Corporate Responsibility Report 2006

A human race

Do more, feel better, live longer Corporate Responsibility Report of 2006

INTRODUCTION

Introduction 3-6 Corporate responsibility at GSK 7-17 Access to medicine 18-25 Research 26-33 Ethical conduct 34-39 Employment practices 40-49 Supply Chain 50-51 Environmental management 52-74 Our work with communities 75-80 Data summary 81

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Introduction Welcome to GlaxoSmithKline’s Corporate Responsibility Report 2006. This report explains our approach to the wide range of social, ethical and environmental issues associated with our business and our performance in 2006.

About GSK About our report Medicines e are a research-based pharmaceutical This report covers our corporate responsibility Our key pharmaceutical products company. Our mission is to improve the activity and performance during 2006. It updates target serious diseases including: Wquality of human life by enabling people our last corporate responsibility report published in • Asthma and chronic to do more, feel better and live longer. Our business March 2005. obstructive pulmonary disease employs over 100,000 people in 116 countries. Our • Epilepsy, depression and other Data relate to the calendar year 2006, except where consumer healthcare business includes dental health diseases of the central nervous stated. products, over-the-counter medicines and system nutritional drinks. The environmental data cover the calendar year • HIV/AIDS, herpes and other 2006. Data are collected from all of our viral diseases Key statistics 80 pharmaceutical and consumer manufacturing • Infections sites, 11 of our 13 biologicals manufacturing sites (£bn, except • Diabetes that are in operation, 18 of 22 pharmaceutical and for employees) 2006 2005 2004 consumer research and development sites and 6 of • Cancer Turnover – total 23.2 21.7 20.0 8 major office locations. We include available data • Heart disease and other for sites that were in operation for all or part of the cardiovascular diseases pharmaceuticals 20.1 18.7 18.1 year. We do not require environmental data from • Urogenital diseases consumer healthcare 3.1 3.0 2.9 small offices and distribution centres. Notes attached to the charts explain the scope and data Profit before taxation 7.8 6.7 5.8 collection process for each parameter in more detail. Vaccines Number of Unless specified as being per unit of sales, figures GSK makes vaccines that protect against diseases including: employees 102,695 100,728 100,019 are absolute numbers, i.e. total consumption of energy, water etc. Data in the environment, health • Hepatitis A and B and safety sections of this report are externally • Diphtheria Turnover by location of customer 2006 verified, see Verification. • Influenza 0% The scope of other data relate to our worldwide • Polio operations except where indicated. 00% • Rotavirus £5.0bn We use external guidelines and frameworks to • Tetanus inform our reporting where relevant. We do not • Typhoid 00% base our report on the Global Reporting Initiative £11.2bn guidelines but we have produced a GRI index to • Whooping cough show which elements of the guidelines we cover and to aid comparison with other company reports. £7.0bn Consumer healthcare brands More background information on our policies and Our brands include: approach to CR is available on our website: • Over-the-counter medicines – www.gsk.com/responsibility. Beechams, Contac, Nicorette/Niquitin, Panadol, We also publish a Corporate Responsibility Review Tums, Zovirax USA £11.2bn which provides an overview of our approach to • Dental health – Aquafresh, corporate responsibility. It is available in print and Macleans, Polident, Sensodyne Europe £7.0bn on our website. • Nutritional drinks – Horlicks, International £5.0bn Our 2005 CR report was one of the top 50 reports Lucozade, Ribena (ranked 17th) in the 2006 SustainAbility, United Nations Environment Programme and Standard & Poor’s Global Reporters Survey – an international benchmark survey of non-financial reporting.

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CEO/Chairman’s letter

e believe that a healthcare company isn’t sustainable if it is only concerned about the 20 percent of the world’s population lucky enough to have the resources to pay for new Wtreatments. We believe that Access to medicines is essential to our vision for GSK. Improving people’s health is what drives us and what makes talented scientists want to work here. Our commitment to the poorest countries is integral to this. These countries may not represent a viable commercial market for some new medicines but there is still a need for people to have medicines they cannot afford. Yet pure philanthropy is not the right solution either – the needs are too great. We look for new ways to tackle these problems. GSK is involved in over ten public private partnership projects – researching new medicines and vaccines for diseases disproportionately affecting developing countries, including HIV/AIDS, malaria and TB. We are also making key medicines and vaccines more accessible through discounted prices and have negotiated eight licences for third-party manufacturers to produce generic versions of our key HIV medicines. As this Report shows, our efforts are starting to bear fruit. Preferential pricing and voluntary licences are helping to increase the supply of HIV/AIDS medicines to sub-Saharan Africa. In 2006, seven countries completed their five-year programmes to eliminate lymphatic filariasis using our albendazole treatment. We will continue donating our tablets until this disabling and incurable disease is completely wiped out. Vaccines are another exciting area. In 2006, 75 percent of all the vaccine doses we produced were sold at preferential prices for immunisation campaigns in the developing world. These will save millions of lives. We expect to launch our vaccine for cervical cancer in 2007. This disease affects women in all countries but has the greatest impact in the developing world where there are few screening programmes to catch early cases. There is no room for complacency – much more effort is needed from all stakeholders to resolve the healthcare problems of developing countries. But we are proud of the contribution we are making. We know that our efforts on access to medicine must be based on a solid foundation. Our industry is high profile and often the subject of criticism. Good medicines can make a big difference to the quality and length of life for all of us and it is rightly expected that we should meet the highest standards of integrity in all aspects of our work. This Report gives a snapshot of our approach to embedding an ethical culture across GSK. This includes applying the highest standards of behaviour and transparency in our R&D and promotion of medicines, treating our people well, and minimising the impact of our business on the environment. We also need to play our part in tackling major global issues such as climate change. We value the input of our stakeholders and would welcome your views on this Report or any aspects of corporate responsibility at GSK.

Sir Christopher Gent JP Garnier Chairman Chief Executive Officer

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Q&A Duncan Learmouth was appointed Senior Vice President, Corporate Communications and Community Partnerships in 2006. Here he sets out his vision for CR at GSK. The complete Q&A is available in our full CR Report at www.gsk.com/responsibility.

What is your vision for CR at GSK? Are GSK’s programmes for the developing There are three elements. We want to achieve high world philanthropy or are they part of standards of behaviour in everything that we do, in your business? all parts of the company. And we want to be known There’s no doubt that they are part of the business. for that. We’ve adopted the theme ‘performance The need for our medicines will not go away so we with integrity’ which has been very successful in need to make sure that our programmes are engaging our employees. Secondly, we need to sustainable, and the best way to do this is make bring the outside world into our decision making. sure they are part of our day-to-day business. A Only through a full understanding of stakeholder great example of this is our long-term commitment views will we make the best decisions. The third to providing not-for-profit HIV medicines in the element is our desire to be a real member of the world’s poorest countries. There is also such local community everywhere that we operate. That immense stakeholder pressure on this subject that includes playing our part in the wider global it would be impossible to turn a blind eye. But it’s community by contributing to better healthcare. not just about responding to pressure from the outside. Our 100,000 employees want to work for Where do you think GSK is doing well? a company that is addressing these challenges. We We are very engaged on issues of the developing have a duty to use our scientific know-how and world – and in my experience this is quite unusual human capital to make a difference where we can for a public company. I believe that we lead our – it’s essential to our own sense of integrity. industry on R&D for neglected diseases, preferential pricing and voluntary licensing and are well ahead Why haven’t you reduced the price of of most other sectors. We take a long-term your products in all markets? approach and our programmes involve a high To be a sustainable business we have to make an degree of partnership and dialogue with NGOs, adequate return or we won’t be able to discover governments, and organisations such as the World new medicines. We’re under immense pressure Health Organisation and the Gates Foundation. from competitors and investors. Nevertheless we are looking at the issue of pricing beyond the world’s Where should GSK be doing more? poorest countries. Sales and marketing practices are always a hot topic for the pharmaceutical industry. We need to ensure Are you researching new medicines that that we keep up with public and regulatory are really needed or just looking for ‘me- expectations of how we market our products, and too’ drugs? ensure GSK policies meet or exceed these changing In many cases the drugs that are really needed will expectations. However, being the first to change be the most profitable because that’s where the commercial practices runs the risk of reducing our demand is. New drugs for cancer or Alzheimer’s will competitiveness, so we must also be proactive in be meeting a huge unmet medical need and will be encouraging others in our industry to follow suit. profitable too. The problem is that these diseases tend to present extreme scientific challenges and What is the biggest challenge? require novel scientific approaches which carry a The most difficult task is finding a balance between greater risk of failure. Diseases of the developing the needs of different stakeholders. Our investors world present a different problem – there is great are concerned primarily with profit. CR is important need but no viable commercial market for new to them because it affects the long-term success of products. We get round this problem by working the company but the next quarter’s earnings are through public private partnerships and are very often a more pressing priority. On the other hand, active on R&D for neglected tropical diseases. I think NGOs and others in society would like us to be more the debate about me-too drugs has been taken too concerned with solving society’s healthcare far. If a new drug enables patients to take fewer problems. doses each day or reduces side effects then it may seem like only a small improvement but it can make a very big difference to the treatment outcome.

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The pharmaceutical industry has been What role is GSK playing in addressing criticised for lack of transparency over climate change? clinical trial results. Are you doing We have targets for reducing energy usage. I anything to address this concern? believe we’ve adopted a sustainable approach that There is a perception that the pharmaceutical is linked to our business. Because of our position industry is less than transparent and I think this is as a company that addresses healthcare needs, partly because we haven’t done a very good job of and the relatively small footprint we have communicating the challenges we face. I believe compared to other sectors, there are other issues that our online Clinical Trial Register has gone some that are a higher priority to address. Nevertheless way to addressing these concerns. But the climate change is an important issue for GSK and communication of data from clinical trials for our stakeholders and we need to play our part is a tough area. Weighing up the balance of risks in tackling it. and benefits from a medicine is rarely straightforward. Data isn’t black and white – it requires interpretation and judgement. This inevitably means that people will have different views and that our knowledge will change over time as new drugs are tested and used. So actually talking about medicines to doctors is not straightforward. This communication is very important but very challenging. Is the pharmaceutical industry sustainable? We have a ‘contract with society’ – in return for investing in new drugs we generally have around ten years of intellectual property protection on our products before generics can be made. R&D is uncertain and unpredictable so in some periods we are more successful at this than in others. But I believe that the basic model is still a good one because it fosters a high level of innovation. Of course there are challenges and the industry must continually look for ways to improve R&D productivity. We have a unique type of product that plays a very personal role in people’s lives. Nowadays good health is seen as a right but it’s also a business and for some people this is uncomfortable. Generally, though, I believe people accept the need for a trade-off – they may not like us making a profit from health but they accept it because it’s the best way to encourage the discovery of new medicines.

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Corporate responsibility at GSK

Why is CR important to GSK? Our strategy orporate responsibility is about how we GSK is committed to addressing two key challenges achieve our goals and implement our facing the pharmaceutical industry and society as a Cbusiness strategy. We aim to operate in a way whole. These are: that reflects our values, while understanding and • Improving productivity in research and responding to stakeholder views and connecting development business decisions to ethical, social and environmental concerns. • Doing our part to support patient access to new medicines Corporate responsibility helps to achieve our business goals by: To do this we focus on four business strategies. We have structured this report around these strategies • Supporting our relationships with key to show how corporate responsibility is integrated stakeholders including patients and consumers, into our business. doctors and governments • Protecting and enhancing our reputation and therefore trust in our products • Improving our ability to attract, retain and motivate the best people • Strengthening our risk management processes We believe that our business makes a valuable contribution to society by developing and marketing medicines which improve people’s lives. However we know that the research, development, manufacture and sale of medicines raise ethical issues. We seek to minimise the negative impacts of our business and maximise the positive benefits of our products and operations.

Build the best product pipeline in the industry for Maximise the potential of our current product the benefit of patients, consumers and society portfolio Relevant responsibility issues include: Relevant responsibility issues include: • Animal research • Ethical conduct • Conduct of clinical trials • Standards in our supply chain •Patient safety • Environmental impact • Interactions with patient groups

Improve access to medicines in the developed Be the best place for the best people to do their and developing world best work Relevant responsibility issues include: Relevant responsibility issues include: • R&D for diseases of the developing world • Employment practices • Preferential pricing • Diversity •Voluntary licensing • Human rights of employees and in our supply chain • Access to medicines in middle income and developed • Health and safety countries • Resilience and well being • Community investment

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Our most important corporate responsibility • DTC advertising issues • Consistency of commercial practices codes Corporate responsibility is a broad subject which covers a very wide range of issues. We need to The Committee also reviews and signs off our prioritise these issues in order to manage them annual CR report. effectively and report clearly on our performance. CR risks We identify the most important (material) issues for Management of significant business risks is GSK through engagement with stakeholders, our coordinated by the Risk Oversight and Compliance risk management processes and our knowledge of Council (ROCC). The ROCC also considers our business and the pharmaceutical industry. reputational and corporate responsibility risks. These inputs have led us to identify four CR issues For more background information on the ROCC, that are particularly relevant and significant for GSK. see Risk management and compliance on These are: gsk.com. • Research and innovation – contributing to Management structure healthcare by developing medicines and Duncan Learmouth, Senior Vice President Corporate vaccines that meet the needs of patients Communications and Community Partnerships, and Rupert Bondy, General Counsel, are our executive • Access to medicines in developed and team members with responsibility for CR. developing countries We believe that day-to-day management of CR • Ethical conduct including sales and marketing issues is done most effectively within our business practices operations, where experts on all our CR issues work. • Environment, including climate change and the Coordination is provided by a cross-functional team, impact of pharmaceuticals in the environment made up of representatives from key business areas. These representatives are senior managers and have direct access to the appropriate executive team member. Their role is to oversee development, MANAGING CR implementation and communication of CR policy across GSK. This ensures a comprehensive and Our Corporate Responsibility Statement and consistent approach is taken throughout the Principles define our approach to our key CR issues organisation. and provide guidance for employees on the standards to which the company is committed. You We also have a small CR team that co-ordinates can view the Principles in the background section policy development, reporting and communication of our website. with socially responsible investment analysts. CR governance For details of our environment health and safety We have a Corporate Responsibility Committee management see EHS management. (CRC) of non-executive board directors that provides Assurance high-level guidance on our approach to CR. The The environment, health and safety sections of this CEO and members of the corporate executive team report are externally verified by environmental are actively involved in CR and participate in CRC assurance consultancy, SGS. The purpose of their meetings. assessment is to: The committee members are Sir Christopher Gent • check that the EHS data presented are accurate (Chair), Sir Ian Prosser, Dr Daniel Podolsky and Tom and that they represent GSK’s performance de Swaan. You can find more information on the fairly CRC members and Terms of Reference in the background section of our website. • critically review the completeness and relevance of the information presented The Committee meets four times a year to review our policies and progress on our CR Principles. Four • assess the effectiveness of GSK’s data Principles – access to medicines, standards of ethical management and reporting systems conduct, research and innovation and global You can find SGS’s verification statement and our community partnerships – are reviewed annually. response on page 70. Other Principles are discussed at least once every two years. The Committee’s findings are reported to Other sections of the report are not externally the Board. verified. However GSK has an extensive internal audit programme that covers all aspects of our During 2006 the Committee reviewed our activity business. in a number of areas including: Internal communication and awareness • Access to medicines We keep employees informed about corporate • Community investment responsibility. During 2006, 34,000 copies of our CR Overview brochure were distributed to • Reputation management employees directly and through Spirit, our internal • Caring for the environment magazine. Spirit also features regular articles on CR related topics. • Standards of ethical conduct

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We also surveyed a random selection of It is difficult to quantify the extent of our 1000 employees on their awareness of corporate engagements, since this activity is embedded in our responsibility and which issues they consider the business operations, but we have included examples most important. 369 employees from across the in this section and throughout this report. These are world and in all the different areas of the business some of the ways we engaged with our responded to the survey. stakeholders in 2006. • 80 percent have heard of corporate Investors and benchmarking organisations responsibility We held 18 meetings with investors in 2006, to discuss CR issues. • 78 percent recognised it was the responsibility of themselves and other employees These included one-to-one meetings to discuss key issues as well as educational visits and meetings. In • Ethical business conduct, access to medicines January we hosted a meeting for 17 investors at our and health and safety were the three areas vaccines facility in Belgium. Investors were shown a identified as most important presentation on the science of vaccines and visited • These are also the areas that employees believe the site’s research and production areas. In October, that the company is doing most to address eight investors visited our manufacturing plant in Dartford, England. Investors were shown the process for making the active ingredients in our products and the environmental management facilities at the plant. On both occasions investors STAKEHOLDER ENGAGEMENT had the opportunity to meet and question senior Stakeholder engagement is an important GSK staff. component of our approach to managing our In December, GSK and Dresdner Bank ran an business responsibly. It helps us to identify the educational seminar on patient safety for important CR issues for our business, understand 16 investors. Our senior physician in charge of stakeholder views and expectations and to build global patient safety explained our current drug trust with key audiences. We also engage with our safety monitoring procedures and how GSK plans stakeholders to tell them about our work and to to further develop these, and answered questions learn from their expertise. GSK interacts with a wide from investors. range of stakeholders including: Investors raise questions and issues throughout the • Patients year. In 2006, the main issues raised related to sales • Doctors and marketing practices, climate change, access to medicines and clinical trials ethics, particularly in the • Governments and regulators developing world. Our approach to all these issues • Public and private health providers can be found in this report. • NGOs • Multilateral organisations • Employees • Investors • Local communities • Suppliers • The scientific community • Peer companies

Most of this discussion takes place in the normal course of business. For example our scientists meet regularly with academics, researchers and other pharmaceutical companies.

