GSK publishes 2010 Corporate Responsibility Report

Issued: London UK

• New sustainability targets set with long-term goal to become carbon neutral by 2050
• Details on new initiatives to increase access to medicines in LDCs
• Charitable support increased to £222m

In its Corporate Responsibility Report published today, GlaxoSmithKline (GSK) reiterated its commitment to building its business on strong values and ethical standards.  The Report covers key responsibility issues including access to medicines, research and business ethics, environmental sustainability, employment practices, stakeholder engagement and investment in communities. In particular, new measures were outlined to strengthen the company’s commitment to the environment and increase access to medicines for people living in the world’s poorest countries.  GSK also reported a substantive increase in its level of charitable support.

Commenting on the report, Andrew Witty, CEO of GlaxoSmithKline said: “Our commitment to running a responsible business underpins everything we do.  This means being led by our values and principles, being transparent about how we work and responding to the changing needs and expectations of our stakeholders. There is always more that can be done but I am pleased with the progress we are making.  Specifically this report outlines our efforts to strengthen our commitment to the environment and continue to improve access to our medicines across the world.”

Environmental sustainability

In a move to further integrate and embed sustainability into its core business, GSK announced a new environment strategy, including the objective that the company’s operations become carbon neutral by 2050.

The new strategy builds on GSK’s success in becoming the first company to achieve the Carbon Trust Standard global certification in 2010.  This recognises organisations that measure, manage and reduce their carbon emissions across their operations based on rigorous independent assessment and remain committed to doing so year on year.

Specifically, the Carbon Trust assessed and certified GSK’s carbon footprint over a three year period across 65 countries, 200 sites and eight business divisions. 

Key elements of GSK’s new environment strategy include:

• A commitment to a long-term goal for company operations and the value chain to be carbon neutral by 2050.  This target means there will be no net greenhouse gas emissions from manufacturing, distribution, use and disposal of products and the sourcing of raw materials.
• Interim targets to reduce GSK’s overall carbon footprint by 10% by 2015 and 25% by 2020.
• Target set to reduce GSK’s operational water consumption by 20% by 2015 and to reduce waste to landfill from operations by 25% by 2015 and to zero by 2020.
• Delivering sustainable operations with financial benefits – the company estimates it can save £100m per annum by 2020 through reduced energy, materials and distribution costs. 

Access to medicines

GSK acknowledges that much still needs to be done by all stakeholders including business, Governments and NGOs, to tackle the issue of access to medicines in developing countries.  Nevertheless the company continues to take substantive steps to reform its business practices, including adopting a range of flexible pricing models, to expand availability of its medicines and vaccines to as many of the people who need them as possible. 

In July 2010, GSK also created a specific Developing Countries and Market Access (DCMA) business unit dedicated to increasing patient access to GSK medicines while expanding the company’s presence and helping it to build a sustainable business in developing countries.  The unit’s success will be judged not only on profits, but also on its contribution to increasing access to medicines.

Following GSK’s commitment to reduce prices of its patented medicines in LDCs to no more than 25% of their price in the UK (or in France for products not sold in the UK), sales volumes for the majority of products have increased significantly.  For example, in East Africa the prices for GSK patented brands (Avamys, Avandamet, Avodart, Flixotide, Malarone and Seretide) were reduced by an average of 69% and the number of packs sold increased more than fourfold (320%) by the end of 2010.

GSK also repeated its pledge to price its malaria candidate vaccine (RTS,S) responsibly and at a level which is affordable for African countries.  The vaccine is currently in late-stage clinical development, and if approved, will be the first vaccine against malaria, with the potential to save the lives of millions of children across Africa.  GSK has committed to price the vaccine at a level that covers costs and generates a small return of around five per cent which it will reinvest in the development of future vaccines for malaria or other products for diseases of the developing world.

Although progress is being made, only one third of the 15 million people living with HIV in sub-Saharan Africa who need therapy are receiving it.  To contribute to efforts to improve availability of medicines, ViiV Healthcare, a global specialist HIV company established by GSK and Pfizer, extended its policy on voluntary licences in 2010.  Voluntary licences are granted by patent holders to allow generics companies to manufacture and sell their products.  ViiV Healthcare has now granted 11 voluntary licences for its ARVs, an increase from eight when the company was formed.  Its licensees supplied over 594 million tablets of their versions of Epivir and Combivir to LDCs and sub-Saharan Africa in 2010. This represents 35% growth over 2009.  ViiV Healthcare does not receive any royalties for granting voluntary licences to generic companies.

Charitable support

GSK announced that global giving to charitable initiatives in 2010 totalled £222m, an increase of 36% over the previous year (on a like-for-like basis).  The £222m comprises £147m of product donations, £53m of cash donations, £18m of management costs and £4m of in-kind donations.

The company’s giving was higher than in 2009 due to the expansion of key programmes including product donations for the US Patient Assistance Programme and donations of albendazole to the Global Alliance to Eliminate Lymphatic Filariasis.

Through the Alliance, GSK has donated almost two billion tablets of albendazole and hundreds of millions of people have been treated through mass drug administrations in 54 countries.

After discussions with the World Health Organization and other health experts, in October 2010 GSK committed to expanding its donation of albendazole to enable treatment of all school-age children in Africa against intestinal worms from 2012 onwards.  The donation will have a major impact on children’s educational performance, physical wellbeing, school attendance and nutrition.

The full report can be found at www.gsk.com/en-gb/investors/corporate-reporting/.  It covers key responsibility issues including access to medicines, research and business ethics, environmental sustainability, employment practices, stakeholder engagement and investment in communities.

GlaxoSmithKline – one of the world’s leading research-based pharmaceutical and healthcare companies – is committed to improving the quality of human life by enabling people to do more, feel better and live longer.  For further information please visit www.gsk.com.

GlaxoSmithKline cautionary statement regarding forward-looking statements
Under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, GSK cautions investors that any forward-looking statements or projections made by GSK, including those made in this announcement, are subject to risks and uncertainties that may cause actual results to differ materially from those projected. Factors that may affect GSK's operations are described under 'Risk Factors' in the 'Business Review' in the company's Annual Report on Form 20-F for 2010.