European Pharmaceutical Industry ESG Thematic Report, 2023

Environmental, Social and Governance (ESG) in the European Pharmaceutical Industry

The integration of Environmental, Social, and Governance (ESG) within the investment and decision-making processes contributes to responsible investing. Investment into ESG has skyrocketed since 2013; equally, European Pharmaceutical industry, is a powerful tool for achieving certain ESG goals across the globe.

The pharmaceutical sector, especially from Europe has been one among leading providers in healthcare and pharmaceutical products throughout the globe. In this sector, there has been good progress in recent years with respect to introducing revolutionary cures for life threatening health conditions along with communityengagement initiatives or as part of philanthropy. Similarly, having a diverse and safe working space, ensuring good product quality, and making sure the companies in this segment achieve environmental targets for example attaining carbon neutrality or/and net carbon zero has been consistent throughout the years.

 The major companies that have been focused here, has been impacted variably due to Covid-19. These companies showcase their technological prowess in terms innovation in threating rare disease, therapeutic areas, immunotherapies etc. So these companies are having high investment potential and have a largest share in market in recent years.

ESG Trends

Both Environmental and Social pillars have been critical for the European Pharmaceutical space. With increase in technology the European Pharmaceutical sector has witnessed increase in of the infusion of investment and market capital. These companies have been the pinnacle of innovations in the industry providing treatment for rare diseases, cell and gene therapies and introducing AI and industrial robots. These technological factors have significantly impacted the community by providing community vaccination drives, conducting medical campaign, awareness programs, and supply of medicines for rare diseases. Introducing AI and Industrial Robots within manufacturing of Pharma products have made workplaces, safe (SDG 3, 11) and secure by reducing accidents. Diversity and inclusion have been key factor throughout these industries, few companies have diversity and inclusion targets, for example for Gilead Sciences maintaining female representation by 50% has been a goal that need to be achieved by 2025.  Ensuring product quality (SDG 9, 12) has been a crucial element for the companies operating in this sector. For example, Pfizer has mentioned success rate of medicines in their website. Most of the companies are also having environmental target abiding with Paris agreement and approaching carbon neutrality or net carbon zero.

ESG Challenges

Main challenges for this sector are inclined with social aspect such as accessibility of medicines or health care, affordability across the globe, and adverse impact of new innovations or products. Even though few of these companies have mentioned strong and sound supply chain, services are not available across globe. There are instances unavailability of right medicines or health care have increased the mortality rate in certain countries due to lack of proper infrastructure. Thus Coping SDG 3 Good Health and wellbeing throughout globe and SDG 10.a providing special treatment for developing/ underdeveloped countries have been difficult. In fact, few of these companies do have philanthropic community engagement activities like community drives including vaccines, medicines, health checkup, and educational programs.  Due to tax system prevailing in the market, import tax for most of medicines have been high and make them unaffordable, especially medicines, vaccines or health care utilities required for any rare disease have been very unaffordable. This poses a significant challenge for these companies in terms of attaining SDG 16 – peace, justice, and strong institutions. Another challenge for we are facing is unpredictable long term or short-term impact from products or innovations.

Growth of the European Pharmaceutical Market

The Europe pharmaceutical market size has been valued at USD 282.75 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR)of 5.4% from 2021 to 2028. The growth can be aligned with increasing healthcare expenditure, a surge in R&D investments, and the emergence of biologics and biosimilars. Moreover, supportive regulatory framework like European Medicines Agency and reimbursement policies improve the adoption of pharmaceuticals in this region, thus facilitating market growth. The impact of COVID-19 has been variable on the industry. It has adversely affected drug prescription and uptake rate owing to the decreased rate of diagnosis of diseases, such as cancer. In fact, the consumption of biologics and novel medicines witnessed a decline in 2020, which can be attributed to a decline in primary care drug prescriptions.

Key Companies in this theme

    • F. Hoffmann-La Roche Ltd.

    • Bristol-Myers Squibb Company

    • AstraZeneca plc

    • Novartis AG

    • Johnson & Johnson Services, Inc.

    • Gilead Sciences, Inc.

Scope of European Pharmaceutical Industry ESG Thematic Report:

    • Macro-economic and ESG-variable analysis of the industry, including regulatory, policy, and innovation landscape

    • Key insights on infrastructure developments and ESG issues affecting the theme

    • Identify key initiatives and challenges within the industry

    • Identify ESG leaders within the industry

    • Understand key initiatives and the impact of companies within the sector to fuel an informed decision-making process

Key Benefits of European Pharmaceutical Industry ESG Thematic Report:

    • Developing a comprehensive understanding of macro-economic, Policies & Regulations and innovations affecting the European pharmaceutical Sector, globally

    • Key insights into environmental developments and ESG issues affecting the theme

    • Identifying ESG risks and opportunities to business among leading players in the European Pharmaceutical Obtaining a clear and relevant understanding of company actions, progress, and impact and find opportunities for investment into the sector.