Analysis of UK Pharmaceutical Industry: Policies and Sustainability

This report provides a comprehensive analysis of the UK pharmaceutical industry, examining the impact of fiscal and monetary policies, particularly in the context of Brexit and regulatory changes. It delves into the operations of major companies like GlaxoSmithKline and AstraZeneca, detailing how changes in taxation, pricing, and healthcare regulations affect their strategies. Furthermore, the report explores the significance of Corporate Social Responsibility (CSR), ethical considerations, and global and regional factors in shaping the industry's activities. It highlights how companies are adapting to sustainability demands, ethical practices, and global market dynamics, including their responses to initiatives like the World Trade Organization's efforts to reduce drug prices and the increasing prominence of generic medications. The report concludes by emphasizing the critical role of the healthcare sector in the UK's economy and its susceptibility to government policies, CSR initiatives, and global influences.

BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Impact of fiscal and monetary policy on activities of pharmaceutical industry..........................3
Impact of CSR, ethics, global and regional factors on shaping activities in pharmaceutical
industry........................................................................................................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Pharmaceutical industry is the growing sector in UK and they give employment to as
much as 73000 people in the year 2017. GlaxoSmithKline and AstraZeneca are the two
companies that have created a position in the top 10 pharmaceutical companies in the world
(Crane, Matten and Spence, 2019). In this report, the fiscal and monetary policies that are
related to the pharmaceutical industry of UK will be taken and their impact will be detailed and
analysed. This report will also identify the different aspects related to sustainability such as CSR,
ethics and other global as well as regional factors that the companies should keep in mind. These
aspects will be the majorly analysed in the context of the two companies that have been selected
and the industry of UK as well.
MAIN BODY
Impact of fiscal and monetary policy on activities of pharmaceutical industry
The pharmaceutical industry of UK has grown immensely where they are giving
employment to a thousand of people and the contribution in the GDP is also enormous. The
economy of UK which was fairly stable and was operating in a balanced manner has been
affected tremendously after the Brexit that has affected their stability and increased the
uncertainty in the economy. The change and amendments in the fiscal and monetary policies that
are implemented in UK and their impact particularly on the pharmaceutical industry can be
detailed in following manner:
Fiscal Policy and Monetary Policy: The fiscal policies in UK have recently experienced changes
and especially in medicinal sector, the shift of EMA from London to Amsterdam will affect the
manner in which the entire pharmaceutical industry is regulated and controlled. Further, EMA is
closely aligned to MHRA and the impact of this alignment on the fiscal aspect of the company
thus affecting their strategies related to taxation and other aspects (Méndez, Sánchez-Moral, and
Malfeito-Gaviro, 2016). Fiscal policies can literally change the consumption patter amongst the
consumers for instance, when the pricing of certain products are modified by implementation of
excise or of sales tax, or by giving subsidies, then consumers may have to give up the product’s
consumption in case of increase in prices.
There are a variety of fiscal measures that have impacted pharmaceutical companies such
as GlaxoSmithKline and AstraZeneca who are the major companies in this sector.
Implementation of VAT reduction strategy on the sale of E-cigarettes has been implemented

with the purpose of increasing the vaping amongst the patients who are afflicted with the
smoking habit so that it can be made accessible to more and more people and people can cure
themselves form this habit (Mehralian and etal., 2016). Similarly, the implementation of
Volumetric Taxation on the alcohol consumption is another major fiscal policy measure that
discourages the consumption of alcohol in UK. Additionally, the increased taxation on the diet
products is also a major contributor in the spending pattern i.e. consumption pattern of the
consumers in UK and thus the pharmaceutical industry has to modify its price as well.
However above are only the impacts on consumption pattern but the change in fiscal
policies affect the operations of pharmaceutical organisations as well. For example, after No-
Deal Brexit, the insulin used for medical purposes has to be imported from the EU where it is
partially manufactured and stored and therefore, it has to be significantly packaged and brought
in UK and then again stored and packaged thus increasing the total cost due to taxation charges.
Additionally, the need to access safer and healthier healthcare services by the taxpayers who
assume that their money is going in the development of this sector wants a return on their
investment and therefore, they expect to get a better service in return of the taxes that they are
paying.
The monetary policy basically comprises of the interest rates and other economical
aspects that are regulated by the Bank of England in UK. Austerity involves the investment and
other financial sector related aspects that are implemented in the European Union and is very
regressive when taken in context of the healthcare sector of UK (Koinig, Diehl and Mueller,
2017). The majority of the healthcare services are given free to the patients in UK by
organisations such as NHS etc. and also the free medicines that are given to the patients is also a
major factor.
NICE which develops clinical guidelines in UK are the cost controllers of the drugs and
medicines as well and the recent pharmaceutical price regulation scheme where the price at
which these medicines are made available to the public or NHS is controlled, i.e. the companies
cannot change more beyond the prices that have been specified. Apart from budgets, price
controls, profits etc. there are price controls, Generic Reference Pricing etc., the fiscal policies
affect the way in which the entire pharmaceutical industry of UK operates.
On the global upfront however, the fiscal and monetary policies have remained relatively
stable and organisations like WTO have ventured towards reduction in the prices of these drugs

