A year ago, amid deep concern over COVID-19 and frantic work to develop vaccines, some of pharma’s heaviest hitters saw the possibility of reputational enhancement.

Novartis AG chief executive (CEO) Vas Narasimhan dubbed it a "remarkable, perhaps once-in-a generation opportunity" back in April during the company's first quarter earnings call. Eli Lilly CEO David Ricks, meanwhile, closely echoed this sentiment, stating the sector had a “once in a generation opportunity to reset” its reputation.

Indeed, the world watched news of vaccine development with bated breath. In the public mind, pharma companies came to be associated with hard-working scientists seeking to cure the world.

Yet it seems like that moment may already be passing, and the opportunity for rehabilitation in the public mind could disappear unless pharma companies take stock.

Earlier this year I warned that the industry may have put all of its eggs into the Covid-19 basket. A dive into our latest analysis of how the pharmaceutical sector is viewed through the crucial lens of its Environmental, Social and Corporate Governance (ESG) actions bears this out, suggesting that the sector may already have missed the boat.

Fading glory

Our insights last year pointed to an improvement in stakeholder perceptions for the sector in 2020, as many warmed to pharma companies thanks to the halo effect of the vaccines. And while recent polling of a sample of the general public by RepTrak indicates that this trend has continued, our latest intelligence finds that this improvement has been short lived.

The headline figure from our deep dive into millions of alternative data, including media, regulator, investor, government, public and NGO sources from December 1, 2020, to February 28 this year shows average ESG perceptions of pharma have since nosedived.

Now, out of a possible range of -100% to +100%, the sector’s average ESG rating is -20%, compared to +10% in the previous quarter.

What’s going on? Last June, The Economist compared COVID-19 vaccine development to the way mass production of penicillin during the Second World War revitalised the industry’s reputation.

Positive headlines have since dwindled. Media attention had shifted from stories of firms collaborating for the benefit of humanity onto more complex territory. High profile issues like vaccine nationalism, anti-vaxxers and pharma companies falling foul of international politics amid the debate over possible side effects have come to the forefront.

The focus on vaccine manufacturers AstraZeneca and Pfizer, meanwhile, has led to increased scrutiny on the companies’ histories of alleged corruption and ethical breaches.

The pharmaceutical sector is of course, far bigger than its work on COVID-19. With the initial shock – if not the consequences – of the pandemic having passed, we may expect this trend to continue. Scandals that may have not received attention last year will once again garner column inches and retweets even as the pandemic remains a global issue.

Dragging the industry down

What are the crucial ESG factors dragging the industry down? Business ethics is the single-most concerning issue for the industry right now, with a score of -13%. Major lawsuits against Roche and Biogen have opened a Pandora’s box of bribery and corruption allegations, garnering major pick-up on social media in the process.

Biogen, which had to pay $22 million to resolve allegations that it illegally paid insurance co-payments for thousands of patients in order to collect Medicare revenue, languishes bottom of our list of 20 companies, with a -67% rating. This represents a drop of -80% compared to the previous quarter.

Roche, the best perceived pharma firm in the previous quarter with +64%, is now seventh with a rating of -3%, having had to pay out a $12.5 million for false claims through Humana’s Medicare Advantage programme.

However, unless more scandal emerges, the firm’s longer-term progress on key ESG issues such as supply chain sustainability means it is well-placed to bounce back. Other firms would do well to take note.

A second issue afflicting the industry’s ESG rating is affordability and pricing, with 12 firms scoring negatively on this issue.

While AstraZeneca offered to sell its COVID-19 vaccine at cost price until the pandemic is over, Moderna and Pfizer’s recent announcement that their versions are likely to contribute at least $15 billion and $18.4 billion respectively to sales this year will have gone down far better with shareholders than the wider public.

This, no doubt, has contributed to Pfizer’s fall 14 places to 19th position on our ESG rankings of 20 firms, with a score of -65% compared to +14% in the previous quarter. While AstraZeneca’s ESG score has also dropped, it has only moved down one position to 13th. There is a good chance that its cost price decision will be remembered positively in years to come.

Negative perceptions of affordability and pricing extend beyond issues relating to COVID-19, of course. Price hikes by AbbVie, Bristol Myers Squibb, GSK, Pfizer, Sanofi and Teva in late January have contributed towards the narrative shift to more negative territory.

Hot on the heels of this spike in negative news, meanwhile, came the refusal of nine companies - Amgen, AZ, Eli Lilly, Merck, Novartis and Novo Nordisk among them - to sell therapies at the price legally required by section 340B of the US Public Health Services Act.

Not all bad

It is easy to focus purely on the negatives amid pharma’s broader shift in ESG ratings, but the traffic is not all one-way.

The sector has received the most positive ESG-related coverage when it comes to access to medicines, most likely due to the publication of the Access to Medicines Index. This annual report has shone a light on a range of successful initiatives and companies that have developed compelling access plans for low and middle income countries.

Praise for Takeda’s ‘Access First’ approach, Patient Assistance Programs and consideration of ‘end-to end' patient access to treatment have played a major key role in its ESG ascent from +11% the previous quarter to +56%, giving it top spot on our index.

Also moving up the ranks is Bayer, which came in second place with +40%, an increase from +8% the previous quarter. The firm’s ascent is linked with drug safety, an area that also garnered overall positive ESG perceptions with Bayer playing an important role in a new alliance with CureVac, for the development of CVnCoV, a COVID vaccine.

A new challenge

The vast challenges of 2020 offered pharmaceutical companies the chance to re-forge their images in the court of public perception.

For instance, Pfizer paid for National Geographic to follow the development of a vaccine, while Johnson & Johnson launched a social media series on the hunt for a vaccine, drawing a vast, global audience.

Our ESG findings, however, indicate that pharmaceutical firms that expected a long-term image-polish borne from vaccine development were sorely misguided. Perceptions of an industry coming together to help the common cause have faded as the reality and complexities of the vaccine rollout kick in.

The narrative is likely to shift towards the global disparities in vaccine acquisition, and attention is shifting once again to the norms of pharma coverage that preceded COVID-19.

Despite all this, the opportunity described by the likes of Vas Narasimhan has not completely vanished. Utilising the opportunity, however, requires far more than some well thought out content and a few savvy marketing gestures.

It demands that firms fully react to growing ESG expectations, building ESG practice into their wider models whether or not they are helping vaccinate the world from COVID-19. It is only by making these changes, and taking the public along with them as they do so, that any fundamental, long lasting shift in perception is achievable.

Siera Torontow is the Managing Director of Healthcare and Consumer Practice at alva