The business of being human

Globally pharma companies spend billions in community outreach programmes. But is this funding a one-way process? In her search for answers Nandini Patwardhan finds companies stand to benefit as much from CSR initiatives as the community.

A successful relationship is always a two-way process. Companies over the years have managed to evolve strong bonds with the customers i.e the society. While taking resources from nature and generating revenues, they offer solutions to consumers.

But that is not considered enough. As the community continues to be plagued with various calamities and problems, Indian pharma companies have come forward repeatedly to make their contribution to the society. But why are they spending their time and money on Corporate Social Responsib-ility (CSR) initiatives? Is it because it aids recall? Or is this another strategy of marketing a company as a holistic entity?

“Generally, a company that is seen to be engaged in social initiatives is viewed as a ‘good’ company, and has a greater chance of recall in an otherwise dry list of comp-eting companies,” admits S Ramkrishna, Senior Director, Corporate Affairs, Pfizer India. “Hence, a brand drawing its identity from such a company is more likely to be remembered by its audience,” he adds.

Ramesh L Adige Whole-time Director, Corporate Affairs and Global Corporate Communications, Ranbaxy

According to Ramesh L Adige, Whole-time Director, Corporate Affairs and Global Corporate Communications, “Ranbaxy’s objective is not to derive mileage from the press on our social initiatives. We feel obliged to contribute to the society in which we operate and believe in sincerely following our enshrined value of being responsible corporate citizens. But it is also true that fulfilment of social responsibility creates goodwill in the community and has natural positive rub-off on the image of the organisation.”

Marketing gimmick?

Nobody can deny the impact of a social responsibility program in terms of the corporate image of the company. In such a scenario, why do companies refrain from talking about their initiatives? “The very fact that it will be misunderstood as a marketing gimmick is the reason for not talking about it,” explains Satish Reddy, Chief Operating Officer and Managing Director of the Hyderabad-based Dr Reddy’s Laboratories. For instance, while people associated with the pharmaceutical industry and NGOs might be aware of the work done by Dr Reddy’s Foundation, not many from the general public would know of it.

Satish Reddy Chief Operating Officer and Managing Director, Dr Reddy’s Laboratories

The foundation is working for the livelihood advance-ment of youth who may not have the necessary resources for getting specialised education. This foundation ensures that youngsters are trained in vocational skills that will eventually help them earn a livelihood. Many of the youngsters trained at this foundation have been recruited in malls in the city as sales people, data entry operators and so on. Almost 47,000 such youth have trained at this large school.

Mumbai-based Pfizer undertakes various social initiatives, some of which are spoken about in the media, while some are not. For instance, the company’s Mother and Child Primary Healthcare program in association with Arpana Trust covers 35 villages in and around Karnal district, in Haryana, and targets a population of approximately 60,000 persons. The programme focuses on reducing anaemia in pregnant women and adolescent girls. However, the media was not involved in this project.

As against this, the company’s Economic Rehab-ilitation Project for tsunami affected communities was discussed in a media conference to spread awareness about the programme so that people requiring assistance would hear about it and approach the project co-ordinators. Under this initiative, Pfizer has partnered with World Vision India (WVI) to help tsunami affected communities regain their economic independence. Pfizer has provided WVI with a grant of Rs 1 crore to disburse as micro-finance development loans to small scale entrepreneurs who lost their livelihoods when the tsunami struck in December 2004.

The rationale behind this selective publicity, Ram-krishna reveals, is the company’s objective behind the initiative. “When initiatives are shared with media proactively, it is usually to reassure all stakeholders that the company is alive to an immediate need in society, and is responding to it. A company seeks to inform its audiences that it is contributing actively to mitigating the situation. At other times, the company may not seek public visibility for something it considers as its normal commitment to society. In our case, we support programs of NGOs in managing common health issues, for which we do not proactively seek press publicity,” he says.

A winning proposition

Whatever the objective behind the decision to publicise, one cannot ignore the benefits derived (by the society as well as the companies) from these programmes.

A report on CSR of pharma companies in India: Practices, Perspectives and Way Forward from the country’s premier industry body, OPPI, in association with SP Jain Institute of Management and Research, states that administration of CSR by pharmaceutical companies offers them certain natural advantages vis-à-vis other industries. Explaining this with the example of Novartis, it states that the company, in its hunt for strategic CSR program forged a strong relationship with the World Health Organisation to implement its leprosy eradication programme.

S Ramkrishna, Senior Director, Corporate Affairs, Pfizer

The society has benefited from this initiative as the area targeted by this initiative has seen a considerable drop in the prevalence levels, to 0.67 persons per 10,000 in 2000 against 8.9 persons 10 years earlier. Nearly, 700 patients have been provided with disability services through a disability care network.

The company has derived social and commercial benefits from its CSR initiative. Socially, they benefit through improved reputation, enhanced corporate image and expanded relationship with the public. Commercially, they reap benefits from the learnings augmented to operate in developing markets with complex regulatory environments, identification of unexplored geographies and markets, and discovery of newer business opportunities.

Whoever said that the prime objective of any business is profit maxim-isation and CSR initiatives do not strengthen the economic performance, needs to re-evaluate his statement. If this statement was considered to be true then, it would not only be difficult to explain the amount spent on a gamut of initiatives, but it would also falsify thoughts of great management thinkers like Peter Drucker, who thought that the statement ‘business is an organisation to make profits’ is irrelevant.

Drucker was of the opinion that profit is not the explanation, cause or rationale of business behaviour and business decisions, but a test of their validity. A business that understands the function of profit tends to plan more rationally and purposefully to obtain the profitability on which the survival and growth of its business depend.

It is for this reason that companies tend to align their economic and social goals. While on one hand, they discover a host of untapped business opportunities, on the other, they also benefit from an enhanced corporate image, increased awareness of the problem and the available solution (offerings of the company in that area).

Selecting projects

So, how do companies choose certain projects over others? “A social initiative should be in line with the vision, mission and philosophy of the company. That is the initial selection criterion for any project. Later it is the company’s performance that matters,” explains Reddy. For instance, in addition to the livelihood advancement programme undertaken by the Reddy’s Foundation, the company had also started work on the child police project as it was observed that many kids run into problems with the police. But over the years, they realised that their strength lay in providing education related to livelihood to youth and so they continued with it. The company has covered many centres including Kargil, Sri Lanka and even Vietnam.

Final thoughts

Over the years, subject of CSR has received due importance because of the information revolution that publicised companies’ initiatives in this area. Those companies with little presence in CSR have been compelled to pull up their socks. Those doing much more have been lauded through various awards and honours. CSR initiatives have always been in line with the economic and social goals, and the core competencies of the company, making them sustainable.

“Community activities have always been a part of our core value; we do not see it as something we need publicity for. It is as much a part of us, as doing business is. However, we do recognise the immense value it adds through employee pride and belonging. Also, the word-of-mouth communication that invariably follows a good initiative is sufficient benefit that we derive,” concludes Ramkrishna.

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