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GSK received the following ratings from agencies:

Organisation Rating

Association of British Insurers GSK was given a ‘full’ rating for its disclosure of Board responsibilities and policies relating to social, ethical and environmental issues.This is the highest possible rating. Dow Jones Sustainability Index GSK was included in this year’s index. Individual company scores and rankings are no longer published. FTSE4Good Index GSK was included in the FTSE4Good Index. Innovest Strategic Value Advisors We were rated 3rd out of 44 companies in Innovest’s Global Pharmaceutical Sector Report. GSK was rated particularly highly in the area of strategic governance. Claremont McKenna GSK received a B+ in a rating of pharmaceutical sustainability reporting, carried out by Claremont- McKenna, a US college that evaluates companies on corporate responsibility issues. GSK was 7th out of the 25 companies evaluated

GSK reported its greenhouse gas emissions through thought-out and well managed. We were rated the Carbon Disclosure Project (CDP). You can read most highly for our programmes to increase access our response on the CDP website at to medicines in the developing world. www.cdproject.net. Opinion leaders made suggestions for how we CR benchmark studies should improve in a number of areas. These We co-sponsored a benchmarking study by the included: consultancy and think-tank SustainAbility into non- • GSK should demonstrate its commitment to financial reporting in the pharmaceutical industry. improving health globally beyond selling GSK was rated highest overall compared to 12 other pharmaceuticals (e.g. through disease companies in the sector. prevention) We were also ranked 17th out of the top • We should do more to embed CR throughout 50 companies in the SustainAbility/UNEP Global the company and should set targets to improve Reporters study of best practice in sustainability our performance reporting. GSK was one of only two pharmaceutical companies in the top 50. • GSK should spend more time listening to stakeholders We retained our position in the Premier League (companies scoring above 95 percent) of Business • We should develop a strategy for reducing our in the Community’s Environment index. impact on climate change EHS • We should focus on improving access to We have established a stakeholder panel to inform medicines in middle-income countries our approach to EHS management. This is made up Reporting of ten external stakeholders representing customers, The opinion leaders felt GSK’s CR report covered suppliers, regulators, public interest groups and the right issues, but the report was too long overall, investors, as well as four senior GSK EHS reducing readability. GSK scored points for representatives. improving the transparency of its reporting over the Opinion leaders last three years. But stakeholders expected further Opinion leaders are influential individuals or disclosure on GSK’s work with patient advocacy organisations with expertise in corporate groups, ethics, management of the supply chain responsibility. These include NGOs, government and our approach to human rights issues. representatives, investors, journalists, academics and Other stakeholders consumer and industry organisations. The following table summarises our interaction with We held two discussions, one each in the US and other groups and shows where further information UK, to gather feedback from 18 opinion leaders on can be found. our CR performance and reporting. Performance Participants mostly agreed that GSK’s approach to corporate responsibility is comprehensive, well

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Stakeholder Engagement

NGOs We engage with international and community NGOs through our access, education and public health programmes. Read more in Investment in Public Health Initiatives on page 76 and Community Investment on page 75. We also engage regularly with animal welfare organisations. Read more in Animal Research on page 26. Employees We seek feedback from our employees through regular employee surveys. See Employment on page 40 for a summary of the results from our latest survey. We also consult employees on changes that affect them and discuss business developments through our Works Councils and European Employee Forum. For more information see Internal Communications on page 44. Governments and We engage in debate on legislation and seek to influence policy decisions that affect GSK. regulators We also engage with governments to advance our corporate responsibility objectives. See Government and External Affairs on page 12 Multi-lateral agencies We engage with multi-lateral agencies through our access and public health initiatives. See Access to Medicines on page 18. Doctors We engage with doctors in many ways including through our medical representatives and when running clinical trials. See Research and Ethical Conduct for information on how we manage the issues this engagement raises. Patients GSK researchers and scientists meet with patients as part of our Focus on the Patient initiative.This engagement influences our understanding of diseases and our research priorities. We also engage with patient groups directly and through Patient Advocacy Leaders’ Summits. Read more in Patient Advocacy. We also conduct market research via third parties to understand patient needs. Local communities Our interactions with local communities are managed by individual GSK sites. See Working with Communities for examples of our initiatives. Suppliers We hold global and regional supplier review meetings where senior GSK managers address and interact with suppliers on key issues. For more information see Supply Chain on page 50. The scientific It is important for GSK to be part of scientific and academic debates.This report contains community and examples of some of these interactions. For a discussion of how we manage such academic partnerships relationships see Research.

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GOVERNMENT AND EXTERNAL AFFAIRS

The pharmaceutical industry is highly regulated and • A common European regulatory system that these regulations can have a significant impact on offers rapid approval of new products our business. So it is essential that we engage in • Intellectual property incentives to promote debate on legislation and seek to influence policy research on orphan medicines, paediatric decisions that affect GSK. In fact, as a major medicines and medicines for the developing multinational corporation we are often approached world by governments to give our views, along with other stakeholders such as NGOs. • Implementation of clinical trial regulations that promote safety and good clinical practice Our size and global reach give us access to governments and policy makers. We need to use • Appropriate use of health technology this access responsibly to benefit patients and our assessments (HTAs). We believe HTAs should be business. We believe that by being transparent independent, transparent and scientifically about our lobbying and public policy work we can robust – they should be a means of ensuring increase stakeholder trust and confidence in GSK. the right medicines reach the right people, rather than be used as a rationing tool We have policies governing our interactions with important stakeholders. This section covers our • Increased individual involvement and interaction with governments and other external responsibility for personal healthcare, including groups, including patient advocacy groups. improved access to information about Information on our approach to working with medicines from pharmaceutical companies doctors and healthcare professionals is available in • An environment which promotes research and the Research section of this report. development, and encourages informed debate More background information on our approach to on the benefits and challenges of new research public policy is available in the external affairs technologies section of gsk.com. Advocacy on CR issues in 2006 Our approach to external affairs We engage with governments and other GSK’s external affairs teams monitor changes and stakeholders to advance our corporate responsibility proposed reforms to legislation and meet regularly objectives. For example, in 2006 GSK: with government officials to explain our views on a • Advocated for improvements to healthcare in range of public policy issues. Lobbying on issues the developing world through discussions with affecting the whole pharmaceutical industry is the UK and US governments, multilateral sometimes conducted through trade associations. agencies and NGOs, see Access to medicines We may also hire professional lobbyists to support our public policy work. • Participated in the World AIDS conference held in Toronto, Canada. See Access to medicines Our public policy work is governed by our External Affairs Code of Conduct, and is backed up by • Supported Mobilising for Malaria, an advocacy factual research and analysis. See policy on initiative to generate political commitment and background site. sustained funding to combat malaria, see Community Investment GSK believes that, where legally and culturally appropriate, political donations are a legitimate way • Worked with regulators to encourage of supporting the political process. Information on acceptance of alternatives to animal testing, see donations is given both in this report and in the Animal research Annual Report and Accounts. We have a Political • Participated in developing the World Health Donations Policy governing our contributions to Organization’s International Clinical Trials political candidates. Registry Platform, an initiative to standardise Public policy activity in 2006 the way information on medical studies is In 2006 we engaged with governments on a wide made available to the public range of issues that affect our industry. In particular • Encouraged more consistent approaches to we advocated for policies that will deliver: patient safety and the reporting of side effects, • Strong intellectual property rights and data see Patient Safety exclusivity protection to encourage the research • Led efforts to develop industry codes of conduct and development of new medicines and for marketing ethics in several Asian countries. vaccines See Marketing Codes of Practice • Pricing and reimbursement systems that support innovative medicines and provide greater predictability and transparency. We believe there should be greater liberalisation in pharmaceutical pricing, especially for medicines that are not paid for by governments

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Our position on key issues We publish our position on many key issues in the GSK does not make donations to political parties or background section of our website. We are happy other political organisations in the European Union. to discuss our position on these or any other issues See our Annual Report for more information. with legitimate parties. Contact our corporate Contributions in the United States responsibility team at [email protected] In the US, candidates are financed primarily by The current position statements published on contributions from companies, individuals, NGOs www.gsk.com/responsibility include: and other parties. Corporate contributions are an accepted and important way for companies to • Clinical trials in developing countries engage in the political debate. • Counterfeit medicines Corporate contributions to national political parties • Developing world challenges and access to and candidates running for federal office are medicines prohibited by US law. • Importation of medicines Contributions to state candidates GSK corporate funds are only given to candidates • Intellectual property and the TRIPS agreement at state level, in states where this is permitted by • Product diversion law. In 2006, we donated $536,000 (approximately £290,000) to candidates for state-held offices. This • Preparations for a flu pandemic was split between Republicans (approx 55 percent) Membership of trade associations and Democrats (approx 45 percent). GSK is a member of trade organisations including: Our contributions are not made on the basis of • Association of the British Pharmaceutical political party. GSK supports candidates who seek Industry (ABPI) an environment that appropriately rewards high- risk, high-investment industries and believes in free • Biotechnology Industry Organization (BIO) market principles and intellectual property rights. • European Federation of Pharmaceutical All states publish information about political Industries (EFPIA) donations. • Intellectual Property Owners Association (IPO) Political Action Committee contributions In accordance with the Federal Election Campaign • Japan Pharmaceutical Manufacturers Act, there is a GSK Political Action Committee (PAC) Association (JPMA) that facilitates voluntary political contributions by • The Swedish Association of the Pharmaceutical eligible employees. The PAC is not controlled by GSK Industry (LIF) but by our participating employees, who have the legal right to make contributions to candidates and • Organization For International Investment (OFII) political parties at the federal and state levels. All • Pharmaceutical Research and Manufacturers of PAC contributions are voluntary and donations are America (PhRMA) subject to strict limitations. For example, the GSK PAC may not contribute in excess of $5,000 to a • International Federation of Pharmaceutical candidate for federal office per election. Manufacturers and Associations (IFPMA) PAC contributions are determined by a governing US lobbying expenditures board of PAC-participating GSK employees from GSK spent $5.14m on federal lobbying activities in across the company. As required by law, PAC the US during 2006. This information is reported to contributions are reported to the Federal Elections the US Congress in accordance with the Lobbying Commission (FEC). In 2006, the second half of the Disclosure Act of 1995. It includes the costs of two-year federal election cycle, the GSK employees’ salaries and benefits for all employees registered to PAC contributed $1.36m to candidates for state and lobby the US government; hiring outside lobbying federal offices. consultants; support for lobbying contacts such as planning activities, research and other background; Contributions in Canada running the GSK Washington DC government In 2006, GSK donated $CAD 56,000 (approximately affairs office; support staff; and the portion of trade £27,000) in Canada to political candidates in those association fees associated with federal lobbying. provinces where it is legal. In other countries we do not collect separate data Contributions in other countries on lobbying expenditure. In 2006, GSK donated $AUS6,000 (approx £2,000) in Australia. Political donations GSK makes political donations with corporate funds Patient advocacy where these are authorised by law and are culturally Patient advocacy groups provide their members appropriate. with support and information on how to live with their condition, represent patient views and In 2006 we contributed £319,000 to political advocate on issues affecting patients’ interests. They organisations in the US, Canada and Australia. All are an important stakeholder for GSK and we donations are covered by the GSK policy on engage with them as part of our aim to be a patient- political donations. focused company.

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Our principles for working with Across the world we work with a wide range of Work with patient groups in 2006 patient groups patient groups in a variety of different disease areas Patient Advocacy Leaders’ Summits (PALS) are one • The independence of such as cancer, asthma, diabetes and HIV/AIDS. Our of the ways we engage with patient groups. In 2006 patient associations, of their political judgement interest in patient advocacy is about understanding we held summits in the US, Japan and in many and of their activities shall patient needs and their illness. Our aim is to support European countries including Poland, Netherlands, be assured. the voice of patients and thus encourage a Romania and Latvia. These meetings give patient • In all co-operative matters, constructive healthcare debate for all stakeholders. groups the opportunity to learn about GSK, tell the company how it can better support their work, and transparency is vital. We believe that patient groups are playing an discuss and debate key issues relating to patient • Any joint policies increasingly valuable role in improving healthcare. To advocacy and healthcare policy. There is typically a undertaken between protect their independence and credibility patient range of workshops for attendees, including patients associations and groups should be encouraged to obtain support, GlaxoSmithKline shall be sessions on media training and sharing best practice. financial and non-financial, from diverse multiple based on mutual respect and trust. sources – private, public and through individual We have a European patient group advisory board donations. that we consult on GSK policies and thus work with • GlaxoSmithKline shall to make the company as patient-centric as possible. refrain from using undue Our approach The board has an independent chair, and is made up influence to promote its We are committed to ensuring that we work with of representatives from a series of European groups, specific medicines or patient groups at the highest levels of ethical services. many from disease areas where GSK has no direct standards and transparency, and have established therapeutic interest. • When working with strong global principles. patient associations GlaxoSmithKline will As part of GSK’s commitment to working ethically always comply with local with patient groups, all employees involved receive laws/governance. formal training on our global principles and work within a framework set by our Standard Operating CONTRIBUTION TO SOCIETY Procedures. In addition employees have access to a We believe that our business adds social and patient advocacy resource intranet site. economic values to society through the contribution In the UK GSK’s advocacy work is governed by the our products make to healthcare and through the Association of the British Pharmaceutical Industry jobs and wealth we generate. (ABPI) Code of Practice. This states that there must Contribution to healthcare be a written agreement between the company and Our medicines and vaccines enable people to live the patient group, and that companies must publish longer and enjoy a better quality of life. a list of all patient groups that they fund. Healthcare is expensive – especially when patients We list all UK patient groups receiving funding from need to make frequent visits to the doctor or spend GSK. In 2007 we have gone further towards greater time in hospital. For example in the US, $3 of every transparency and extended the list to include all $4 spent on healthcare goes to treating people with patient groups in Europe that receive funding chronic diseases. Healthcare costs are also likely to from GSK and have given full details of that funding. rise further in many countries as the population In Europe GSK developed a Standard Operating ages. Vaccines and medicines reduce the burden on Procedure (SOP) for working with patient groups. healthcare systems by preventing diseases, enabling This initiative is being extended to the other GSK people with chronic diseases to work and helping regions in 2007. The SOP covers a variety of areas patients to control their symptoms and make fewer concerning GSK’s work with patient groups. It states visits to hospital. that GSK will not seek a patient group’s GSK contributes to healthcare in three ways: endorsement of any medicine, and that we will not provide more than 50 percent of a patient group’s • Disease prevention overall funding. In 2007 this will become no more • Effective intervention – medicines to treat than 25 percent funding. In the vast majority of diseases instances the actual percentage is much lower. Additionally all activities are accompanied by a • Innovation – investment in R&D to discover new written agreement. medicines and vaccines to meet future healthcare needs GSK is working with many pharmaceutical company representative bodies to encourage industry-wide transparent and ethical approaches to working with patient groups.

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Disease prevention Preventing disease is better for the potential patient, Community investment – We support several major who avoids illness, pain and suffering; and better disease prevention programmes in developing for society because it reduces healthcare costs. We countries through our community investment. support disease prevention efforts in several ways: These include: Vaccines • the Global Alliance that plans to completely We make vaccines that protect against crippling and eliminate LF (a disfiguring disease that is one of fatal diseases including hepatitis A and B, diphtheria, the world’s leading causes of permanent seasonal flu, polio, tetanus and whooping cough. disability) by 2020. See Community Investment, We currently supply 22 vaccines against 17 diseases. page 75. Global immunisation efforts have led to the • PHASE, our programme to reduce diarrhoea- eradication of smallpox, the potential eradication of related disease by encouraging school children polio, and are estimated to save the lives of up to in developing countries to wash their hands. three million people world-wide each year. See Community Investment, page 75. Vaccination has a longer term benefit and is more Intervention cost effective than treating people after they Our key pharmaceutical products target serious become sick. It can also reduce healthcare costs by: diseases including: • preventing disease outbreaks • Asthma and chronic obstructive pulmonary • reducing the need for expensive treatments and disease hospitalisations • Epilepsy, depression and other diseases of the • reducing permanent disabilities and the long- central nervous system term effects of disease • HIV/AIDS, herpes and other viral diseases • preventing loss of productivity from illness • Infections GSK Vaccines • Diabetes We distributed 1.1 billion vaccine doses in 2006 to 169 countries in both the developed and the • Cancer developing world – an average of 3 million doses a • Heart disease and other cardiovascular diseases day. We invested £348 million in vaccine research in 2006 and had 1,500 scientists working at our • Urogenital diseases vaccine research centres. These make a major contribution to healthcare in We make our vaccines available in developing several ways: countries through an innovative tiered pricing • Prolonging life – GSK is a pioneer in treatments model. In 2006, 75 percent of the 1.1 billion for HIV/AIDS. Our antiretrovirals (ARVs) such as vaccines we produced went to the developing Combivir help patients to control the effects of world. We are currently researching new vaccines HIV infection for many years. We sell our ARVs for more than 15 diseases including several that are to countries in sub-Saharan Africa at not-for- particularly relevant for developing countries. See profit prices. See Access to Medicines. Access to medicines page 18. • Preventing complications – Many diseases such Patient education – We support patient education as diabetes are progressive – if patients don’t and disease prevention initiatives. These include receive the right treatment they can suffer working with patient advocacy groups, severe side effects. Every day in the US diabetes producing patient information leaflets for medicine is the cause of an estimated 225 amputations, packs and doctors’ surgeries and publishing around 50 cases of blindness, and 117 people information on disease prevention on our website. experiencing kidney failure. Avandia, our Anti-smoking – It is estimated that around five diabetes treatment, helps patients to control million people die prematurely each year as a result their symptoms, delays the progression of the of smoking. This makes smoking cessation one of disease and prevents complications. Avandia the most effective ways to improve health. GSK’s has now been used by more than seven million nicotine replacement therapy brands such as people worldwide. NicoDerm and Nicorette have helped more than • Improving quality of life – Many of our five million smokers quit since 1996, making a medicines such as those for asthma and significant contribution to public health. diabetes help patients with chronic diseases live full and productive lives. GSK preventative treatments for asthma such as Seretide/Advair control the symptoms of asthma and prevent asthma attacks. • Curing infection – We produce antibiotics that treat respiratory tract and other infections. In 2006, we donated antibiotics to help relief efforts in disaster areas. See community on page 75.

