading global research and advisory firm focusing on corporate reputation.
Nielsen's research makes the situation clear. "Looking right across the world, pharma's reputation is somewhere in the middle of the pack, well above financial services and energy, even telecoms." What's more, the general trend is upwards. "The overall picture is of an average reputation that has been flat for the past few years but is now improving."
The problem for pharma, says Nielsen, is that its reputation with the public is polarised – while more than one-third consider its reputation as 'excellent', another third has the opposite view, rating it 'poor' or 'weak'.
This polarisation reflects the changing attitude of the industry, he says. "The industry is going through an interesting development. 10 years ago, companies were very focused on healthcare professionals and, broadly speaking, didn't care about the patient or the general public because they were not its customers. This has drastically changed and today the pharma companies that really engage with the patient – and with their reputation among them – are reaping the rewards on their bottom lines."
Reputation is all about emotion and story, says Nielsen. "Pharma is good at engaging stakeholders and it knows from work with existing stakeholders that the more you engage and communicate, the more favourable people are towards you. When we measure HCPs, healthcare experts and payers, they understand the challenges of the industry and have a fundamental trust in the companies."
The Reputation Institute's RepTrak measures reputation across seven dimensions. "We know that products and services, governance and citizenship are the top drivers of emotional perception towards the company, yet with pharma governance and citizenship are the weakest elements. This is because members of the public – patients – simply don't know what the companies are doing in these areas.
"If you ask whether a company is a good corporate citizen, the number of people who disagree with the statement is very low, only about 6-7 percent, but 60-65 percent of the general public are uncommitted. These are the swing voters you have to influence," says Nielsen.
There is a clear link between a strong reputation and communicating to the public on these issues, he says. "This is a source of real frustration for many companies because they point to their access to medicines programmes and the millions of dollars they donate to charities but they see a mismatch in the public's perception of them. Companies may be engaging in the developing world but this isn't what matters to people; they are looking for something much more tangible and closer to home, putting a face to the company, focusing the impact they have in local areas, creating jobs and being active in local communities. The industry still has some way to go. The companies that do well are those that are telling that story."
There is also a mismatch in the budgets companies allocate for marketing and comms activities. "The data shows that 60 percent of people's willingness to recommend or buy a product is based on their perceptions of the company, while only 40 percent is on how they perceive that company's products and services. Yet, in pharma, where 98 percent of spend is on product promotion, it is a tough ask as many companies are very comfortable with the traditional B2B model where they talk about their products using technical language to healthcare professionals.
"Pharma is moving into a new environment and I'm not saying to stop talking about your products. Be bold and start talking about who you are as a company. Try spending 20 percent of your budget on corporate activities – the companies that do will see a major shift in their reputations and will really stand out in the industry. It's not about winning a reputation award, it's about driving your business," says Nielsen.
He has some more advice for uncertain companies. "Ask yourself – what do I want the general public to do for me? As patients, you want them to go into the doctor's office and ask for a specific product, or recommend a product by word of mouth, or even support you in a crisis. The data shows that if you improve your reputation by five points, recommendations go up 8.5 percent. A good reputation is the key to growth and to better margins, as well as attracting and retaining the best people and best stakeholders to partner with," he says.
A holistic approachOne company that has taken much of this advice to heart is Novo Nordisk, which has risen sharply in the RepTrak survey. "We have been tracking our reputation and using the data to manage our reputation for some years. In fact, reputation tracking is fundamental to the way we build the brand and how we build communications around the many things we're doing," says Nick Adams, vice-president of corporate branding.
"The general public is one of the audiences we track and we're very happy and proud that we seem to be doing something good in this space, but, for us, reputation needs a holistic cross-stakeholder approach," he says. "We track ten different stakeholder groups, including the ones we report on in our annual report – employees, patients, GPs and diabetes specialists – but also a much wider catchment such as potential employees and the media. We use the same methodology and ask the same questions so we can compare each group."