that are lifesaving in nature and although, the companies who have patents on such drugs will
suffer major losses because their profits will be at risk but still, they have to satisfactorily agree.
This is also a major cause behind the increase in generic copies which are made available
cheaper than those medicines which are patented thus impacting companies like
GlaxoSmithKline and AstraZeneca.
Impact of CSR, ethics, global and regional factors on shaping activities in pharmaceutical
industry
With the evolution of the market, industry and preference of the consumers, the practices
have also evolved. Today, the sustainability in the practices that are adopted by the companies
have become more significant than other aspect like price, quantity etc. Therefore, there are
additional new factors that need to be analysed and their impact on the pharmaceutical industry
needs to be documented:
Corporate Social Responsibility: In the pharmaceutical industry, sustainability and value
addition have been interlinked where the healthcare industries need to strive towards giving free
and quality access to the medicinal drugs so that the life of a person can be saved. Profit and
revenue must be the objective of the companies but it should not be the only objective. If the
companies agree to the government interventions of providing the life-saving medicines to the
patients in terms of compulsory licensing, then it simply implies that this is a step towards
increasing the chances of living a life which should be an objective for which these companies
operate (DiMasi, Grabowski and Hansen, 2016). There are many medicines through which the
revenue that is essential in the R&D activities of the company can be earned. CSR is not just
limited to this but also extends to the charitable activities that the companies perform, give
healthcare services in remote areas etc. GlaxoSmithKline aims to reduce its carbon emissions in
half by the year 2030 and they are even sourcing their raw material like wood and palm oil
required from responsible and ethical sources trying to minimise deforestation. Similarly,
AstraZeneca adheres to CSR by adopting 4Ps of sustainability i.e. building global relationships,
giving training and employment to people, developing evidence-based policies and increasing
the access of people to quality healthcare services. Additionally, they have formed partnerships
with various other healthcare facilities that are located in the remote areas of UK so their
medicines can reach as far as possible (Crane, Matten and Spence, 2019). These are examples of
just two pharmaceutical industries because in similar manner, there are many other companies

that are fulfilling their CSR responsibilities and strive to work continuously further as well which
will develop the entire pharmaceutical industry.
Ethics: Ethics comprises of the decision to choose the right option over other wrong options and
in context of pharmaceutical industries it usually implies in the manner of developing safe and
correct drugs that treat the people in correct manner. This should be a major concern for all the
pharmaceutical companies because the fact that lives of many people literally do lies in the hands
of these manufacturers. The ethical aspect also involve placing the lives of the patients above the
profit and revenue generation and therefore, these companies should try to give as much lower
cost or free medicines as much as possible and in UK, the environment is still much safer as
compared to the one in USA where the Opioid drug crisis was detrimental for the public.
GlaxoSmithKline performs their ethical duties by adhering to a Code of Conduct and they have
developed Anti-Bribery and corruption programme where they would complete risk assessments
etc and prefer to work with third parties that are properly aware of these. AstraZeneca also fulfils
their responsibility for ethics by promoting gender equality, encouraging diversity, ensuring
wellbeing of the workforce, protecting the human rights etc. (Agri, Mailafia and Umejiaku,
2017). They too have developed a code of conduct and their major focus is on doing the correct
thing. The company additionally focuses more on increasing the transparency in the company.
Therefore, the compliance to ethics should not be just because it generates goodwill for the
company but also because it is the correct thing to do and lives of the patients are not to be taken
lightly. They should always be prudent and safe where they trust the medicines that they are
taking and the companies that are making them.
Global Factors and Regional Factors: The global context is not just limited to the position of
the pharmaceutical companies on a global level but also depicts how trusted a particular brand or
medicine is. The pharmaceutical industry of UK is already present significantly in the world with
two of its companies coming in top 10 pharmaceutical companies of the world. Further, it is
estimated that the position of the company will rise by 4% to 7% approximately and the country
which is the highest contributor in this pharmaceutical field i.e. USA is another major country
with a huge global presence in this field (Agarwal and Wu, 2018). The reason behind the global
rule of UK is however, the innovation and excellent research and development activities that are
carried out by firms and this is evident in the increasing technological upgrade in the healthcare
industry, operating a free healthcare service on a level as wide as NHS and specifically the