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Value to UK economy Innovation In 2006, the British Pharma Despite revolutionary advances in healthcare there Health Organization has predicted that COPD will Group (comprising the two are still many diseases for which there is no cure or be the third leading cause of death by 2020. The UK-based companies, GSK and AstraZeneca) commissioned a for which treatments could be improved. So GSK study will involve more than 2,000 patients report by the Office of Health continued research and innovation is essential. over three years and identify relevant markers that Economics (OHE), an indepen- may help predict disease progression. We believe that R&D into new medicines is the most dent research organisation, into the companies’ value to the UK important element of corporate responsibility for Many diseases are caused by genetic factors which economy. our company. GSK invested £3.46 billion and makes them difficult to cure or prevent. Our employed over 15,000 people in R&D in 2006. research into the body’s immune system will also The report used the concept of enable us to develop safer, more effective and more ‘economic rent’ – the net Our pipeline targeted vaccines to protect against a greater additional income and wealth We have 159 prescription medicines and vaccines brought to the UK by a number of diseases. company, in excess of the income in clinical development. Current projects include that would be generated if the research into asthma, cancer, depression, diabetes, Economic value labour and capital were put to epilepsy, heart disease, HIV/AIDS, influenza, irritable We contribute to the countries in which we operate the next best alternative use. bowel syndrome, osteoporosis, schizophrenia, through creating wealth and employment, paying The OHE stated that the stroke and TB. taxes and purchasing products and services. As well estimated net economic rent as these direct financial contributions our products We expect to launch five major new vaccines within earned by many enterprises in also contribute indirectly to economic growth by the next five years: any economy can be expected preventing and treating disease. to be close to zero i.e. they yield • a human papilloma virus vaccine preventing as much economic value as, but Detailed financial information is available in our cervical cancer not significantly more than, the Annual Report. However, some of the key figures next best alternative uses of the • the USA launch of a vaccine against rotavirus for our global business are: capital and labour they employ. induced gastroenteritis and the strengthening GSK’s and AstraZeneca’s of rotavirus vaccine uptake in Europe and in the Global figures (£m) 2004 2005 2006 economic rent from manufact- international markets Sales 19,986 21,660 23,225 uring, R&D and other activities in the UK was estimated to be at • a vaccine against pneumococcal disease and R&D investment 2,904 3,136 3,457 least £1 billion annually, and non-typeable Haemophilus influenzae possibly much higher. infections causing otitis media Payments to: GSK contributes approximately 60 percent of this figure. • a number of vaccines against both seasonal and • Employees 5,054 5,254 5,495 You can read a copy of the avian flu based on GSK’s unique expertise in • Suppliers n/a n/a 8,107 report in the background section adjuvant technology including, a new of our website. generation adjuvanted seasonal flu vaccine for • Government (taxation) 1,757 1,916 2,301 Other studies have also ranked elderly people • Community investment 328 380 302 GSK’s value to the UK economy highly: • vaccine combinations against meningitis n\a = not available The UK Government Department Experts are predicting there may be a major flu of Trade and Industry (DTI) 2006 pandemic in the next decade caused by the H5N1 Value Added Scoreboard lists the strain of bird flu. GSK is actively preparing for this companies making the largest potential crisis. In a pivotal clinical trial of GSK’s new contributions to value added in generation H5N1 influenza vaccine carried out in HUMAN RIGHTS the UK and in Europe. GSK was ranked 6th in the UK and 19th in 2006 in Belgium, it was shown that very low doses Human rights is a broad subject that is relevant to Europe (the highest pharma- of antigen (3.8µg) combined with GSK’s novel GSK in a number of different contexts. ceutical company). Our value adjuvant system elicited a strong seroprotective We are committed to upholding human rights in added was calculated as response. As GSK’s vaccine is also believed to have our sphere of influence. We have greater control £11.8 billion or £118,500 per the potential to offer a protection against ‘drifted’ employee. over human rights in our own operations but can variants of the H5N1 virus, it could be used as part also influence human rights among our suppliers Investment in R&D stimulates of a proactive pre-pandemic vaccination campaign. and wider society. economic growth. GSK is ranked In addition we also increased production of Relenza, 10th in the UK DTI’s R&D our treatment for influenza. For a full review of our GSK’s sphere of influence Scoreboard which ranks the top global companies by the value of pipeline please see our Annual Report. There are several reasons why we take human rights seriously: their R&D investment. We are We have an extensive R&D programme into diseases the highest ranked UK company. • Achieving high standards on human rights See www.dti.gov.uk/innovation disproportionately affecting developing countries. We believe GSK is the only company researching supports our reputation and our goal of both new vaccines and treatments for HIV/AIDS, TB operational excellence and malaria – the World Health Organization’s three • It helps us to get the best from our employees priority diseases. • By working with suppliers that match our Research into the causes of disease standards, we help ensure the smooth As well as researching potential new medicines we operation of supplier contracts and therefore a also invest in research to increase understanding of reliable supply of high quality products the human body and the causes of disease. • It supports good relationships with the For example, in 2006 we launched ECLIPSE, a non- communities near our sites drug study to improve understanding of chronic obstructive pulmonary disease (COPD). The World

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Our approach to human rights is guided by the UN A wide variety of biological materials is used in Universal Declaration of Human Rights, the OECD biomedical research. These include human Guidelines for Multinational Enterprises and the core materials, non-human materials found in humans labour standards set out by the International Labour (such as bacteria and viruses), animals and plants. Organisation. They are obtained from various sources. Sometimes they will be indigenous and unique to a country or Our employees community. More commonly, they will be cultivated Most of our direct employees are well educated and or bred as staple commercial products and obtained skilled people so the risk of human rights issues through ordinary commercial channels. occurring is relatively low. We believe that our employment standards on issues such as diversity, Today most of GSK’s pharmaceutical research is equal opportunities and health and safety provide based on screening of large numbers of synthetic adequate safeguards on human rights for our chemical compounds, rather than natural resources. employees. For more information see Employment We do not currently have any access and benefit Practices on page 40. sharing agreements in place. However, if GSK were to undertake development work using indigenous Suppliers genetic resources and associated traditional We expect our suppliers, contractors and business knowledge arising from any GSK natural product partners to meet the same standards on human collection programmes, access to those resources rights as GSK but we recognise that some suppliers would be obtained in accordance with local laws. may not. We seek to influence our suppliers to Contracts would be negotiated as required with the adopt high standards on human rights by adding appropriate authority and we would thereby ensure human rights clauses to our contracts and that a clear benefit was returned to the country of auditing suppliers. For more information see Supply origin, for example through royalties or a share of Chain on page 50. net profits. See our policy on Biodiversity. Communities Society Human rights are relevant to our relationships with Improving healthcare, particularly in the developing a wider community of stakeholders. Here are a few world, is one of the greatest challenges the world examples: faces. GSK is committed to playing its part in Countries with poor human rights records improving access to medicines. We contribute to Some of our stakeholders are concerned about our healthcare in the developing world through our presence in countries which have a poor human research into new treatments and vaccines, by rights record such as Sudan, North Korea and making our medicines available at affordable Burma. While we respect these concerns, our preferential prices, by negotiating voluntary licences medicines and vaccines are needed by local with generic manufacturers and through our populations. Our products need to be registered community investment. For more information see with governments before they can be sold, which Access to Medicines on page 18 and Community almost always requires interaction with some aspect Investment on page 75. of government. We believe, along with the UN, that We engage with governments, multilateral agencies people should not be denied access to medicines and NGOs to help improve access to medicines. We because of the regime operating in their country. have developed a seven point plan for use in our See UN document. advocacy efforts. For more information see page Local communities 19. We seek to reduce the environmental impacts of our sites, operate them safely and foster good relationships with local communities. Indigenous material and traditional knowledge As one of the world’s leading pharmaceutical companies, GSK fully supports the Convention on Biological Diversity’s role in providing a framework for the conservation of biological diversity, the sustainable use of its components and respect for traditional knowledge. We also support the CBD objective “to provide fair and equitable sharing of the benefits arising from the use of genetic resources”.

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Access to medicines Millions of poor people in both developed and developing countries struggle to get the medicines they need.

e are supporting efforts to improve access healthcare workers. The AIDS pandemic is making to medicines. This section explains our: the situation even worse, depriving communities of W their greatest asset – healthy and productive people. • Contribution to the developing world through Tackling this crisis is a complex challenge, requiring research, preferential pricing, partnerships and visionary leadership. Poverty is a huge barrier to voluntary licences, and community investment progress. Significant political will and extra resources in important public health initiatives are needed to aid development and build healthcare infrastructure. Disease programmes need to be well • Pricing arrangements and discount cards for co-ordinated to ensure that health systems as a middle-income countries whole benefit. • Patient Assistance Programs and discount cards We believe that it is the responsibility of to help uninsured patients in the US governments and intergovernmental agencies, We believe that our response is not only the right supplemented by the work of NGOs, to deliver thing to do but makes good business sense. healthcare in these countries. However, the Companies that adapt their business practices to pharmaceutical industry can play a significant role address such challenges will be the leaders of the in supporting their efforts. future. In the competitive market for talented We make an important contribution through: people this also helps us to attract and retain the best people. • Research and development into diseases disproportionately affecting developing Differential pricing increases affordability for patients countries. We believe GSK is currently the only whilst maintaining support for the intellectual company researching both new vaccines and property system. Intellectual property rights are treatments for HIV/AIDS, TB and malaria – the essential to the pharmaceutical industry because World Health Organization’s three priority without them we would not be able to invest in diseases. Much of this research is conducted R&D for new medicines and vaccines. through public private partnerships By finding innovative ways to help poor people in • Preferential pricing; specially reduced prices for developed and developing countries access our anti-retrovirals (ARVs), anti-malarials and medicines, we are addressing ethical, reputational vaccines. In 2006, we shipped more than and commercial imperatives. For these reasons 86 million Combivir and Epivir tablets at not- access to medicines is a strategic business driver of for-profit prices for the treatment of HIV/AIDS GSK. to the poorest countries of the world We also support under-served communities • Seeking innovative partnerships; GSK has worldwide through donations, funding and granted eight voluntary licences for the practical support. See community investment. manufacture and supply of generic versions of Developing world our leading ARVs for treating HIV/AIDS in Africa, Poverty has caused a healthcare crisis in many parts and is active in other partnerships such as Roll of the developing world. Millions of people do not Back Malaria and Stop TB have access to reliable food and clean water, never • Community investment in public health mind adequate healthcare. Despite unprecedented initiatives and partnerships that foster effective resources being made available for public health, healthcare including major programmes to many governments are unable to fund the clinics tackle lymphatic filariasis, malaria, HIV/AIDS and and staff needed to deliver basic healthcare. diarrhoeal disease. See community investment. The World Bank estimates that $14 per person per Research and development year is needed to provide the most basic health The research and development (R&D) of new drugs services. Yet the average spend in sub-Saharan and vaccines is an essential element in improving Africa is just $6. The African Region of the WHO health in the developing world. There are still no suffers more than 24 percent of the global burden effective treatments for some widespread and life- of disease, but has only 3 percent of the world’s threatening diseases. Many existing treatments for health workers. Migration of African health workers diseases such as malaria are becoming less effective to wealthier markets is exacerbating this situation. due to drug resistance. Globally, there is a shortage of well over 4 million

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For HIV/AIDS which affects both developed and diseases of the developing world (DDW). This Access to healthcare – whose developing countries, there is a commercial market includes a DDW drug discovery centre at our Tres responsibility? for new treatments. This encourages investment Cantos R&D site in Spain where over 100 scientists Access to healthcare in the developing world remains a into the required R&D. GSK is an industry leader in are based, and clinical development experts in the complex issue. We believe that research into HIV/AIDS treatment and prevention. UK and US. DDW projects are prioritised according only a holistic approach to their social and public health benefits rather than embracing prevention and However, for many diseases that disproportionately their commercial returns. A similar group exists in treatment will work. All affect the developing world, the lack of resources our vaccines organisation based in Belgium. stakeholders have a role to play. for healthcare means there is often no viable Pharmaceutical companies must commercial market for new treatments. Public In total GSK is conducting R&D into 11 diseases of make their medicines affordable 1 private partnerships (PPPs) are helping to address particular relevance to developing world . This to developing countries and this problem. includes 14 clinical programmes for medicines and invest in research into diseases vaccines against these diseases. Seven of these of the developing world – new GSK collaborates with several PPPs including the projects are for diseases that disproportionately treatments are urgently needed. Medicines for Malaria Venture (MMV), the Global affect developing countries. Some of these are Alliance for TB Drug Development (TB Alliance), the Wealthy nations must give more. summarised below. Welcome new funding is coming Aeras Global TB Vaccine Foundation (Aeras), the through from the Global Fund to Malaria Vaccine Initiative (MVI) and the International Fight AIDS, TB and Malaria, the AIDS Vaccine Initiative (IAVI). Gates Foundation, PEPFAR (The 1 HIV/AIDS, malaria, leishmaniasis, dengue fever, hepatitis C, US President’s Emergency Plan GSK has created a dedicated group in our hepatitis E, N. meningitis, cervical cancer, TB, chlamydia and for Aids Relief) and others – but pharmaceutical R&D organisation to focus on pneumococcal disease funds are still inadequate. Resources are needed to fund research, purchase medicines Development pipeline at end of 2006 for diseases relevant to the developing world* and to discourage the export of trained healthcare workers from Focus Pre-clinical activity Phase I Phase II Phase III Marketed developing countries. Developing countries must show ✓ HIV integrase inhibitor Retrovir, Epivir, genuine political commitment HIV-1 entry inhibitor Combivir, Ziagen, to addressing stigma, removing NNRTI Trizivir, Agenerase, import tariffs and prioritising Kivexa, Telzir healthcare in national budgets. ✓ Middle-income countries must Vaccines HIV Malaria Synflorix Rotarix – accept their responsibilities and Malaria HIV (DNA- (P. falciparum) (pneumococcus (rotavirus) not seek the lowest prices (P. vivax) antiviral TB disease) Havrix – offered to the world’s poorest HIV vaccine) Hepatitis E Cervarix (Hepatitis A) countries. Chlamydia Dengue Fever (Cervical cancer) Engerix-B – We have developed a Seven N.meningitis (Hepatitis B) Point Plan for a sustainable combinations Twinrix – approach to improving (Hep A&B) healthcare in the developing Infanrix/Tritanrix world, which we use in – DPT family our advocacy efforts. In 2006 (Diptheria, Tetanus, these included: Pertussis) Boostrix – • Submissions to the UK (DTP acellular) Department for International Development’s (DfID) Polio Sabin – consultations on its White (Polio) Paper ‘Eliminating world Priorix – poverty: Making governance (Measles, Mumps work for the poor’, and also and Rubella) to health strategy Typherix – (Typhoid) Hiberix – • Submissions to the G8 (Haemophilus influenzae governments ahead of the type b) St Petersburg summit Mencevax ACW – • Face-to-face meetings with (meningitis) Hilary Benn, UK International ✓ Development Secretary, UN Malaria tefenoquine CDA Lapdap, Halfan, Secretary General Kofi Annan, Malarone UK Government officials, ✓ White House officials, EU TB officials and NGO ✓ representatives Other sitamaquine Zentel Hepatitis C (visceral (de-worming agent) • Interactions with UNAIDS, leishmaniasis) Pentostam UNITAID (the new (visceral leishmaniasis) international drug purchase Banocide facility) and the World Health (lymphatic filariasis Organization – GSK India)

* more detailed information on our product pipeline can be found in the Annual Report

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What’s different about R&D for PROGRESS IN 2006 HIV/AIDS medicines for the developing Vaccines world? Malaria GSK is a leader in the global effort to develop an GSK scientists working on Vaccines treatment projects for diseases AIDS vaccine. We have been involved in AIDS GSK has been working on a malaria vaccine for over disproportionately affecting vaccine research for more than two decades and developing countries make 20 years. In 2005 clinical trials of our malaria vaccine today we are pursuing four separate vaccine access to medicines a priority for children showed that the vaccine remained technologies. A successful AIDS vaccine might need right from the start of the R&D efficacious over 18 months in reducing severe to combine several of these approaches. process. malaria by 49 percent in children. Several more years GSK and the Institut Pasteur are working together When researching new of clinical investigation are needed but these results treatments we produce a Target indicate it has the potential to help save millions of to develop an AIDS vaccine by fusing genes from the Product Profile (TPP) – outlining children’s lives. In 2006 additional phase II clinical HIV virus onto an existing measles vaccine. The the characteristics we are trials of the vaccine were initiated in Mozambique, project is being supported by a Euro 5.5 million looking for in any new molecule. Kenya, Tanzania, Gabon and Ghana. These are (£3.7 million) grant from the European Union. As well as safety and efficacy, a TPP for a new DDW treatment supported by a grant from the Malaria Vaccine We are part of a public private partnership with the emphasises factors such as: Initiative at PATH funded by the Bill & Melinda International AIDS Vaccine Initiative (IAVI) to Gates Foundation, and will further evaluate the • Heat and humidity develop an AIDS vaccine using nonhuman primate resistance – the product vaccine in different settings and with younger adenovirus vector technology. The collaboration – must be able to survive in a children. If these trials are successful, the partners the first ever in AIDS vaccine research between IAVI hot climate where there will initiate a large-scale phase III clinical trial. If the and a major vaccine company – will facilitate may not be refrigeration results continue to be positive the vaccine could be research into vaccines against types of HIV that facilities submitted for regulatory approval as early as 2010. circulate predominantly in Africa. • Ease of use – it must be easy to use in settings where Treatments GSK Biologicals also has an in-house AIDS vaccine there are limited healthcare We are working closely with the Medicines for development project using the company’s prop- facilities. For example once- Malaria Venture, which subsidises 30 scientists at rietary adjuvant system technology. Two phase I a-day tablets that can be our Tres Cantos facility, the World Health clinical trials have been conducted with this vaccine, taken at home are Organization (WHO) and academic partners to in the United States in partnership with the US preferable to an injectable develop CDA, an affordable fixed-dose artemisinin medicine that must be National Institutes of Health’s HIV Vaccine Trials administered in a hospital or combination treatment for drug-resistant malaria in Network, and the other in Belgium at Ghent clinic Africa. In 2006 phase III clinical trials were initiated University. These trials, completed in 2003 and 2005 at several sites across Africa. An additional phase III • Affordability – price is one respectively, demonstrated that the vaccine is safe of the most important study is planned for 2007 involving infants between and produces a strong immune response. A third factors. We look for the ages of three months and one year. We aim to phase I trial in 20 HIV-infected volunteers was molecules and formulations submit CDA for regulatory approval in early 2008. initiated in late 2005 in collaboration with the that are straightforward to Partners AIDS Research Center at Massachusetts manufacture and therefore In March 2006, we identified a lead candidate General Hospital in Boston, and the results are inexpensive to produce (GW308678) to take forward into development from our pyridones project, along with a backup currently being analysed. A follow-up approach candidate (GW308121). These drugs have the explores a similar strategy using a new antigen potential to be highly active against drug-resistant named F4. A phase I clinical trial of the F4 vaccine strains of malaria and show none of the toxicity candidate is scheduled to begin in the near future issues that affected a previous candidate in this class. in Belgium. Significant chemical and pharmaceutical develop- Our fourth approach aims to develop an improved ment was undertaken on the anti-malarial drug adjuvanted envelope (Env) protein vaccine able to GSK369796 (n-tert butyl isoquine) and we plan to produce neutralising antibodies that will provide start clinical studies in humans when partner lasting protection against infection with HIV. This funding becomes available. The drug is relatively approach is currently under preclinical evaluation. straightforward to synthesise and manufacture, and Treatments therefore has the potential to be relatively In December 2006 we discontinued the clinical inexpensive. development of brecanavir, our protease inhibitor Clinical data for tafenoquine, a new antimalarial for patients with multi-drug resistant HIV infection. being developed in partnership with the US Military, We were unable to develop an oral dosage have shown that a tafenoquine-containing formulation that could consistently deliver the combination regimen may work faster than existing correct dosage of brecanavir to the patient. therapies in the treatment of P. vivax malaria and Our scientists are working on new HIV medicines in may also help to address concerns about emerging several different drug classes. Our integrase inhibitor resistance to existing treatments. We are in discovery programme is very active and the lead discussions regarding the funding of additional candidate 364735C, which is being developed in development work for the treatment of P. vivax partnership with Shionogi, is currently in phase II malaria and we plan to proceed with clinical development. New HIV-1 entry inhibitor and non- development in 2007. nucleoside reverse transcriptase inhibitor (NNRTI) candidates are entering the pipeline.

