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Reaffirming commitment to sustainability

As the pharma sector battles the COVID-19 pandemic and goes through a reset to defend the world against such crises in future, it needs to pledge allegiance to sustainability to ensure global welfare

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Sustainability as a concept was gaining good traction across industries, globally and in India, before the onset of the COVID-19 pandemic. Be it reducing energy consumption or emission of greenhouse gases to curb environmental pollution, improving waste management or optimising water consumption, the pharma industry was identifying and implementing various measures to become more sustainable. Many companies were actively seeking to enhance their impact on the environment and society.

But, the focus of the world has shifted towards fighting the pandemic. For the pharma industry, in particular, identifying and developing new tests, medicines and vaccines at the earliest to fight COVID-19, while ensuring that the production and supply of other medicines remain unhampered, is the current priority. How has this affected sustainability agendas? Have they taken a back seat in this scenario? Let’s examine.

The COVID-19 impact

A GlobalData report had anticipated last year, “Sustainability was the buzzword of 2019 and would have continued to increase in prominence in 2020. However, the global outbreak of coronavirus (COVID-19) will bring progress to a halt.”

This year, in another report, GlobalData highlighted, “Sustainability has been a big trend in the past few years and many companies in the Asia-Pacific (APAC) region have switched to more eco-friendly alternatives, such as replacing plastic materials and removing single-use packaging. However, since the outbreak of coronavirus, companies may resort to plastic packaging to combat the spread of the pandemic putting the sustainability aspect in the back seat.”

Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co also states, “The present unprecedented situation since early 2020, as a result of the COVID-19 pandemic, has impacted the commitment towards the 17 SDGs. The process of achieving the 17 SDGs has slowed down and the approach towards these goals has weakened. There has also been a shift in the course of development.”

He highlights, “Inequalities are increasing now more than ever before, and this threatens the overarching aim of SDGs, that is, ‘leave no one behind’. Additionally, COVID-19 has largely impacted global economies, making financing for sustainability even more difficult. It was theorised in early 2020 that there is an apparent risk that COVID-19 will adversely affect the achievement of SDGs. The UN, World Bank and other international organisations warned that even the limited progress made towards countering poverty and malnutrition will be nullified.”

Elaborating on the magnitude of the issue, he adds, “It is estimated by the UN Environment Programme that recovering from the fallout of COVID-19 may require a global investment of around $20 trillion. The investment decisions surrounding this money will affect the society for decades to come including our response to future and possibly greater environmental challenges.”

If the growing use of plastics and the huge amounts of medical waste being generated are considered cases in point, the impact of the pandemic on sustainability has been adverse.

For the pharma industry, this means that endeavours undertaken and implemented over the years to make drug development, manufacturing and distribution more sustainable is at serious risk. However, Santhosh Jayaram, Partner and Head, Climate Change, Sustainability and CSR Advisory, KPMG in India, has a different point of view. He states, “The fight to defeat the crisis has only strengthened the sustainability agenda. The capital allocation around the world towards sustainability has increased during 2020.”

This opinion is reiterated by Antony Prashant, Partner, Deloitte India as well. He opines, “COVID-19 has accelerated the positioning of sustainability as an important agenda for organisations. One of the big impacts of COVID on companies has been the shifts in operating models which were near-constant for many years. As they build/redesign their operating models, the focus has been on creating them with the sustainability agenda at the core.”

So, industry stakeholders and observers seem to be divided on the impact of COVID-19 on sustainability.

Challenges to sustainability in pharma

It is to be hoped that Jayaram and Prashant are proven true since it is clear that the pharma sector needs to reaffirm its commitment to sustainability. Otherwise, in the long term, this could also derail the world’s efforts to prevent another health crisis of this scale and scope since the correlation between health and the environment is becoming disconcertingly clear.

But, a report from GlobalData titled, ‘Sustainability in Pharma – Thematic Research’, gives a reality check as it points out, “The industry has deeply rooted environmental, social, end governance issues that challenge sustainability. This, along with the image of the industry itself, has created poor or even negative public perception about sustainability in pharma.”

There is enough evidence to back this perception. For instance, a report titled, ‘Carbon footprint of the global pharmaceutical industry and relative impact of its major players’, reveals that the pharma industry is 55 per cent more emission-intensive than the automotive industry.

And, some of the challenges have been aggravated as a result of the pandemic. Sharma informs, “A majority of the financial stimulus programmes that have been notified by various governments focus on sustainability to restore global economies from the impact of COVID-19. However, the change brought about by the pandemic is not simple and has created challenges in implementing/ maintaining sustainable practices.”

Our experts cite some examples of the challenges.

Jayaram states, “The big challenges that the pandemic has created is the disposal of medical waste. The pandemic has also raised questions related to supply chain.”

Sudarshan Jain, Secretary-General, Indian Pharmaceutical Alliance (IPA) also admits, “Pharmaceutical manufacturing and supply chain is complex in nature and requires collaboration with multiple stakeholders in the process. So, logistical disruptions were one of the key challenges in maintaining sustainable practices during the pandemic.”

But, innovative ways and methods are emerging to tackle these issues. Take combination products for example. Packaging a drug and medical device together is an approach that is garnering a lot of attention as it could bring in a new paradigm in healthcare delivery and also lead to less packaging. Likewise, serialisation technologies are enabling efficiencies throughout the supply chain, and can also help find openings for simplification and waste reduction.