research are ain the medicinal field that the country is pioneering with its development has
increased. GlaxoSmithKline and AstraZeneca are respectively the 6th and 7th world largest
pharmaceutical companies and lead the world because of the medicinal features that they have
excelled in and therefore, the company has created a world class position.
Regional factors are related to the presence of the pharmaceutical companies on the local
level and the activities that can be completed at the local level (Abrol, Prajapati and Singh,
2017). In UK, mainly the industry is regulated by MHRA i.e. the Medicines and Healthcare
products Regulatory Agency and these ensure that the prices charged for the medicines are not
too high. Additionally, they give free medicines in NHS and many other healthcare services so
that the local health can improve.
CONCLUSION
The above research helps in concluding that the healthcare sector is a prominent
contributor in the GDP and growth of the UK’s economy and gets equally impacted by the
monetary as well as fiscal policies and decisions that are taken by the government. The two
prominent companies i.e. GlaxoSmithKline and AstraZeneca were selected in the report amongst
the major companies belonging to this field. The impact of Brexit was also analysed on such
policies and consequently on this industry as well. Additionally the factors related top CSR and
sustainability were analysed and their importance in the industry was identified and detailed.
Further, in this report, the importance of this factor in the growth and sustainability aspect of the
two companies was also identified and analysed accordingly. This analysis helped in ascertaining
how UK at a global level adhered to the CSR and ethics by determining there is adequate
transparency and accurateness in the practices that are adopted by such pharmaceutical;
companies.

REFERENCES
Books and journals
Abrol, D., Prajapati, P. and Singh, N., 2017. Globalization of the Indian pharmaceutical industry:
implications for innovation. Institutions and Economies, pp.327-365.
Agarwal, J. and Wu, T., 2018. The Changing Nature of Global Marketing: A New Perspective.
In Emerging Issues in Global Marketing (pp. 3-11). Springer, Cham.
Agri, E.M., Mailafia, D. and Umejiaku, M.R.I., 2017. Impact of economic recession on
macroeconomic stability and sustainable development in Nigeria. Science journal of
Economics, 2017.
Crane, A., Matten, D. and Spence, L. eds., 2019. Corporate social responsibility: Readings and
cases in a global context. Routledge.
DiMasi, J.A., Grabowski, H.G. and Hansen, R.W., 2016. Innovation in the pharmaceutical
industry: new estimates of R&D costs. Journal of health economics. 47. pp.20-33.
Koinig, I., Diehl, S. and Mueller, B., 2017. Responses to CSR Appeals in Non-Prescription Drug
Ads: Evidence from Brazil and the United States. In Corporate Social Responsibility
and Corporate Governance: Concepts, Perspectives and Emerging Trends in Ibero-
America (pp. 133-155). Emerald Publishing Limited.
Mehralian, G., and etal., 2016. The effects of corporate social responsibility on organizational
performance in the Iranian pharmaceutical industry: The mediating role of TQM.
Journal of Cleaner Production. 135. pp.689-698.
Méndez, R., Sánchez-Moral, S. and Malfeito-Gaviro, J., 2016. Employment changes in
knowledge-based industries in large urban areas of Spain: Impact of the economic crisis
and austerity policies. Environment and Planning C: Government and Policy. 34(5).
pp.963-980.
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