GSK Corporate Responsibility Report 2006 20 Corporate Responsibility Report of 2006

Experts at WHO and UNICEF have stated that access In partnership with Stellenbosch University in South to appropriate ARV tablets (as opposed to ARV Africa, GSK is supporting grant applications to fund liquid formulations) would facilitate the treatment of a programme to identify “biomarkers” in people children old enough to be able to swallow tablets. who may respond to specific treatments. Such We are developing scored tablets for our key ARVs biomarkers can be used to predict whether or not (Epivir, Ziagen, and Combivir) so they can be broken patients will respond quickly to treatment or if TB is into two smaller doses suitable for the treatment of likely to recur. children. This will simplify treatment and help Rotavirus physicians and carers administer the right dose Rotavirus infection is the leading cause of severe efficiently and safely to children. We expect to diarrhoea and vomiting (gastroenteritis) in children submit the scored tablets for registration in 2007. under two and kills around 600,000 children each We want to continue to play an important role year – one child every minute – mostly in developing in the treatment of HIV in children and we support countries. Our vaccine, Rotarix, for the prevention of four paediatric clinical studies involving 2,400 rotavirus induced gastroenteritis, was launched in children in five resource-poor countries. Mexico in January 2005 and has now been approved in 89 countries and is being registered in We provide ARVs through our international HIV a further 26. Most registrations have been in the Collaborative Research Trial programme to support developing world. The vaccine is now part of clinical studies run by third parties. We are currently national immunisation programmes for all new- supporting 21 clinical studies involving 19,500 born babies in eight developing countries including patients, of which 16 studies are taking place in sub- Brazil, El Salvador, Mexico, Panama and Venezuela. Saharan Africa. These include eight studies on We have distributed 12.5 million doses since launch. prevention of mother-to-child transmission, one on Early in 2007, GSK received prequalification status prophylactic properties, the four studies on children for its rotavirus vaccine from the World Health mentioned above, four on HIV-TB co-infection, and Organization (WHO). This is required before UN four on adult treatment strategies. These studies are organisations and GAVI (formerly known as the intended to advance knowledge about the use of Global Alliance for Vaccines and Immunisation) can ARVs in resource-poor settings and also help to purchase a vaccine. This was timely as it increase access to ARVs. complemented the decision by GAVI in late 2006 to Tuberculosis (TB) provide funding to support the introduction of TB kills two million people a year and is a leading rotavirus vaccines in developing countries. cause of death among people with AIDS in the Cervical cancer developing world. But no new drugs against TB Cervical cancer is the most common cause of cancer have been discovered in more than 40 years. deaths in women in the developing world. Current Vaccines published data suggest that our Cervarix vaccine GSK and the Aeras Global TB Vaccine could reduce by 70 percent a woman’s lifetime risk Foundation are developing GSK’s TB candidate of developing cervical cancer. We applied for vaccine. Early-stage clinical trials in the US and registration of the vaccine in Europe as well as Belgium showed that the vaccine is safe and well- 28 countries in our International region during tolerated and produces a strong immune response. 2006. We are on track to file for regulatory approval In 2006 we began additional trials involving adults in the US by April 2007. We are committed to previously infected with TB or vaccinated with making Cervarix widely available, and will make it Bacillus Calmette-Guérin (BCG). We plan to conduct available to low-income countries at preferential further studies in Africa and other locations to test prices through GSK’s tiered pricing model for the safety and efficacy of the vaccine candidate in vaccines. populations highly affected by TB. We are conducting clinical studies on the use of the Treatments vaccine in low income settings. In 2005 we launched a joint drug discovery Leishmaniasis partnership with the Global Alliance for TB Drug Sitamaquine is our potential new once-a-day oral Development (TB Alliance). The TB Alliance aims to treatment for visceral leishmaniasis. This disease accelerate the development of affordable drugs that affects half a million people a year in the developing will shorten treatment and be effective against world and is usually fatal if untreated. GSK is multi-drug-resistant strains of TB. All compounds providing all the funding for this project. A new will be screened to ensure they can be taken with treatment for visceral leishmaniasis is urgently HIV treatments. The TB Alliance is supporting needed, since current medicines are either 25 full-time scientists working exclusively on the TB impractical or becoming ineffective due to drug drug programme at Tres Cantos. GSK is contributing resistance or are simply unaffordable. Sitamaquine a matching number of staff and all remaining has shown good efficacy in phase II trials. The trials overhead costs. Around 1.5 million compounds also suggest that a shorter treatment period can be have now been tested for anti-TB activity and we achieved – perhaps up to half of the four weeks have four pre-clinical TB projects underway. needed for current treatments. The low cost suggests that sitamaquine could be the first truly accessible treatment for visceral leishmaniasis which affects the poorest of the poor.

GSK Corporate Responsibility Report 2006 21 Corporate Responsibility Report of 2006

Public private partnerships (PPPs) What is a PPP? PREFERENTIAL PRICING In a PPP, companies such as GSK Poverty, lack of political will and insufficient medical supply. In 2006 our licencees supplied over provide the R&D, technology, infrastructure (hospitals, clinics and health workers) 120 million tablets of their versions of Epivir and manufacturing and distribution are the biggest barriers to accessing healthcare in Combivir to Africa. expertise. Academic institutions developing countries. may also provide research and We will continue to look for new customers for our disease area knowledge. Public The affordability of medicines is also important and nfp ARVs in these countries and to regularly review sector partners, governments, or organisations such as the there are two elements to this: our nfp prices. However, it may well be that our licencees are able to produce first-line ARVs at lower Gates Foundation, help fund the • The ability of governments or patients to pay development and delivery costs costs and will increase their share of the business. for medicines. Governments and inter- and ensure that medicines get to the people who need them. governmental agencies must make significant A massive scale-up in treatment for HIV/AIDS is Funds are usually channelled additional financial resources available to solve planned by the global community in the next five through organisations such as this problem. years. We are negotiating agreements with contract the Medicines for Malaria manufacturers to ensure we have the capacity to • The price at which medicines are sold – an area Venture. contribute to meeting this demand. GSK can help to address. Why are PPPs needed? The WHO published new treatment guidelines for GSK wants to invest in research We are making ARVs and anti-malarials available to patients with HIV. Our ARV abacavir is now to tackle diseases that blight the developing countries at more affordable prices. This developing world. However, recommended as a first-line treatment option. In is a major commitment that we call ‘preferential there is a dilemma. We must be May we reduced the nfp price of abacavir- pricing’. It includes not-for-profit (nfp) prices for the profitable to sustain our business containing ARVs by 30 percent and made our two world’s poorest countries, and discounted prices for and to continue to develop new new ARVs – Kivexa and Telzir -– available at nfp medicines. This business model wealthier developing and middle-income countries, prices. does not work in cases where see page 23. there is no prospect of a There have been concerns that pharmaceutical commercial return. Other factors in the supply chain such as taxes, companies are not doing enough to register Unfortunately, lack of resources tariffs and distributor mark-ups can significantly essential medicines in developing countries and that means there is limited market increase the price of medicines. These factors are this prevents these countries from taking advantage for new treatments for diseases out of our control and should be addressed by that disproportionately affect of preferential pricing offers. We continue to review governments. developing countries. The PPP the registration needs for our key ARVs in our model, in which business and For middle-income developing countries we 64 target developing countries to ensure that Epivir, the public sector work together, continue to negotiate public sector prices on a case- Retrovir and Combivir are available as widely as offers a solution. by-case basis to improve affordability, see page 23. necessary and possible. How does the partnership work in practice? GSK vaccines are also available at preferential prices. A current focus is to also make abacavir and Drug discovery takes place at We use a tiered pricing structure for vaccines – prices abacavir-containing ARVs available in these our dedicated diseases of the for the developing world can be as little as a tenth locations. We will prioritise our efforts where there developing world Discovery of those for developed countries. We work with is the greatest medical need – in particular the Centre at Tres Cantos. GSK provides the facilities and meets multinational organisations such as UNICEF, the 15 PEPFAR countries and other developing countries all the running costs. There are World Health Organization and the Pan American with a significant HIV burden where high-quality over 100 GSK scientists at Tres Health Organisation, governments and non- alternatives to abacavir are not available. Cantos, half of whom are governmental organisations, to provide appropriate Product diversion, where not-for-profit medicines subsidised by our partner and affordable vaccines for developing countries. are illegally shipped back for sale in wealthier organisations – the Medicines This includes basic polio vaccines as well as specially for Malaria Venture (MMV) and countries, denies treatment to patients in poorer developed combination vaccines that target several the Global Alliance for TB Drug countries. Our anti-diversion measures include diseases. In 2006, of the 1.1 billion vaccines we Development (TB Alliance). access packs (such as red rather than white tablets) shipped, around 75 percent went to the developing As compounds move into clinical for Combivir, Epivir tablets, Epivir solution, Trizivir world. This is lower than in previous years due to the development, GSK provides the and Retrovir solution which are now registered in timing of some significant tenders. clinical, regulatory and more than 50 countries. GSK was the first company manufacturing expertise and resources through our global Progress in 2006 to receive a Positive Opinion (for Epivir and Combivir R&D and supply network. We shipped 27 million tablets of nfp Combivir and red coloured tablets) from the European Medicines Partners help fund the cost of 59 million tablets of nfp Epivir to the developing Evaluation Agency (EMEA) via the Article running clinical trials and address world compared with 45 million and 81 million 58 regulatory procedure for medicines intended for issues of access and distribution. tablets respectively in 2004 and 2005. use outside of the EU. This should serve to speed up This reduces the costs of registration of red coloured tablets in developing development and gets new This decrease was expected and is primarily due to countries. products to patients faster. more customers purchasing ARVs from generic Research programmes are manufacturers including those licensed by GSK. This overseen by joint steering is a positive indication that our licensing policy is committees with representatives from GSK and our partners. working. Does this affect the price of In the last year generic manufacturers licensed by new treatments? GSK have significantly increased their Importantly, under the terms manufacturing capacity and ability to supply larger of our agreement, we are quantities of ARVs at lower prices. We welcome this committed to make any new treatments resulting from PPPs trend as it gives customers in sub-Saharan Africa accessible to the developing greater choice and contributes to better security of world at affordable prices.

GSK Corporate Responsibility Report 2006 22 Corporate Responsibility Report of 2006

Our not-for-profit prices in Supply of preferentially priced There has been much discussion about the use of summary Combivir and Epivir tablets compulsory licences, under which intellectual property rights are taken away from rights holders. Which medicines? Compulsory licenses are one of the flexibilities in the All our HIV/AIDS (ARVs) and malaria treatments. 250 World Trade Organisation’s TRIPs agreement on GSK licencees intellectual property. GSK believes that widespread Which customers? Public sector customers and not- 200 use of compulsory licences will undermine the intellectual property framework and be counter- for-profit organisations in all productive in the long term. R&D into new eligible countries and private 150 120 employers in sub-Saharan Africa 126.3 treatments, especially where commercial markets who provide treatment for non- exist, such as for HIV/AIDS, depends on protection 100 insured staff. for intellectual property. 66.4 Which countries? All the Least Developed 50 86.3 Countries and sub-Saharan

Number of tablets (million) 16.2 7.7 Africa, as well as countries with 0 eligible Global Fund and PEPFAR 2002 2003 2004 2005 2006 MIDDLE-INCOME COUNTRIES projects – over 100 countries in total. See eligibility for not-for- Middle-income countries are more economically profit prices in the background developed but often have healthcare demands that section of our website for more A report from the UN-led Accelerating Access outstrip their available resources. These challenges details. Initiative (AAI), suggests that by September 2006 are made worse by a growing AIDS epidemic in What does it cost? more than 738,000 people living with HIV/AIDS in many middle-income countries. Combivir, our leading ARV, is developing countries were receiving treatment with available at $0.65 a day. Our nfp at least one ARV supplied by the seven We can only afford to supply products at low prices prices also include delivery and pharmaceutical companies in the AAI (compared in the world’s poorest countries if we can still make insurance costs. an adequate return on them in wealthier markets. with 221,000 people on treatment in 2004). This How much? includes 424,000 patients in Africa. Nevertheless, we recognise that many middle- Our nfp prices are applicable to income countries need assistance. orders of any size and are not Extending preferential pricing We negotiate preferential pricing arrangements dependent on large order We are considering extending our preferential prices quantities. in Africa to a wider range of products. However, a with middle-income countries on a case-by-case For how long? number of commercial factors and the overall basis. This is done bilaterally through dialogue with governments. We believe this is the best approach Our nfp prices are sustainable – market environment must be considered. The we do not make a profit on findings from our five country pilot study are since the disease burden, and resources available to them, but we do cover our informing this evaluation. address, it vary significantly from country to country manufacturing and distribution and also within countries. These arrangements costs. Therefore we can continue combine a viable and sustainable commercial return to supply them in the long-term. for GSK with improved affordability for the VOLUNTARY LICENSING AND healthcare systems concerned. For several more developed countries we are also PARTNERSHIPS introducing discount cards for senior citizens, see GSK wants to play its part in the global response to developed world. the HIV/AIDS pandemic. Our preferential pricing Activity in 2006 arrangements enable us to supply highly Russia discounted, safe and quality products for as long as We announced an agreement to supply ARVs to they are needed. In some situations voluntary the Russian Government at discounted prices. This licences also help to increase the supply of is the first direct, federal purchase of anti-retroviral medicines. medicines in Russia. During 2006 GSK supplied over Voluntary licences (VL) enable local manufacturers 90,000 treatment packs to the Russian Government to produce and sell generic versions of our products. of its HIV medicines, Combivir, Epivir and Ziagen We granted our first VL in 2001 and have now which were dispensed by hospital centres across the negotiated eight licencing agreements for our ARVs country. This agreement will contribute to the in Africa. This includes a new licence agreed in 2006 Russian Government’s target of reaching 15,000 with a South Africa company. Some of our VLs cover patients by the end of 2006. This target has been individual countries or trade blocks whilst others doubled to 30,000 in 2007. cover all of sub-Saharan Africa. VLs are not a China universal solution to HIV/AIDS but a specific In September 2006, we signed a voluntary licence response to a particular set of circumstances. with Simcere, a Chinese manufacturer, granting A decision to grant a VL depends on a number of them the right to manufacture and sell zanamivir factors including the severity of the HIV/AIDS (Relenza) containing products in China, Indonesia, epidemic in that country, local healthcare provision Thailand, Vietnam and all LDCs. Relenza is an anti- and the economic and manufacturing environment. viral which can help treat influenza. More than half Selecting the most appropriate licensee is key. We of all human cases of flu caused by the H5N1 virus need to be sure that the manufacturer will be able have occurred in the Asia-Pacific region. to provide a long-term supply of good quality medicines and will implement safeguards to prevent the diversion of medicines to wealthier markets.