However, given the complexity of processes in the life sciences industry, pharma products could leak into the environment at any stage of their life, from development to utilisation to disposal. Therefore, tackling these challenges would call for collaborative, proactive steps from the industry. And, one of them would be to make environmental sustainability central to any project, right from the beginning.

So, what will drive sustainability agendas post-pandemic?

According to Jayaram, “Organisations have a better understanding that the centrality of sustainability is resilience. The pandemic has also given strength to the thought that sustainability goals can be achieved through partnerships.”

He highlights, “The pharma industry is trying to restore/gain back the lost trust through this pandemic. The drug pricing issues and the Opioid crisis somewhat resulted in some damage to its image in 2019, especially in the US. With the response and agility the industry has shown during this crisis it surely would have helped to regain some of the lost image, but what it has also done is, it has helped to bring the importance of access to treatment and medicines to the centre of the agenda and this will be one of the biggest sustainability agendas for the pharma industry.” Rebuilding its reputation and increasing access to key medicines will be crucial to India Pharma Inc as well.

Jain states, “Achieving sustainability while providing quality medicines to the country is one of the major priorities of the pharma industry.” And, as India takes strides towards being truly AatmaNirbhar in the pharma sector, this is imperative.

He opines, “In light of the COVID-19 pandemic, the pharma industry went through various operational changes. A key agenda on priority is to accelerate India’s domestic drug manufacturing capacities. While the industry plans to boost its capacities in API and bulk drugs, the industry consciously considers the quantities of liquid, solid and air pollutants generated during the process. The immediate need is to work at putting in place a mechanism to process this waste into less harmful substances. Being cognizant of the environmental factors is equally important to enable the success of the agenda and long-term impact.”

Sharma advises, “The carbon footprint can be better managed by use of new, improved and technology-driven packaging techniques. Pharma companies need to consume resources like water efficiently and evaluate the environmental impacts of every stage of the product life cycle until its final disposal.”

“Seamless integration of business objectives with sustainability goals is key,” he asserts.

“The pandemic has significantly altered both the drug development cycle times and production lead times. This has brought in the need for pharma companies to drive the sustainability agendas around the environment, health and safety specifically around minimisation of waste, increase the safety for employees to ensure disruption-free operations and, optimisation of energy consumption all of which enable production at lower costs and ensure sustainability. Focus for the future would be on dimensions around plastic neutrality, water sustainability and green infrastructure,” says Prashant.

He adds, “There has been a shift in priorities towards social sustainability due to the pandemic and therefore the focus on environmental sustainability has been relatively less. The objective for organisations would be to balance both of these in the medium term post the pandemic.”

Thus, multiple factors will impel the industry’s strides towards sustainability.

Setting examples

The good news is that on a global level several pharma companies are pledging and taking very important steps towards key sustainability goals. (Check Table 1) Many companies with operations in India are also making it a priority. To cite an example, LANXESS, a speciality chemicals company had released a statement in March 2021 which informed, “A new system of compensation for the Board of Management has been in place since the beginning of the year. Roughly one-third of the variable compensation is now linked to the company’s sustainability performance. More specifically, the company’s performance in the areas of climate protection and occupational health and safety will be factored into the system for 2021.

TABLE 1: GLOBAL SUSTAINABILITY INITIATIVES
VANQUISHING AMR

Over 100 pharma firms and organisations that account for over a third of the world’s global antibiotic sales collaborated to form the AMR Industry Alliance. It works to tackle AMR and its members have set voluntary targets to decrease the industry’s environmental footprint. The Alliance released a report In 2020, which divulges that15 of its 18 members who manufacture antibiotics had carried out assessments at their manufacturing facilities and 82 per cent of them had successfully adhered to the standards recommended by the alliance. The report also predicted that in three years, over 50 per cent of all products manufactured at facilities owned by these 18 members would meet targets for no-effect concentrations of antibiotics in the environment.

Source: AMR Industry Alliance 2020 report

ROOTING FOR RESPONSIBLE PROCUREMENT

Founded in 2005, the Pharmaceutical Supply Chain Initiative (PSCI) is a group of pharmaceutical and healthcare companies that have collaborated to promote responsible supply chain management and better business conditions across the industry. Today it has over 40 member companies across the globe. The PSCI Benchmarking Survey Insights Report released in 2021 reveals very positive data about responsible procurement in the industry. It found, “responsible procurement is gaining more importance in member companies’ business activity. Further demonstrating the increasing importance of responsible procurement is the fact that, over the years, higher levels of management are actively engaged in companies’ Responsible Procurement Program.” The report states, “Supply chains have rarely had to grapple with more complex, changing conditions than during the Covid-19 pandemic. Even prior to the pandemic, however, there was an increasing understanding that having an overview of the risks present in a supply chain can help prevent business interruption and ensure resilience. In 2020, more companies segmented their supply base based on responsible procurement risk.” A higher proportion of member companies now also perform responsible procurement audits for suppliers assessed as high risk. Over the years, India, China, the USA and Europe have consistently been the regions where most responsible procurement audits are conducted, reveals the report.

Source: The PSCI Benchmarking Survey Insights Report

It also added, “This covers climate protection and energy, occupational health and safety, environmental protection, products and circular value chains, employees and corporate culture, and transparent reporting on achievement of sustainability. Through its newly created Sustainability Committee, all member of the Board of Management will make joint decisions on major sustainability projects.” (Check LANXESS: Making sustainability a guiding principle)

LANXESS: MAKING SUSTAINABILITY A GUIDING PRINCIPLE
LANXESS, a speciality chemicals company, is an organisation that is taking focused strides towards ensuring