Yet, tracking is simply the "start of the discussion" for Adams and his team. "The data shows us which factors are most important for each individual stakeholder group. For example, the 'workplace' dimension is inevitably important for employees but diabetes specialists are more interested in innovative and high-quality products and services, as well as whether we are a good corporate citizen," says Adams.
"We use the methodology across groups to see how we're performing relative to our competitors and to see what happens when we make changes. So, for my area – communications – that might be about changing the story, for example, moving from a pure 'corporate citizen' story to one that includes innovation. However, it's not just about communications and there are many things a company can do as a whole to influence its reputation."
Building a reputation is a long-term activity, he says. "Pharma's reputation is not as bad as people think but it's also true to say that it's not that great either – it's distinctly average. However, what's interesting is that companies are also pretty average. Yes, there are some shifts up and down as companies change their activities but reputation takes time to build and mould, although things can change overnight, of course, as we've seen with companies like GSK in recent years."
Avoiding scandalOn the road to a robust reputation dangers lurk around every corner. In fact, recent research has highlighted that the pharma industry is worryingly prone to corruption.
"There are abundant examples globally that display how corruption in the pharmaceutical sector endangers positive health outcomes," concludes a new report from global anti-corruption coalition, Transparency International. "Whether it is a pharmaceutical company bribing a doctor for prescribing its medicines irrespective of a health need or a government employee facilitating the infiltration of substandard medicines into the distribution system, public resources can be wasted and patient health put at risk."
"The pharmaceutical value chain – from research, through development, registration and marketing – that delivers a medicine or device to the patient is extremely long," says programme director for the organisation's pharmaceuticals and healthcare programme, Sophie Peresson. "What's more, if you do a little bit of research into corruption in pharma and the healthcare sector you won't find that much out there that covers the entire chain, so our report is an attempt to bring together all the information in order to identify corruption vulnerabilities."
Peresson and her team found a number of vulnerabilities. "There are some well-established historic issues that have been looked at by many institutional players including WHO or the World Bank. Also, the private sector has had these issues on its radar screen for some time and there is a real commitment from many to tackle the issues head on. We are also seeing that some governments are committed; for example, former Prime Minister Cameron hosted an anti-corruption summit here in London back in May."
In order to help all stakeholders identify ways to prevent corruption, the report focuses on vulnerabilities in six key areas – R&D, manufacturing, registration, marketing, procurement and distribution, says Peresson.
"There are many different types of corruption, some of which are more hidden than others," she says. "In the R&D phase, for example, corruption can be the undue influence of the private sector on the types of research that are done or skewing the perception of the data by failing to publish the results of clinical trials. These are much more difficult to prove than more obvious cases of corruption such as when a patient has to pay a bribe to a doctor to get a medicine or a company pays an official to gain marketing authorisation.
"One piece of evidence I found really striking was from Australia where it was shown that researchers funded by the private sector reached different types of conclusions from research funded in other ways. A simple and easy way to tackle this would be to ensure that the results of all clinical trials are published, both negative and positive," says Peresson.
The report makes a number of other recommendations. "We need global leadership to address corruption and, so far in healthcare, this hasn't happened. We need increased cooperation between actors and genuine action from governments. Donors have a definite role to play in anti-corruption efforts and we call for truly autonomous global institutions. However, we can't achieve anything without the help of the private sector and we have seen several players take a pioneering role, such as the change to EFPIA's code requiring companies to disclose information on their relationships with healthcare professionals. We have also identified some tools that we believe will be able to tackle corruption, especially working more with technology, and, of course, we are calling for increased monitoring and enforcement of existing frameworks and sanctions."The report from Transparency International concludes: "From transparency issues during R&D to unethical drug promotion in marketing practices, key issues caused by corruption and inefficiency continue to undermine health outcomes… The high degree of autonomy afforded to the pharmaceutical industry, the industry's vast financial resources, the drivers for maximising profits at the expense of healthcare outcomes and the incentives for HCPs to act unethically, create a breeding ground for corruption to take place. As in any sector, the more ethical companies are disadvantaged, the greater the risk that all companies operate with unethical business practices."