GSK Corporate Responsibility Report 2006 23 Corporate Responsibility Report of 2006

Intellectual property rights in India India has developed a large generics industry partly This is a significant reduction from last year and as a result of national legislation that did not permit reflects the introduction of a new drug benefit as patent protection for pharmaceutical products. In part of the US Medicare programme – known as 2005, to comply with the WTO Trade Related Medicare Part D. Prior to this, Medicare patients did Aspects of Intellectual Property Rights (TRIPs) not have prescription coverage for most medicines. agreement, India introduced legislation that allowed Once a patient had enrolled in a Medicare Part D for the patenting of pharmaceutical products. In the Plan, they became ineligible for our existing patient context of the access to medicines debate, some assistance programmes (Bridge to Access and argue that this obligation on India will result in an Commitment to Access). However we still recognise end to the provision of cheap generics and that, even with this drug coverage, these patients undermine the future availability of affordable may still need assistance. A new programme GSK innovative products. Access provides the extra help some low income senior and disabled Medicare Part D patients need GSK believes that the intellectual property in getting their medicines. This programme allows protection provisions set out in TRIPs are vital to the those who spend $600 out of pocket in 2007 for development of medicines to meet unmet medical prescription medicines, and whose incomes are needs around the world. A robust IP system is between 135 percent to 250 percent, (up to 350 essential to encourage research-based companies percent for Oncology products) of the Federal to undertake risky and hugely expensive R&D to Poverty Level to apply and if eligible obtain GSK discover new and better medicines and vaccines. medicine for free for the remainder of 2007. See Most of the generic medicines already on the www.gsk-access.com for more information. We market in India will not be affected by the expect this new programme to increase the number introduction of patent protection. They will continue of patients in our assistance programmes during to be available in India and elsewhere in the same 2007. way as they are today. We also believe that the public health safeguards in the TRIPS agreement will In January 2005, GSK and nine other pharma- prevent access problems in the future. ceutical companies created a discount savings programme to improve access to medicines for The root cause of developing countries’ inability to uninsured Americans who are not eligible for address their healthcare problems does not lie with Medicare. The Together Rx Access card provides the patenting system but with a lack of funding, a savings of 25-40 percent on more than lack of political will and inadequate healthcare 300 medicines. Approximately 37 million people, infrastructure. None of these factors is affected by around 80 percent of the people in the US without intellectual property rights or by full implementation prescription insurance, are eligible to enroll. The of TRIPs in India or elsewhere. participating companies enrolled 469,888 people in 2006, who received 1.6 million 30-day prescriptions saving $24million (based on WAC). Of these, GSK provided discounts of $3.1 million to 98,955 DEVELOPED WORLD patients through 31,737 30-day prescriptions. Access to medicines is not just an issue for the Orange Cards in middle income countries developing world. Even in developed countries Our Orange Card in the Ukraine gives all asthma some patients cannot afford the medicines they and chronic obstructive pulmonary disease patients need. This is a particular problem in the US where who are under 25 or over 50, an average discount many people do not have health insurance. GSK of 19 percent on the most popular presentations of has developed Patient Assistance Programs and a GSK’s Seretide asthma medicine. Asthma patients of discount savings card in the US to help patients any age who suffer disabilities or who are affected without insurance. by the Chernobyl nuclear disaster are also eligible. We are also introducing discount savings cards in Eligibility is assessed by the patient’s doctor and several middle-income countries to enable patients can receive the medicine at participating qualifying patients to obtain prescription medicines pharmacies. A hotline number has been set up to at a discount price. help patients find their nearest pharmacy. In 2006 Orange Card discounts totalled $119,722 Programmes in the US (£65,000). Patient Assistance Programs provide prescription medicines to low-income, uninsured patients free In Lithuania, our Orange Card gives senior citizens or at minimal cost. GSK operates several and the disabled an average discount of 40 percent programmes, including Commitment to Access on the patient co-payment on all GSK prescription which covers cancer treatments and Bridges to medicines. So far more than 25,000 patients Access which covers other medicines for out- have applied for an Orange Card and over patients. Patients are registered through one phone 200 pharmacies (20 percent of the pharmacies in call from a patient advocate and receive medicine at Lithuania) are registered to participate. In 2006, their local pharmacy or by mail order. In 2006, 25,000 patients received discounts worth 402,000 patients received GSK medicines worth £150,000. $370 million through these programmes, compared with $464 million in 2005. The value of the medicines is calculated using the wholesale acquisition cost (WAC).

GSK Corporate Responsibility Report 2006 24 Corporate Responsibility Report of 2006

GSK’s Orange Card in Bulgaria provides low-income patients with a discount on GSK medicines to treat chronic diseases such as asthma, chronic obstructive pulmonary disease and diabetes. We broadened the scope of our Orange Card in 2006 in response to changes in the Bulgarian reimbursement system which meant that 50,000 patients with chronic diseases could no longer access state assistance for their currently prescribed medicines. The Orange Card provides direct benefits (in the form of subsidy) to patients suffering from three important chronic diseases in Bulgaria – asthma, diabetes and benign prostate hyperplasia. The 2006 GSK investment in the Orange Card in Bulgaria is now Euro 4.5 million (£3.1million).

Summary of GSK discount programmes

Country GSK programme Number of patients Value of benefit to patients US Patient Assistance Programs – Free or minimal cost medicines for low-income, 402,000 received $370 million uninsured patients prescriptions (£200 million) US Together Rx Access – Discounts for all low-income uninsured patients. 98,955 received $3.1 million Joint industry programme prescriptions (£1.6 million) Bulgaria Orange Card – Discounts for low-income Euro 4.5 million patients with chronic diseases 50,000 approx (£3.1 million) Lithuania Orange Card – Discounts for senior citizens and disabled people 25,000 £150,000 Ukraine Orange Card – Discounts on asthma and $120,000 COPD medicine for patients under 25 or over 50 not available (£65,000)

GSK Corporate Responsibility Report 2006 25 Corporate Responsibility Report of 2006

Research Research and development (R&D) of new medicines and vaccines is at the core of our business and makes a significant contribution to society.

Our product pipeline ew medicines and vaccines have brought ANIMAL RESEARCH GSK’s R&D pipeline includes huge benefits to the health and quality of life potential new treatments and of millions of people over the last 100 years. Animal research and testing is an essential vaccines for many serious and N component of understanding disease and debilitating conditions But continued R&D remains as important as ever. evaluating safety and effectiveness of new vaccines including: There are still many serious, debilitating and life- and prescription and over-the-counter medicines. • Alzheimer’s disease threatening illnesses for which there are no effective treatments or where treatments could be Safety regulations require us to test all new • Asthma significantly improved. medicines on animals before they are tested in • Atherosclerosis Our goal is to build the best product pipeline in clinical trials using humans. Most vaccines have to • Cancer the industry. In 2006 we invested £3.5 billion be tested on animals each time a new batch is produced. • Depression ($6.4 billion) and employed over 15,000 people in • Diabetes R&D. GSK has 17 animal research laboratories in Europe, Asia and the US. Some animal research is conducted • Heart disease Our research aims to address unmet medical needs. Our pipeline includes compounds with the potential by external contractors on our behalf. This • HIV/AIDS 1 to make a major contribution to healthcare in represents an additional 9 percent of animals . We • Influenza developing countries, see Access to medicines. estimate that animal research accounts for around • Malaria Throughout the R&D process we seek the views of 5 percent of all GSK research expenditure. • Rheumatoid arthritis patients to inform our research. Focusing on patient Around 99 percent of the animals used by GSK are needs drives innovation which brings commercial •TB rodents (such as rats, mice, guinea pigs) and rabbits. success. The remaining 1 percent includes fish, ferrets, pigs, We recognise that biomedical and pharmaceutical dogs, cats and primates. research raises ethical concerns – from the use of Animals used by GSK in 2006 % new technologies to the objective reporting of clinical trial results. We are committed to attaining mouse 67.7 high ethical and scientific standards in all our R&D work. This section explains our approach to: rat 25.0 • Animal research, and our efforts to reduce, guinea pig 5.2 refine and replace animal testing other rodent 0.1 • The conduct of clinical trials. How we ensure rabbit 0.8 GSK sponsored clinical trials are carried out to the same high ethical standards irrespective of other 1.2 where they are conducted Ultimately GSK would like to see the important • Training and auditing for clinical trials. How we benefits of research being achieved without the use train GSK employees involved in clinical trials of experimentation which has the potential to cause and how we check that trials are carried out to pain or distress to animals. We do not believe this Good Clinical Practice (GCP) standards can be achieved in the foreseeable future, therefore • Clinical trial information and results. How we GSK is committed to the 3Rs – reduction, publicly disclose trial information and results refinement and replacement of animals in research through journal articles, the GSK Clinical Trial – and to achieving high standards of animal welfare. Register and other public databases Our goal is to use animals only when scientifically necessary, use as few as scientifically feasible and to • Patient safety. How we monitor the safety of minimise pain and distress. our medicines This approach continues to have an impact. In 2006 Background information on our approach to new there was a small increase in the absolute numbers technologies, including pharmacogenetic of animals used from a baseline in 19942, however research and the use of transgenic animals, is the growth in R&D activity continues to greatly available on our website. exceed any increase in animal use.

1 We started estimating our external animal use in 2002, and to 2006 have recorded external animal use as representing 3.3%, 4.5%, 7.1%, 6.7%, 8.9% of the total animal use in our own laboratories. This change may both represent a rise but also improvement in reporting of data from our diverse external collaborations. 2 We use 1994 as a baseline for comparison as this was the first year we were able to collect reliable data. The increased use in 2006 was due to more mice being used, especially for vaccines testing.

GSK Corporate Responsibility Report 2006 26 Corporate Responsibility Report of 2006

Change in R&D activity compared to change in number of animals used in GSK research laboratories*

300

250 R&D activity Animal used

200 e 1994 c

150 hange sin c %

100

50

0 1994 1995 1964 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

*These data do not include animal research conducted by external contractors on our behalf. R&D activity combines our R&D budget and our vaccine sales, the two main drivers of animal use.Vaccine sales are included since most vaccines have to be tested on animals each time a new batch is produced.

Change in R&D activity compared to change in number of animals used in GSK research laboratories* Year Animals used R&D activity

1994 100.0% 100.0% 1995 85.9% 120.4% 1996 83.1% 128.8% 1997 86.5% 135.2% 1998 95.5% 140.7% 1999 92.5% 154.0% 2000 92.8% 168.6% 2001 92.4% 176.2% 2002 103.3% 191.8% 2003 105.0% 195.8% 2004 103.9% 203.0% 2005 102.3% 227.6% 2006 109.8% 259.0%

GSK Corporate Responsibility Report 2006 27 Corporate Responsibility Report of 2006

Recent GSK advances in the 3Rs: Regulation and internal controls • We replaced all wild-caught Our animal research laboratories comply with Our Animal Welfare Awards recognise employees primates used for safety national laws on animal welfare. Regulators carry who have made outstanding advances in testing of oral polio vaccines with primates bred in out regular unannounced inspections of our sites. implementing the 3Rs. In 2006 a research team looking at smoking cessation products, received the captivity. In 2006 we also All proposed research and testing using animals is reduced the number of award for reducing by 40 percent the number of considered by GSK ethical review committees. GSK primates used for this rats used in studies into the addictive properties of laboratories, and any external laboratories purpose by 58 percent smoking products. compared to 2005. We are conducting research on our behalf, must follow our progressing the replacement code of practice on animal research which Sharing best practice of all primates used for includes best practice standards for animal care and We fund the UK National Centre for the 3Rs’ safety testing of oral polio use. (NC3Rs) prize which recognises the best new vaccines with genetically techniques for implementing the 3Rs. In 2006, the modified mice; the date to Independent accreditation by the Association for £10,000 prize money was won for a technique that achieve this remains subject the Accreditation and Assessment of Laboratory reduced the number of mice subjected to an to regulatory approval. Animal Care (AAALAC) International is one way invasive procedure used in bacterial disease • We replaced rats used to laboratories can demonstrate that they meet best research. supply brain tissue with a practice standards. Ten of our animal laboratories rat stem cell culture. This are accredited by AAALAC. These are located in Together with industry partners in the Association of continuously produces more cells without the need to Belgium, Italy, Spain, the UK and the US and this the British Pharmaceutical Industry, we are funding use animals, avoiding the accreditation now covers more than 91 percent of a three-year job post at the NC3Rs to encourage use of 2,000 rats each year. the animals used in GSK-owned laboratories. Our sharing of best practice. aim is to achieve AAALAC accreditation for all our • We have increased the In 2006, we donated our internal guide to refining laboratories1. number of macaque the collection of blood samples from laboratory monkeys housed in pairs As we expand our business into new markets, animals. This is now available for free on the NC3Rs allowing more social interaction which improves increase vaccine production and work with more website. external partners to develop new medicines, we will animal wellbeing. We are involved in many other initiatives to also conduct animal research and testing in more • We introduced use of encourage research into the 3Rs and to stimulate countries worldwide. We are assessing the impact catheters and automated the sharing of best practice on animal research. In of these changes on our programme of animal blood collection systems to 2006, GSK: significantly reduce the research and in 2006 we updated our policy on the number of rats used in review of studies we sponsor externally. • Took part in working groups run by the NC3Rs pharmacokinetic studies on replacing and reducing the use of primates (studies into the absorption, The three Rs in research distribution, metabolism Implementing the 3Rs commits us to: and excretion of medicines). • Supported the Universities Federation for • replacing animal studies with alternative The new approach Animal Welfare’s projects to improve housing significantly reduces animal methods wherever possible use by 60 percent in this and husbandry for laboratory animals • reducing the number of animals used in each commonly used type of • Participated in the European RSPCA, FRAME study. study and industry initiative to reduce the use of dogs More information on how we • refining studies to minimise pain and maximise in safety testing implement the 3Rs is available the information obtained from each animal on our website. • Supported the National Academy’s Institute of For example, we are currently replacing the use of Laboratory Animal Research and the Johns primates with mice in vaccine batch testing. Beyond Hopkins Center for Alternatives to Animal this we are looking at ways to use the advances in Testing in the US quality control processes for vaccine production to Advocacy change testing requirements so that eventually it We work with stakeholders to encourage reduction, will not be necessary to test each batch of vaccines refinement and replacement of animal research and on animals. testing. In 2006 we: Training and awareness • Joined the European Partnership for Alternatives We provide training on the 3Rs to all staff who are to Animal Testing, which is a collaboration involved in the care and use of animals and publish between the European Commission and major quarterly news bulletins on the 3Rs to raise companies from seven industry sectors awarness. • Worked with a range of stakeholders to ensure Our ethical review committees of GSK scientists, the impact on animals of the REACH chemicals statisticians, senior managers, animal technicians initiative were addressed. We believe that and veterinarians encourages a 3Rs culture at GSK existing data records, long-term human through seminars and ‘Recommended Practice’ exposure records, and modern techniques that guidelines for scientific procedures and animal do not use animals can provide most of, if not welfare. all, the data required for product testing of many of the established products that have been in use for some time

1 In 2006 we closed a laboratory in Japan, acquired laboratories in Croatia and Canada, and established GSK-managed laboratories in Singapore and the US, giving a current total of 17 GSK laboratories where we use animals.

GSK Corporate Responsibility Report 2006 28 Corporate Responsibility Report of 2006

• Gave evidence to the UK Academy of Medical CONDUCT OF CLINICAL Our policy on Payments to Sciences study on the use of non-human Healthcare Practitioners and primates in research. This confirmed that a TRIALS Institutions Conducting GSK- Sponsored or GSK-Supported strong justification is essential for any such use. The safety and effectiveness of new medicines and Clinical Studies However it concluded that where there are no vaccines must be evaluated in human clinical trials • All clinical trial investigators other means to address clearly defined before they can be approved for marketing. are selected solely on their questions of particular biological or medical Regulators will only give approval if trials qualifications to conduct importance, there is a strong scientific and demonstrate that a product is safe and effective and clinical research. Their history moral case for the carefully regulated use of of using GSK products is not that its benefits outweigh any risks from potential taken into account. non-human primates side effects. • Payments to practitioners • Participated in a study on animal pain and A new product will typically be tested through three reflect fair market value for distress in research. The study conducted by the stages of clinical trials. These involve both healthy the work performed. Laboratory Animal Science Association and the individuals and patients with the relevant disease. • No payments are offered or Animal Procedures Committee assessed made that could influence In 2006 there were 159 projects in clinical whether the severity of pain and distress could their judgement on whether be retrospectively reported. The study found development. to enrol or maintain a that most research institutions already keep a Standards for clinical trials participant in a clinical study. record of pain or distress experienced by All GSK clinical trials, wherever they are carried out, individual animals. It concluded that making this are conducted according to the Good Clinical information public would be useful and would Practice (GCP) guidelines developed by the increase transparency. The study is now looking International Conference on Harmonisation (ICH) at ways this could be done without introducing and the principles contained in the World Medical excessive bureaucracy Association Declaration of Helsinki on the ‘Ethical Communicating our approach Principles for Medical Research Involving Some people hold strong views on animal research Human Subjects (2004)’. and testing. We believe it is important to explain the The ICH guidelines provide an internationally need for animal research and testing and to be open accepted ethical and scientific quality standard for about what we do. designing, conducting, recording and reporting Our laboratories host visits from schools, colleges, trials. They cover issues such as the selection and animal welfare organisations and others. In 2006, training of trial investigators, gaining informed we made over 28 visits to UK schools and hosted consent from trial participants, monitoring and 4 site visits. In the US we host regular Science quality assurance. Literacy teacher workshops on animal research with Trial protocols (the plan for how a clinical trial will be the Pennsylvania and North Carolina Associations conducted) are reviewed by external regulatory for Biomedical Research. Over 1,000 teachers have agencies in the relevant countries when required, taken part since 1994. and all protocols are considered by the relevant We engage regularly with animal welfare ethical review committees which cover the sites organisations and our investors, as well as where studies will take place. contributing to the debate in the media. An article An ethics review committee is composed of lay on animal research in the UK Times (29th April 2006) people, medical professionals and scientists. They followed a visit to a GSK UK animal laboratory. assess whether a trial is justified and whether it is In 2006, SustainAbility, the corporate responsibility designed and will be conducted according to consultancy and think-tank, benchmarked our appropriate ethical standards. Ethics committees reporting on animal research. They concluded it was have the power to reject or stop a clinical trial. “Overall, the most comprehensive discussion of Safety data are routinely collected throughout animals in research in the industry’s reporting” and development programmes and are reported to that “animal welfare concerns are integrated into regulators in line with applicable regulations. Data GSK’s operations and contracting”. are also reviewed by GSK on an ongoing basis for Protest any safety signals (events not necessarily caused by We accept the right of lawful protest against animal the treatment that require further exploration). GSK research as a part of a free society, but condemn has a Global Safety Board (GSB) led by the Chief the use of violence and intimidation by some who Medical Officer and composed of senior physicians are opposed to animal use. Our public stance and scientists. The GSB oversees the safety of all against extremism has been complimented in the investigational and marketed compounds, approving the adminis-tration of investigational media (UK Guardian 9th May 2006), and by the UK compounds to humans and defining the doses and Prime Minister (UK Sunday Telegraph 14th May 2006) for its robustness and openness. We welcome duration of treatment that are considered safe. The the apparent shift in the UK away from extremism GSK Global Safety Board is responsible both for to debate, and the passage of new legislation approval of pivotal protocols (pivotal trials are those against animal extremism in the United States. which provide the primary data on which regulatory approval is based) and internal assessment of any issues related to patient safety that arise during the product development programme or when it is marketed.

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We audit clinical trials to ensure they are conducted TRAINING AND AUDITING FOR to the appropriate standards. See Training and Auditing for Clinical Trials. CLINICAL TRIALS Clinical trials outside Western Europe and We provide training to ensure that clinical trials are North America performed to high ethical and quality standards. We Most clinical trials take place in Western Europe and audit the conduct of clinical trials to ensure they are North America but GSK is starting to perform more carried out according to the study protocol, GSK trials in regions such as Central and Eastern Europe, Standard Operating Procedures (SOPs), Good South Africa, Latin America and parts of Asia. Clinical Practice (GCP), current regulatory directives, laws, guidelines and the ethical considerations of We seek to conduct clinical trials where: the Declaration of Helsinki. • The population is relevant to the scientific All employees involved in designing, conducting and question and where the results can be monitoring GSK-sponsored trials are trained in GCP. generalised to broader populations Training is mandatory and employees must have • There are qualified investigators capable of completed the required training before starting or carrying out the research changing jobs. • There are people who qualify for participation In 2006 there were 14,988 training activities related in the research to GCP. Each ‘training activity’ represents a successful completion of an e-learning module or • The research can be carried out as quickly and instructor-led course related to GCP by one of our efficiently as possible employees or contractors. All GSK-sponsored clinical trials are conducted to We keep detailed training records which are the same ethical standards irrespective of the routinely requested by regulatory authorities when location. All studies meet international and national undertaking an inspection to assess the competence regulatory and legislative requirements and are of employees undertaking clinical trials. conducted in accordance with the principles of Good Clinical Practice (GCP) standards, the GSK’s internal audit department audits GSK systems principles contained in the World Medical and processes involved in the conduct of trials, as Association Declaration of Helsinki on the ‘Ethical well as auditing external clinical research Principles for Medical Research Involving Human organisations and investigators performing clinical Subjects’ (2004) and GSK’s own policies. research on our behalf. A risk management approach is used to determine which trials are GSK is committed to investing in R&D for diseases audited. Risk factors evaluated include the disproportionately affecting developing countries, complexity of the study, the patient population, the see Access to Medicines. These compounds must location of the study, previous audit history and any usually be tested through clinical trials in developing unusual findings during the conduct of the study. countries where the disease is prevalent and the medicine is relevant for the local population. In 2006, 213 audits were conducted: In some of the least-developed countries additional • 132 audits of investigator sites conducting GSK- safeguards may be needed. For example, in some sponsored trials. This represents approximately cultures, while still complying with normal ethical 5 percent of investigator sites participating in and legal requirements, additional steps are taken pivotal clinical trials to match the objectives of informed consent to local • 22 audits of internal GSK systems and processes culture. So for example local leaders and/or family used in managing clinical trials and data members may need to be involved in the consent process. • 29 audits of clinical research organisations carrying out clinical trials on GSK’s behalf You can read our position on clinical trials in the developing world in the background section of • 13 audits of GSK local operating companies, our website. including the medical departments managing the clinical research in those countries • 17 “For Cause” audits were conducted in response to suspected irregularities and six investigators were reported to regulatory agencies Audit results are reported quarterly to the R&D Risk Management & Compliance Board, and annually to the GSK Audit Committee. Any concerns or issues identified during audits are fully investigated and appropriate action taken. This may include retraining or, in severe cases, dismissal for the individuals concerned as well as development of new training programmes or procedures to prevent a reoccurrence. Trial data may also be re-analysed.

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Inspections of investigators, clinical research GSK follows the PhRMA Principles on the Our approach to authorship of organisations, Independent Ethics Committees Conduct of Clinical Trials and the journal articles /Institutional Review Boards and sponsors of clinical Communication of Clinical Trial Results and is There have been concerns about “ghost writing” of journal trials are also carried out by regulatory authorities to committed to timely communication of results for articles, where doctors put their ensure the safety of trial participants, the quality of all products approved for marketing. Wherever names to articles written by data, and that trials are conducted according to possible we publish our trial results in peer-reviewed pharmaceutical companies. GSK’s GCP. During 2006 there were more than 30 such scientific and medical journals, or in conference policy is that: inspections of GSK and investigators used by GSK abstracts and proceedings. These are used by • Authorship and to conduct clinical studies. research and healthcare communities to obtain the acknowledgements for articles latest information on treatments. must be consistent with journal guidelines and be GSK cannot guarantee publication by these determined on the level of methods since this is at the discretion of journal contribution to study design, CLINICAL TRIAL INFORMATION editors and conference organisers. For this reason, data acquisition, analysis and we launched the GSK online Clinical Trial Register interpretation and writing or revising the manuscript. AND RESULTS in 2004, to supplement prescribing information and We make the results of our clinical trials widely publications in the scientific literature. • The named senior author for a available to healthcare practitioners and others who paper must actively The Register contains results and protocol participate in the drafting use or evaluate the use of our medicines. We also information from GSK-sponsored trials of marketed process, lead the content publicly disclose information about ongoing trials. medicines. It also provides references to publications development, and retain final Ongoing clinical trials that have appeared in medical journals. Anyone can approval authority for the manuscript. Publicly available internet-based registration of use the internet to access the register. ongoing clinical trials can provide a stimulus for • Any GSK staff or contractors Activity in 2006 increased participation in clinical research. It also who contribute to the At the end of 2006 there were 2,760 clinical trial development of manuscripts provides an important reference point so interested summaries on the GSK Clinical Trial Register for external authors must be parties can track the subsequent disclosure of clinical (http://ctr.gsk.co.uk/welcome.asp). This includes named in the article. trial results. all clinical trials of our major marketed products Read our Public Policy on GSK is legally required to post summary protocol which have been completed since the formation of Disclosure of Clinical Trial information for ongoing studies of treatments for GSK in 2000, or that were completed before this Information Authorship of Journal Articles. serious or life-threatening diseases conducted under and are likely to inform medical judgement. a US Investigational New Drug Application on the We have continued to populate the register with National Institutes of Health website clinical trials that relate to our other marketed www.ClinicalTrials.gov. medicines and this was largely completed in 2006. In addition, GSK is posting protocol summaries of all clinical trials, irrespective of the countries involved, to ClinicalTrials.gov. Number of summaries of GSK clinical trials on the GSK Clinical Trial Register At the end of 2006 there were 223 protocol (cumulative total) summaries of actively recruiting clinical trials on ClinicalTrials.gov. These meet the requirements of 3000 such postings as set out by the International 2760 Committee of Medical Journal editors. For non- 2500 phase III trials, our policy is to delay the posting on 2125 the website of certain data elements on an 2000 exceptional basis when they are competitively sensitive. 1500

Clinical trial results 1000 Pharmaceutical companies are legally required to disclose all relevant data from clinical trials to the Number of summaries 500 appropriate regulatory authorities when seeking 143 0 approval for a new product. 2004 2005 2006 After approval, sponsors have a continuing obligation to provide regulatory authorities with Number of summaries of GSK clinical trials on updated safety information from clinical trials, see the GSK Clinical Trial Register (cumulative total) patient safety. Safety and efficacy information is provided to doctors through prescribing information Year Summaries which is approved by regulators. 2004 143 In addition there is a need to use other ways to 2005 2,125 communicate the results of our clinical trials to healthcare practitioners and others who use or 2006 2,760 evaluate the use of our medicines.

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Genetic research and patient Our objective is to disclose on the Clinical Trial How do we monitor safety? safety Register the trial results for all new products within An efficient, fully operational, worldwide system for Pharmacogenetic research is the 10 months of the product reaching the market and pharmacovigilance is maintained within our study of genetic variations that predispose individuals to respond to disclose the results of trials completed after a company. We have dedicated teams of scientists differently to medicines. It is a product is approved for marketing within one year and healthcare professionals across the world who research area with the potential of trial completion. In 2006 a small number of monitor, review, evaluate and communicate safety to improve the effectiveness of postings were delayed for various reasons, including issues with our medicines. medicines and patient safety, by so that publication in scientific journals was not The safety of our products is assessed in clinical identifying which patients are jeopardised. more likely to benefit from a trials before a product can be approved for medicine and which may be An independent assessment of documentation marketing. Sometimes adverse events occur after susceptible to side-effects. processes and procedures used by GSK in approval when a product is being used by large Pharmacogenetics relies on populating the Clinical Trial Register has been numbers of patients. We have policies and a analysing the DNA of participants conducted by an external organisation. We will governance framework in place to help us detect in clinical trials against the results continue to engage the services of this organisation and act on any adverse events reasonably from their treatment. We collect to ensure that GSK complies with the policies and associated with our products. See drug safety blood samples for potential DNA analysis in the majority of procedures that we have established to fulfil our governance framework. commitment to make information from our clinical our phase I, II and III drug Adverse events are recorded on our global safety development trials. This includes research activities available to the public. with ethics committee reviews and database and clinical trial database and investigated approval and informed patient by our clinical and pharmacovigilance teams. This consent. helps us to monitor the balance between benefits and risks. See benefit-risk management. PATIENT SAFETY When appropriate, we respond to safety issues by Ensuring patient safety is extremely important and changing product labelling and communicating we take the safety of all our medicines, vaccines and with doctors. In most cases these actions are medical devices very seriously. sufficient; in a small number of cases we conduct risk minimisation activities, such as further clinical Safety of medicines trials. In certain cases it may also be appropriate to Medicines are a part of modern life. In an ideal stop clinical trials or to withdraw the medicine from world, a medicine would target only the disease or the market. See collecting and reporting safety disorder it’s meant to and never do anything else. data. Unfortunately, despite the best efforts of scientists, such a medicine does not yet exist. GSK is investing in a number of areas of emerging science that have the potential to improve patient All medicines have potential risks as well as benefits safety, for example, pharmacogenetic research, see although not everyone who takes a medicine will sidebar. experience side effects. It is important that we identify, evaluate and minimise safety concerns to Enhancing the pharmacovigilance system ensure that the overall benefits of a medicine The science of pharmacogivilance is continually outweigh any risks. This is known as evolving, providing new ways of enhancing the pharmacovigilance. pharmacovigilance framework to the benefit of industry, regulators, healthcare professionals and Monitoring the safety of medicines most importantly patients. To enhance The pharmaceutical industry has two major roles in pharmacovigilance GSK recommends that: managing the safety of medicines: • Initiatives are undertaken to increase the 1. To collect, investigate and proactively evaluate quantity and quality of the reporting of possible information relating to side effects of medicines side effects of medicines by healthcare for the purpose of protecting patients and professionals and patients advising on drug safety • There is a focus on the development of 2. To fulfil its legal obligations to the regulatory electronic patient records which would permit authorities by reporting individual adverse “real time” access to anonymised data for the events (AEs) on an expedited basis and/or detection and evaluation of possible side effects periodically, according to the drug safety regulations of each country • Pregnancy registries are established by health care systems to enable the rapid collection and We strive to ensure patient interest is served through evaluation of data related to possible adverse the prompt detection of a potential safety issue with events, including birth defects one of our drugs so that appropriate communi- cation with regulators occurs. Following evaluation, • Research is undertaken to establish the most decisions can then be made and action taken. See effective ways to minimise the risks of medicines collecting and reporting safety data. including effective ways of communicating the benefits and risks of medicines to healthcare professionals and patients

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• There is increased harmonisation of pharmacovigilance rules through the rapid and consistent implementation of ICH guidelines by the EU, US and Japan • An EU Pharmacovigilance Regulation is introduced to streamline and simplify pharmacovigilance reporting requirements in Europe In order to achieve this it is necessary for the industry and regulators to work together. Safety monitoring is not considered to be a competitive area, since it benefits all parties if carried out to the highest standards. GSK makes new ideas and technology available to other pharmaceutical companies and regulators by presenting at scientific conferences and also by working with third party software suppliers to make new advances accessible to all.

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Ethical conduct GSK is committed to business practices that meet high standards of ethical and legal compliance and to ensuring that our employees behave with honesty and integrity. Getting this right requires a combination of effective systems and an ethical corporate culture, in which it is understood that everyone is required to conduct business with honesty and integrity and in compliance with applicable legal requirements.

Find out more atients, consumers, doctors and governments Management certification on business ethics In our report: want to use medicines from companies that Commitment to our Code of Conduct is reinforced • Ethical issues in R&D, Pthey trust. Our reputation with these by an annual management certification programme including our policies on stakeholders is therefore critical to our business. that requires managers to confirm that they comply relationships with doctors Meeting high ethical standards enables us to with our ethics policies. The programme covers over involved in clinical trials, maintain their support and retain our ‘licence to 12,000 managers worldwide. Eligible managers disclosure of clinical trial operate’. It also helps us to attract, retain and from all business units completed the certification in results and writing of articles for medical motivate the best people. 2006. journals Unethical conduct could have serious legal and Certification is managed electronically and non- • Our relationships with financial consequences for the company. So our certification is tracked and followed up. Non- governments and patient ethics programmes are also an important element certification is typically due to extended leave of groups of risk management and good stewardship of absence, such as maternity leave or long-term sick • Supply chain standards corporate assets. leave. • Our access to medicines This section explains our approach to business and The full certification statement is reproduced in policies marketing ethics and our progress in embedding an the background section of our website. On our website: ethical culture at GSK. It covers: Business ethics and our suppliers • More background • GSK’s Code of Conduct and management We expect our suppliers to operate to the same high information on our ethics policies certification on business ethics ethical standards as our own employees. See Supply chain page 50. • Our Code of Conduct • Marketing ethics, including our codes of practice and policy on direct-to-consumer • Our European Marketing Code of Practice advertising • Ethical training and awareness programmes MARKETING ETHICS • Monitoring and compliance systems, including channels for reporting cases of misconduct GSK markets its medicines to doctors, hospitals and governments. In some countries, such as the US, • Data on the number of employees dismissed or we also advertise medicines directly to consumers. disciplined for violating company policies Our specialist sales representatives meet regularly with doctors and pharmacists to inform them about our medicines and their approved uses. We believe that sales representatives play an CODE OF CONDUCT important role in providing up-to-date information Our Employee Guide to Business Conduct requires to doctors on our products and their benefits to all employees to act with integrity, comply with the patients. However, we recognise that the marketing law, avoid conflicts of interest and report any of pharmaceutical products raises some challenging violations of the law or GSK’s policies or any issues. unethical behaviour. It provides guidance, including In particular, some people are concerned that specific examples, on what constitutes acceptable or marketing by pharmaceutical companies exerts unacceptable behaviour. undue influence on doctors, that sales Employees learn about our standards during their representatives do not always give doctors full induction and can access the guide via the company information about potential side effects, or that intranet. promotion for unapproved uses may be common despite increased training, monitoring and Read our Code of Conduct and Employee Guide oversight. to Business Conduct.

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The promotion of pharmaceutical products is highly US Our Marketing Codes of regulated and several governments are extending We strengthened our policy on Grants for Practice in summary legislation in this area. For instance, six US states Independent Medical Education. All grants will now • Full and accurate information – information can only be require pharmaceutical companies to restrict or be made by the new Center for Medical Education provided on approved uses report their interactions with doctors. Requirements within our Corporate Ethics & Compliance for a medicine. It must be vary from prohibiting companies from providing department. Grants to medical education based on valid scientific meals to setting annual spending limits or requiring companies (MECs), hospitals, medical associations, evidence, and must be transparent reporting. Similar legislation is being and patient groups must not account for more than accurate, balanced, fair, considered in many other states. The American 25 percent of that organisation’s annual budget. objective, unambiguous and up-to-date Medical Association now enables doctors to request Sales staff are not permitted to deal with MECs or that their prescribing activity is not shared with other providers of independent medical education • Promotional Items to pharmaceutical companies. or to recommend speakers for education healthcare professionals – promotional items must be programmes. Our approach to addressing these issues includes given only occasionally and the following: International region must be relevant to the practice of medicine. Their We revised the Marketing Code for our • All GSK employees must comply with our nominal value must be no international region to ensure it meets new IFPMA marketing codes of practice – revised and more than $10 (less than £6). standards and added a comprehensive Q&A to help strengthened in 2006 – and our policies Items cannot be made as an employees understand our requirements. We inducement to prescribe any governing consumer advertising provided more guidance to employees on the use of our medicines or to medical • Sales and marketing employees receive training of healthcare professionals as consultants and professionals retained as consultants to GSK to ensure they have a good understanding of sponsorship of healthcare professionals to attend our marketing policies and the legal framework conferences. • Appropriate hospitality for governing their sales activities meetings – no entertainment Europe is permitted. Hospitality (such • We have programmes to monitor compliance We updated the GSK European Promotion of as travel costs or food) may including, in some regions, feedback from Medicines Code of Practice in March 2006 to ensure only be provided for meetings doctors on our sales practices alignment with the updated EFPIA Code. The major with an educational purpose. The level of hospitality must changes include: Marketing codes of practice be appropriate to the Our Pharmaceutical Marketing and Promotional • New sections on distributing product occasion and must only be provided for relevant Activity policy applies to all employees and agents. information to healthcare professionals via healthcare professionals, It commits us to promotional practices that are email or the internet not spouses, children, office ethical, responsible, principled and patient-centred. • Prohibiting the use of competitions with prizes personnel, or any other It prohibits kickbacks, bribery or other inducements guests. Travel costs are not to promote our medicines to doctors, and any promotion for unapproved uses provided in the US of our medicines. We established a new procedure on relationships • Decisions about grants for with patient groups and committed to publishing medical education are This policy is supported by regional marketing GSK funding for these groups. See patient reviewed by qualified medical practices codes in Europe, our International region, advocacy on page 13. or scientific personnel within Japan and the US. These codes apply the same our compliance function ethical standards but reflect differences in market R&D structures, national healthcare systems and We strengthened our R&D policy on gifts and regulations. They incorporate the principles of entertainment. This policy states that the primary industry codes of practice such as the EFPIA, IFPMA, purpose of a meeting must be to facilitate JPMA, and PhRMA marketing codes. substantial discussion of a medical or scientific topic. Meals may be provided during such meetings only Our codes are available in many languages and if they are incidental to the meeting. The meal must employees can access them via the intranet. be modest in value and GSK personnel must be A copy of the GSK European Promotion of present. Medicines Code of Practice is available on our Consumer advertising website. This section explains our approach to advertising Progress in 2006 our prescription medicines in the US and our We revised our procedure for making charitable consumer healthcare products in other markets. donations to health-related organisations and Direct-to-consumer advertising funding external science and medical programmes In the US we advertise our prescription medicines to in all our regions. Decisions about these grants must consumers through TV and print advertisements. now be made by relevant medical and/or This is known as direct-to-consumer (DTC) compliance personnel and not by sales and advertising. New Zealand, Bangladesh and Korea marketing departments. also allow limited DTC advertising. DTC advertising of prescription medicines is not permitted in other markets.

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Supporting industry In the US, we implemented a policy incorporating We belong to the Consumer Healthcare Products codes of conduct the new PhRMA Guiding Principles on DTC Association in the US and comply with its Code of GSK supports efforts to advertising for prescription medicines. This states Advertising Practices for Non-prescription strengthen marketing standards across the pharmaceutical that DTC advertising should: Medicines. This states that advertising should not imply a casual attitude towards using medicines or industry. In 2006 this included: • Only begin after we have spent an appropriate suggest that an over-the-counter medicine can Global – We helped revise the amount of time educating doctors and prevent or cure a serious disease that must be International Federation of healthcare professionals about new medicines Pharmaceutical Manufacturers treated by a licensed practitioner. In addition GSK and Association’s (IFPMA) Code • Be designed to educate consumers about the policies require that all claims in advertisements are of Pharmaceutical Marketing medicine and the condition for which it is consistent with product labelling. Advertising that Practices. GSK is a member of prescribed compares a GSK product to a competitor’s must be the newly formed Code supported by adequate data. Compliance Network that will • Be accurate and supported by evidence support implementation of the GSK Consumer Healthcare advertising is reviewed • Include information on the risks and benefits of IFPMA standards through by Copy Review Committees (in our larger markets) training and education. GSK treatments or medical and legal personnel (in our smaller helped revise the European Federation of Pharmaceutical • Provide information on other treatment options markets) before publication to ensure it meets our Industries Associations (EFPIA) (such as diet and lifestyle changes), where these standards. Code of Practice for Promotion are referenced in the prescribing information Our over-the-counter medicines are also promoted of Medicines for a product. to pharmacists, doctors and dentists by our sales Greece – GSK Greece is leading ‘Reminder’ advertisements – short advertisements teams. In 2006 a prescription weight loss medicine the local industry body working group set up to improve their that mention the pharmaceutical brand name but was promoted in preparation for its approval as an local code of practice not the medical condition it is designed to treat – are over-the-counter medicine. Our US Consumer not permitted. Healthcare medical sales team completed online Korea – GSK led efforts to training on our Marketing Codes of Practice prior to improve the Korean Research- All DTC television advertisements (including audio promoting this product. based Pharmaceutical Industry and visual components) are submitted to the US Association’s Code of Conduct Food and Drug Administration (FDA) for review at Advertising to children and to have this endorsed by the Korea Fair Trade Commission least 30 days in advance. No problems with GSK Our guidelines for advertising to children meet or DTC advertising were identified by the FDA during exceed local laws and codes of practice. They Japan – GSK joined the Executive 2006. prohibit advertising designed to appeal to, or Steering Committee of the Fair targeted at, children below the legally mandated Trade Council of the Ethical Members of the public and healthcare professionals minimum age. For example, in the UK we do not Pharmaceutical Drug can send comments on DTC advertising to PhRMA’s Manufacturing Industry that buy advertising space in children’s media and we do Office of Accountability established in 2006. These seeks to strengthen compliance not supply vending machines to primary schools. with marketing codes are forwarded to the relevant company. The Office of Accountability reports periodically on the Sports star sponsorship is important to brands such Slovakia – GSK’s General Manager in Slovakia helped comments and the companies’ response to the as Lucozade Sport. Our guidelines state that only found the recently formed local FDA. In 2006, GSK did not receive any comments people who set an appropriate example should be industry association and now from the Office of Accountability regarding its DTC used for sponsorship, and they should have an leads this group advertising. appeal that is not solely to children below the age of 13. Sri Lanka – GSK led efforts to In 2006, our employees involved in DTC marketing create the first marketing code attended training on our new policy and the PhRMA for the Sri Lanka Chamber of the Pharmaceutical Industry based Principles. We also developed a DTC e-Learning on the IFPMA Code module for future training. Disease awareness campaigns We fund disease awareness campaigns which are designed to increase understanding of a specific disease but are not linked to the promotion of GSK products. We revised our policies in 2006 to make clear that disease awareness campaigns must not imply endorsement by a government agency, professional body or patient advocacy group without consent. Campaigns cannot include links to third party websites without permission or to any websites which contain information about uses of our products outside of their licence. Non-prescription products We advertise over-the-counter medicines, oral healthcare and nutritional products directly to consumers. This is governed by national regulations or codes of practice for advertising. These are generally less stringent than the requirements for prescription medicines.

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TRAINING AND AWARENESS US Our view on direct-to-consumer In 2006, all new sales and marketing staff in the US advertising Training and awareness programmes help completed training and more than 9,000 existing Promoting the use of prescrip- employees understand and comply with our ethics tion medicines directly to staff received two hours of annual refresher training. consumers can be controversial. policies. In the US, compliance is a formal performance Critics believe that it encourages people to request unnecessary In our global leadership survey, over 91 percent of objective for sales and marketing employees. They managers said they believe that people in their treatment, adding to the burden are appraised against the following objective: on healthcare systems. department show commitment to performance with integrity. “Consistently follow company policies and We believe that responsible procedures, take and complete required compliance pharmaceutical advertising is Specialised training is provided for employees training in a timely manner, and report compliance a useful source of health working in R&D, manufacturing and sales and issues to manager, Legal or Compliance.” information for patients. It marketing where there are additional regulatory helps to increase knowledge of conditions and educates requirements. In addition, managers are evaluated against the following objective: patients about treatment We monitor the success of our training through options. regular employee surveys. In 2006 we surveyed our “Ensure that supervised employees are trained on In countries such as the US US district sales managers (DSMs) who play an company policies and procedures and have taken all where DTC advertising is important role in helping sales representatives required training, and provide oversight and common industry practice, we resolve compliance questions. This showed that a direction to supervised employees so that they are need to ensure that our products are also promoted in this way. substantial majority of DSMs have a good in compliance with company policies and procedures.” If we do not, GSK would be at a understanding of compliance issues and are disadvantage against our confident that they can help representatives resolve We will launch a Compliance University in 2007 for competitors. ‘grey’ areas. The survey identified opportunities to US sales managers. This is a one day programme Patients must still consult with enhance our training and resource materials. For designed to improve understanding of our policies their physicians about their instance, we will provide managers with additional and the ability of managers to guide staff, reduce condition, the appropriateness training and materials to increase their expertise and the number of breaches of our policies, and increase of a prescription medicine, and obtain his or her consent before for providing more effective guidance to their staff. managers’ expertise in detecting compliance issues receiving such medicines. Ethics training so that corrective actions can be taken early. New employees in the UK and the US complete International induction training on our Code of Conduct. This In 2006, all sales and marketing staff continued to ensures that they understand the importance of receive training in the Pharmaceuticals International ethical conduct from day one, know how to deal Promotion and Marketing Code. This involves initial with dilemmas and where to seek help. awareness sessions at induction courses and regular We ran an Ethical Decision Making workshop for reminders and refreshers, facilitated by medical staff, managers as part of our ‘Hot Topics’ training at sales conferences. programme. Follow up emails were sent to In addition a number of supplemental policies were encourage managers to review the key points with implemented in 2006 and these have been added their teams. We piloted three e-Learning modules to an internal intranet community which supports on ethical leadership within our Corporate HR and visibility by all International staff. Training of sales Corporate Ethics and Compliance teams before they and marketing staff will be delivered in the first half are rolled out to all managers worldwide during of 2007 regarding the updated International Code. 2007. Europe Training and awareness for sales and All pharmaceuticals sales and marketing staff in marketing Europe were trained in the updated Promotion of Employees working in sales and marketing receive Medicines Code of Practice and certified that they extensive training on ethics and our marketing understood the revised Code. policies. This includes: Ethics training for R&D • Induction training for new employees on our We updated our ‘Performance with Integrity’ face- marketing codes of practice to-face induction training for R&D employees which • Sales employees are required to pass a test on was completed by over 11,500 new and existing our marketing code before starting their sales employees worldwide in 2006. This mandatory role course – offered in 12 languages – includes training on the Code of Conduct, conflicts of interest, • Detailed training for sales representatives on the acceptance of gifts and entertainment by medicines they promote and the diseases they employees and external professional activities. are designed to treat • Regular refresher courses held at least once a year • A yearly bulletin on the major types of unethical conduct detected and the actions taken, for employees in the US • Senior managers within our European region receive a quarterly update on the number and types of disciplinary actions for policy breaches

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We launched additional training for R&D employees MONITORING AND on our policies governing; COMPLIANCE • Collection, use and storage of protected medical information (information held on We recognise that strong policies, codes of practice, clinical trial participants relating to their health and good training do not guarantee that all status and medical conditions) employees will meet our standards. Our internal compliance systems are designed to identify and • Collection and use of human biological address breaches of our codes. samples, data integrity management of human safety information This section covers: • Public disclosure of clinical trial results • The role of our Corporate Ethics and Compliance department • Post-trial treatment for participants in GSK- sponsored clinical trials • Channels for employees to report concerns or suspected cases of misconduct Ethics training in practice Ethics training is designed to help employees apply • How we address misconduct our policies in real life situations and make the right • The number of employees dismissed or decisions in their work. disciplined for misconduct For example, employees are encouraged to ask Corporate ethics and compliance function themselves the following questions before making Our corporate ethics and compliance department a decision: promotes effective compliance programmes, • Would I be embarrassed if my friends or family addresses compliance issues, and reports problems knew what decision I have made? and progress to senior management and the Board. • How would my decision look to a cynic? We have a dedicated compliance officer in each of our eight business units – R&D, Manufacturing, • What could the newspaper headline look like? Biologicals, Pharma Europe, International Pharma, • Am I still confident that this is the right decision Consumer Healthcare, Japan Pharma and US for GSK? Pharma, in addition to the corporate compliance officer, who reports directly to the CEO. During training employees explore ethical dilemmas they may face in their work and receive guidance to Compliance officers are senior managers with direct help them understand the appropriate response. access to the leadership teams of GSK functions. This is one example from a recent training session: They are a source of expertise for anyone with a question on ethics or GSK policies. In our European Scenario: you are at a trade conference and put and International regions they are supported by a your business card in a prize draw. You win the network of regional and country compliance officers grand prize, which is a set of golf clubs worth and local compliance champions. We will further £1,000. You enjoy golf and would like a new set of strengthen these networks in 2007, particularly in clubs. The draw is sponsored by an exhibitor with eastern Europe. whom GSK does business. Should you keep the clubs? Sales representatives are supervised by their managers who regularly monitor educational Guidance: taking into account the GSK policy, events, visits to doctors and expenses. We also have acceptance of entertainment and gifts by GSK independent monitors to review records in a employees, the clubs must not be accepted and it number of key risk areas in the US. Our internal would be better not to put your business card in audit department regularly audits our sales and the draw. marketing practices globally. Objectives for 2007 GSK requires each business or functional unit to • Translate 20 key policies and the Employee identify all significant risks, implement effective Guide to Business Conduct into 12 languages controls to manage those risks, periodically review to improve understanding across the business those risks and provide upward communication of • Create company wide compliance training on any significant issues that arise. our Employee Guide to Business Conduct to US supplement local training and to reinforce our In the US we have four sales and marketing annual Management Certification in Business compliance advisers who provide feedback on Ethics infractions, conduct customised training and recommend process improvements. They are an important link between our compliance department and commercial units. Our compliance data analysis and reporting function coordinates monitoring, reporting and targeting of our compliance efforts.

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In 2006 we set up a Strategic Tracking, Analysis & Addressing misconduct Reporting (STAR) System. This gives senior managers Our Corporate Ethics and Compliance department access to comprehensive compliance information monitors and tracks allegations and suspected cases and makes it easier to identify instances of non- of legal, ethical or policy infractions. It ensures that compliance in their area and take appropriate all such allegations are appropriately investigated. action. Disciplinary action, up to and including dismissal, is taken where necessary. Europe The European Code of Marketing Practice includes Our discipline reporting process was changed in a quarterly reporting mechanism where the markets 2006 in order to provide GSK with the ability to confirm whether any breaches of the code of better identify issues resulting in formal HR practice have occurred, the severity of any breaches disciplinary action. Significant changes include: new and what actions have been taken to prevent category sections; more precise reporting directions; recurrence. These reports are reviewed by senior and interactive training sessions conducted with managers. Expenses and payments to doctors (for appropriate personnel. Because of these example for speaker fees) are monitored locally and improvements, the information for 2006 policy a summary report for each market is reviewed by discipline cases differs from the information our european compliance officer each quarter. reported in previous years. The overall level of dismissals collected is similar to previous years, but International is not directly comparable. In future reports, GSK We established a monthly review system in our will be using 2006 HR policy discipline numbers as International region. During 2006 senior managers the baseline against which to compare policy reviewed and resolved a number of compliance discipline trends. issues through this mechanism. Many other minor issues were resolved at a local level. In 2006: Reporting channels • 1,089 employees were disciplined for policy Employees are encouraged to seek help and to violations report any concerns or suspected cases of • Of these, 284 were dismissed or agreed to leave misconduct. They can do this through their line the company voluntarily (known as separation) management, a compliance officer, or through our confidential Integrity Helplines or offsite post office • Other disciplinary actions included documented box (in the US). warnings (805 instances) and financial penalties Reporting channels are promoted through the • Employees staying with the company received Employee Guide to Business Conduct, on the GSK retraining and increased monitoring intranet and during training. The 1,089 disciplinary actions included 381 cases of In 2006 there were: employees breaching sales and marketing codes. These 381 cases resulted in 49 dismissals or • 5,363 contacts with the compliance functions. separations from the company. All the other This is an increase from 3,644 in 2005, and 332 cases resulted in documented warnings. 2,593 in 2004 We will these data to analyse compliance trends and • Of these, 81percent were from employees regional differences, and to identify appropriate seeking advice or information; 19 percent were corrective actions. from employees reporting suspected cases of misconduct The compliance group continues to make efforts to promote high standards of legal compliance and ethical behaviour, as well as the use of the Integrity Helpline as a compliance resource. The year-on-year growth (41 percent in 2005; 47 percent in 2006) seen in the contact figures above may be due to a greater awareness and sensitivity to these standards. Doctors can raise any concerns or report unethical conduct by GSK sales representatives through our customer response centres, during our market research or via industry associations such as PhRMA and the ABPI. Staff are trained to deal with concerns about marketing practices that might be raised by healthcare professionals, patients or the public. They redirect calls to appropriate senior management or a compliance officer if necessary.

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Employment practices Our goal ‘to be the best place for the best people to do their best work’ is central to our business strategy and underpins our success. Our people are our greatest source of competitive advantage. Their skills and intellect are essential to GSK discovering and delivering the best new medicines and vaccines, and successfully marketing and selling our prescription and consumer healthcare products.

Some of the employment SK employs over 100,000 people in GSK SPIRIT awards won by GSK in 2006 116 countries. Our goal is to be a company • Working Mother’s Top 100 where talented people apply their energy We expect employees to meet high standards in the Best Places to Work in the US G and passion to make a difference in the world. way they carry out their work for GSK. The GSK • Britain’s Top Employers 2007, Competitive reward is important but not the only Spirit defines our culture and the principles we independent survey run by expect employees to work by. These include: Corporate Research factor that influences our ability to recruit and retain Foundation and the Guardian talented employees. • Performance with integrity newspaper – ranked 4th This section explains our approach to employment • Innovation and entrepreneurial spirit • Britain’s Most Admired and our performance in 2006 including: Companies 2006, • Accountability for achievement Management Today – ranked • Initiatives to increase diversity and inclusion 4th • Passion and a sense of urgency • Training, development and talent management • Best Companies to Work • Continuous learning and development for Awards in Germany; • Internal communication – how we communi- Hungary; Ireland; Mexico and cate with employees and get their feedback Regular performance appraisals assess whether Russia employees have upheld these principles and the • Flexible working arrangements, wellbeing and requirements of our Code of Conduct in their work • Human Rights Campaign’s resilience programmes that support a healthy Best Places to Work for Gay, (see Ethical Conduct for more on our Code). The Lesbian, Bisexual and workforce results affect bonuses and career progression. Transgender Employees – GSK Breakdown of global employment by business (end received a perfect score December 2006):

Business or Number of EMPLOYEE SURVEYS function employees Regular employee surveys help us to monitor GSK’s Maufacturing 33,235 culture, gauge employee satisfaction and assess the effectiveness of our employment policies. Selling 44,484 Our Global Leadership Survey (GLS) is sent to GSK R&D 15,952 managers every two years and is available in nine Adminisration 9,024 languages. In 2006, over 10,000 managers took part, a 78 percent response rate. The survey tracked Total 102,695 their views against our previous two surveys and against findings from other global companies through a cross-company database. This database includes 42 top-ranked companies from several industries including pharmaceuticals, automotive, banking, energy and IT. The normative database has responses from around three million employees in 139 countries.

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Key survey findings The survey showed that managers in GSK are more satisfied with their company than managers in the other companies that took part. GSK participants were also more satisfied than they were in 2004, with overall responses on average 4 percent higher.

Industry 2006 GSK 2006 (%) GSK 2004 (%) GSK 2002 (%) Benchmark Favourable Favourable Favourable Overall satisfaction with GSK 65 85 73 67 People in my department show commitment to performance with integrity N/A 91 91 88 I am proud to be part of GSK 84 90 83 78 People in my department are committed and enabled to make meaningful contributions N/A 84 82 76 I can report unethical practices without fear of reprisal 68 82 76 70 The amount of work I am expected to do is about right 53 42 45 42 GSK is a company where great people can do their best work N/A 62 52 46 I am satisfied with the recognition I receive for doing a good job 54 59 57 56 Sufficient effort is made to get the opinions and thinking of people who work here 55 65 59 51 Leaders in my department act as teachers, coaches and champions of development N/A 60 59 54 I receive ongoing feedback that helps me improve my performance 54 61 61 57

Improvement plans DIVERSITY AND INCLUSION Survey results are reviewed by our corporate We aim to create an inclusive working environment executive team which has identified two key areas at GSK where employees from diverse backgrounds of focus can flourish. • Reducing unnecessary bureaucracy within and Diversity benefits our business. A workforce with across our businesses diverse backgrounds, cultures and outlooks helps us to better understand the needs of different • Leadership visibility, defined as the drive for patients and customers. Only by delivering genuine managers to spend more time with their teams equality of opportunity can we be sure that we have and to be more visible in their respective the best people in the right jobs. businesses We reinforce our commitment to diversity and Each business unit and function has developed an inclusion (D&I) through: action plan to address these and other areas for improvement. • Our corporate executive team which endorses a global policy for D&I and support activities and initiatives such as the annual Multicultural Marketing and Diversity Awards • Our company-wide D&I policy and practices are available to view by employees through our intranet • Monitoring and reporting data on gender diversity by management grade worldwide and on ethnicity in the US and UK

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• Reinforcing the GSK Spirit which states that we Ethnic diversity will value and draw on the differing knowledge, In the US, minorities (defined as Blacks, Hispanics, perspectives, experiences and styles resident in Asians, Pacific Islanders, American Indians and our global community Alaskan natives) made up 19.8 percent of our workforce, compared with 19.6 percent in 2005 • D&I steering teams in the UK and US that run and 19.5 percent in 2004. This is above the average awareness campaigns and training for in our closest comparator, the US chemical industry. employees • Diversity champions in each business unit and among our field staff 19.819.8%% • Employee networks that provide insight and support for diversity objectives More background information on our approach to D&I is available on our website. In the US we conduct an annual survey of 1,000 employees selected at random to gauge progress on inclusion and resilience. In the 2006 survey where we achieved a 41 percent response rate, 76 percent agreed that ‘my workgroup has a climate in which diverse perspectives are valued’ and 79 percent agreed that ‘my manager demonstrates the ability to manage a diverse workforce.’ % US minoritminorityy Gender diversity Gender diversity in management In the UK, ethnic minorities, as defined by the UK 2006 (worldwide) Commission for Racial Equality (CRE), accounted for 18.3 percent of employees (compared with 16.8 Women in % of positions percent in 2005 and 15.5 percent in 2004). The CRE management grades held by women defines ethnic minorities as anyone not identifying themselves as ‘White British’. Figures from the 2001 2006 2005 2004 2003 census show that 12.5 percent of the population of A&B Bands* 22 21 19 20 England and Wales were from an ethnic minority. C01 – C03** 34 33 33 31

C04 – C05*** 39 38 38 37 18.3% Total for all management grades 36 35 35 34

* Corporate Executive Team, Senior Vice Presidents, Vice Presidents ** Director grade *** Manager grade This positive trend of increased female representation in management positions reflects the impact of GSK’s D&I strategy across the businesses and the effect of our flexible working policies in % UK ethnic minorities attracting and retaining women. This is further supported by the 2006 US D&I survey where 79 percent of employees agreed that ‘my manager An alternative measure of diversity is the number enables flexible and innovative solutions for of employees who define themselves as ‘non- managing work and personal life’. white’. In 2006 11.6 percent of GSK UK employees defined themselves as non-white (compared to For more than 12 years, the annual Women in 11.0 percent in 2005 and 10.4 percent in 2004). Science event in the US has fostered positive, mentoring relationships between GSK female Age scientists and female students aspiring to enter In advance of new age discrimination regulations in science fields. It also exposes students to hands-on, the UK, we carried out a comprehensive review of real-life laboratory and research environments and our policies and practices and consulted our UK further enhances GSK’s ability to attract and retain Information and Consultation Forum. As a result a women in the fields of science. number of policies were amended and updated. Extensive training was provided for HR professionals and the changes were communicated to managers and employees to ensure they understand the implications of the new law.

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Disability We are committed to offering people with Leadership training in 2006 included: disabilities access to the full range of recruitment • 108 managers attended four Leadership Edge and career opportunities at GSK. In the UK we were programmes awarded the two ticks symbol from Jobcentre Plus and we partner with the Employers Forum on • 77 managers attended six Inspirational Disability and other interest groups to ensure we are Leadership Workshops that focused on inspiring a Disability Confident organisation. and motivating people to high performance Multicultural Marketing and Diversity • 407 managers attended new manager / Awards experienced manager training Our annual Multi-Cultural Marketing and Diversity • 692 managers attended ‘Hot Topics – Awards (now in their fifth year) inspire staff to find Harnessing the Power of Real Conversations’ creative ways to reach a wider audience of employees, customers and communities. • 678 managers attended ‘Hot Topics – The Art of Self Leadership’ Awards are given in several categories including Employee Attraction, Development or Retention, Development Multicultural Marketing and Sales, Community Regular performance appraisals reward strong Outreach and Diversity Ambassador. There have performance, identify training needs and help been 289 entries to the awards since 2001 and 21 employees set objectives that are aligned with our employees have received the GSK Diversity business priorities. More than two-thirds of GSK Ambassador Award for leading diversity efforts with employees receive an annual performance appraisal passion, innovation, and impact. through our Performance and Development Planning (PDP) programmes. Employee networks Employee networks are an integral part of our D&I PDP includes an assessment of how well employees programme. Networks support professional growth have implemented the GSK Spirit – the principles for participating employees and provide a forum for we use to define our culture. It can have an impact employees with similar backgrounds to meet and on bonus payments and affect future career discuss issues of shared concern. development. Several networks have a particular diversity focus, Employee turnover including our networks for Asian, African American, We have a number of teams that focus on issues Hispanic, Gay, Lesbian, Bisexual or Transgender affecting employee retention, for example the employees. As well as benefiting the participants, management of people in different age groups and the networks act as a source of expertise on diversity development and promotion for female and issues for other people at GSK. minority employees. Each employee network has an executive sponsor Rewarding strong performance who helps in setting and achieving goals, obtaining Performance related pay and share ownership resources, and promoting network objectives schemes help us attract and retain the best people among senior management. GSK-sponsored and generate a culture of ownership among networks, regardless of affiliation, are open to all employees. In countries where employee share GSK employees. ownership schemes exist the level of participation is high. Talent management Our talent management processes help us identify EMPLOYEE DEVELOPMENT and develop leadership candidates. We identify the highest performing employees in each business and AND TALENT MANAGEMENT function through our annual talent management GSK invests in training and development to enable cycle. Talented individuals take part in our leadership all employees to perform to the best of their ability programmes and are exposed to top management and to support their career progression. We work through programmes such as the Chief Executive hard to attract and retain the best and the brightest Forum. people at GSK and to help them develop their potential. Training We provide job-related training courses for all employees and leadership training for managers. Employees can enrol in training programmes through our myLearning intranet site available in the UK, US and other countries. During 2006, we registered on the system over 638,000 course completions.

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INTERNAL COMMUNICATIONS Good internal communication is important in We have similar forums in other countries where achieving our business objectives as well as creating this is national practice. an open and inclusive work environment. We have Communicating corporate responsibility a range of communications channels to keep It is through our employees that we put our employees up to date with company news and responsible business policies into practice and enable them to give feedback. communicate this to the outside world. Employees These include: are also important stakeholders in their own right and want to know about our progress on • myGSK, our global intranet site, provides news responsibility issues. and updates and a Q&A section where employees can put questions directly to the We keep employees informed about corporate CEO and senior executives. In 2006 JP Garnier, responsibility through regular news articles on the GSK‘s Chief Executive, answered 341 questions GSK intranet, through articles in Spirit magazine and from employees. Behind the News, a section of by presentations to departmental groups. During the GSK intranet, gives the company’s position 2006, a summary of our CR report was distributed on important issues linked to press stories about to 34,000 employees. GSK • Web-broadcasts from GSK senior manage- ment, including 16 during 2006 from executive team members, for employees at our major EMPLOYEE HEALTH sites Protection and promotion of the wellbeing of our • Spirit, our internal magazine, reaches around employees is an ethical obligation and an important 34,000 employees throughout the company contributor to our goal to be an employer of choice. four times a year. Many sites also produce local This philosophy also supports our business strategy newsletters because a healthy and resilient workforce drives • Confidential feedback mechanisms enable positive business performance by increasing employees to raise concerns. These include our employee productivity and attendance. Healthy Integrity Helpline. See Ethical conduct workers also reduce health care and insurance costs. • Regular employee surveys, see page 40. Healthy High Performance Healthy Culture • 44 ‘townhall’ sessions during 2006 for We consider four dimensions of health to be vitally employees at all levels of the company were important to high performance: physical, emotional, hosted by senior management. Employees have mental and spiritual. People need to be physically the opportunity to discuss the progress of the energised, emotionally connected, mentally focused business, raise questions and give feedback. and ‘spiritually aligned’ (meaning they have a sense We track the effectiveness of communications of purpose). Linked to these four dimensions are through employee surveys. We monitor the 16 factors that enable high performance. The questions employees put to senior managers factors range from fitness and nutrition to self- through the Q&A pages on myGSK to ensure we awareness and time management. We deliver pick up potential areas of concern. We also track programmes such as the Corporate Athlete and the readership of news stories on myGSK to help Health Risk Assessment (HRA) that are directed at improve the relevance and interest of the content. improving these 16 factors and measuring our risk reduction and health impacts. Employee consultation We consult employees on changes that affect them. Driving a healthy culture through all of GSK starts In Europe we discuss business developments with the leadership. We want the company’s leaders through our European Employee Consultation to be committed to the continuous development of Forum (EECF). In 2006 the EECF received updates their physical and psychological well being so that from GSK’s global business leaders and reviewed they can be effective leaders and role models to their proposals and progress reports on a number of employees. European initiatives in IT, distribution and medical. Resilience We also have national consultation forums and in We use the term ‘resilience’ to describe the skills 2006 we established a UK Information and and behaviours needed to be successful in a highly Consultation Forum to provide information about pressured environment. It is the same set of skills the company’s progress and plans and to help that helps to prevent work-related mental illness, stimulate constructive dialogue with employee which is a leading cause of ill-health leading to time representatives within the UK. The Forum is made away from work. Resilient employees can manage up of 15 elected employee representatives and work and home demands effectively and minimise seven managers. It meets three times a year and, to the adverse health affects of stress. date, has reviewed areas such as employment policy changes, UK pension arrangements and preparations for supporting employees in the event of a flu pandemic.

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We identify and manage the challenges to We have developed a new global management role employee resilience and mental well being, in focused on improving the health of employees accordance with GSK’s Global Resilience and Mental around the world by developing health and well- Well Being Standard. The majority of GSK sites have being resources and sharing best practice. In 2006, programmes to reduce workplace pressures and we: help employees achieve a good work-life balance, • developed a Health Risk Appraisal tool that can such as time management training, flexible working be used at all our sites options and health awareness. Since 2002, work- related mental ill-health is down by 57 percent. • worked with the World Heart Federation on a joint project at two of our sites in India. This Our Team Resilience programme is now available in ground breaking three-year study will look at 11 languages. It helps GSK teams to take control of two different interventions aimed at reducing their work and avoid excessive pressure which can the effects of chronic disease, identifying the lead to stress. The first step is to assess seven sources most effective interventions that are sustainable of pressure that can impact performance and and transferable to other companies and health, and identify the extent of pressure the team community programmes is facing. Team members then consider the issues that are creating excessive pressures and how they • began global health education webinars (web- can be managed more effectively. The objective is based seminars) not to avoid any pressure – which can help to Ergonomics achieve high performance – but to avoid becoming The reduction of musculoskeletal illness and injury strained or overwhelmed due to excessive work continues to be a key area of focus, because it is demands. one of the leading causes of time away from work. By the end of 2006 more than 12,000 people from We have set a target to reduce the number of these over 1,000 teams had gone through the prog- illnesses and injuries by 5 percent each year through ramme. The results show significant improvements. to 2010. Better workplace and job design, a science In the first two years of the programme: called ‘ergonomics’, will prevent musculoskeletal injuries and illnesses as well as increase efficiency • Reported pressure due to work/life conflicts fell and productivity. by 25 percent Ergonomics improvement teams include cross- • Participating staff satisfaction increased by functional team members who impact how work 21 percent and the work environment is designed and • 14 percent increase in willingness among staff implemented. We now have established to experiment with new work practices ergonomics improvement teams at manufacturing sites around the world. In 2006, ergonomics • Teams that have taken the profile for a second workshops were provided to regions in the US, UK, time are showing improvement in the seven France, India and Malaysia to increase in-house sources of pressure of between 30 percent and ergonomics knowledge and expertise. 70 percent Sites share good practices for work, ranging from We also provide a training programme to support commercial operations to laboratory research to personal development and help individuals become manufacturing, via an intranet site called The Global more resilient. Pre- and post-assessments in a pilot Ergonomics Community. This intranet site provides of 500 employees found improvement in 55 of access to the latest information on ergonomics, 58 elements measured, with the greatest good practices and validated tools for practitioners, improvement in employees‘ sense of being relaxed including our online computer ergonomics risk and engaged. After two months the number of assessment tool. The online assessment is used by people who felt less pressured rose by almost a fifth. 144 GSK sites globally. Over 17,800 employees Personal health worldwide have used the tool during the past two Our programmes aim to improve the health of years to assess their computer work and to take employees and their families, which benefits the steps needed to improve their workstations. business through increased employee commitment Ergonomic principles are integrated into designs and productivity and reduced costs of ill-health. including major engineering projects, and furniture Support includes on-site health and fitness centres, procurement takes ergonomics into consideration flexible working arrangements and family support to ensure that appropriate furniture and equipment services. Healthcare benefits focus on prevention are selected. and access to innovative and proven treatments. For HIV example, in the US employees receive free We provide anti-retroviral treatment to all HIV immunisations, cancer screening, help with smoking positive GSK employees (full and part-time) and cessation and regular check ups. We assist their families in countries where treatment is not employees suffering from chronic diseases with their available adequately or consistently through the medical plans so they can continue with treatments. local healthcare system. (For more background information see employee access to anti-retroviral drugs.)

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We have developed awareness-raising material for Our programmes cover a wide range of health and use by peer educators, in a project funded by safety (H&S) aspects, from providing safety training Positive Action and delivered by the National AIDS for sales employees to working with all employees Trust. GSK and other employers use these materials to improve their general health. This section reports to deliver training in ways that address the problems on specific health and safety issues. See the of HIV and AIDS-related stigma. Environment section on page 52 for more information on how we manage environmental and The materials are based on the experience of GSK broader EHS issues. Kenya and adapted versions have now been used in India and Central America. A French version has been promoted by the GSK Foundation across francophone Africa. HEALTH AND SAFETY Flu Pandemic Preparedness GSK is committed to supporting governments and MANAGEMENT health authorities around the world, as well as our We manage health and safety through an own employees, in minimising the impact of a integrated environment, health and safety (EHS) global influenza pandemic. management system. The system incorporates our EHS and Employee Health Policies, EHS Vision and GSK will play a vital role in providing potentially life- 64 Global EHS Standards. Our EHS Plan for saving medicines and vaccines for flu, as well as Excellence sets out our strategy for improving EHS continuing to produce our other critical medicines. performance. We renewed the Plan in 2006 and We have invested more than $2 billion in expanding extended it to 2015. See more on our EHS seasonal flu vaccine capacity, developing an avian Management System in our background pages. flu vaccine, and increasing production capacity for the anti-viral flu treatment Relenza. See our OHSAS 18001 certification Contribution to Society. In 2006, one additional site achieved certification to the international health and safety standard We have also been developing plans to ensure the OHSAS 18001. This brings the total number continuity of critical business operations and of manufacturing sites certified to 21 out of processes, and to safeguard the health of the GSK 80 pharmaceutical and consumer manufacturing employees, their dependents and key contractors sites. The certified sites are in Argentina, China, on our sites. Every GSK market is developing a Egypt, France, Germany, India, Japan, Kenya, comprehensive country plan which covers all local Mexico, Poland, Saudi Arabia, Turkey, USA and the business units. The plans include annual seasonal UK. The voluntary certification process is being flu vaccine and travel health programmes, measures replaced with a plan to require all manufacturing to reduce infection risk at work, management of sites to be certified by 2010. sickness absence, and provision of a treatment course of anti-virals (and possibly vaccine) to all Training and awareness employees and immediate family members Training is targeted to match employee worldwide. All markets are expected to have responsibilities. Employees with responsibility for completed plans by the third quarter of 2007. H&S issues receive regular training about initiatives in areas such as ergonomics, chemical exposures and driver safety. This is handled through regional meetings of H&S staff. They in turn train employees in manufacturing, research, sales and other HEALTH AND SAFETY divisions. Corporate EHS and Employee Health staff AT WORK arrange annual meetings to determine training issues and provide training materials. The health and safety of employees and contractors is an absolute priority for GSK. We have We also want employees to be aware of health and programmes to systematically assess the risks safety in their personal lives. Employee bulletins, associated with our operations. We monitor announcements on the myEHS website, the CEO’s performance, aiming to learn from the causes of EHS Excellence awards programme and Health and incidents and take action to protect employees and Safety Week activities aim to raise employee others in the workplace. awareness of issues such as wearing seat belts, being careful with electricity and using ladders Our ultimate aim is to eliminate all work-related appropriately. injuries and illnesses (I&I). We are now focusing on ‘reportable’ incidents. These are more serious than We conduct a Health and Safety Week every first aid but do not necessarily result in time off work October to coincide with the European Health and (lost time) which was the main measure of Safety week and Fire Safety Awareness Month in performance we used in the past. We believe that the United States. Information kits are sent to all addressing causes of these minor events will help to sites to help them develop ideas and plan activities. eliminate risks and hazards, which should lead to In 2006, over 20,000 employees from 63 sites in fewer reportable cases as well as lost-time I&I cases. 38 countries took part in the Health and Safety Our new target (from 2007) is to reduce reportable Week. Activities included safe driving education, I&I by 5 percent a year. We will still monitor and training in fire evacuation, ergonomics, first aid, report ‘lost time’ incidents but we no longer have a awareness-raising on noise, healthy eating and target for this measure. lifestyles.

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Excellence awards • Risk assessment – the Guideline was revised and Employee health management The Chief Executive Officer’s Environment, Health aligned with the risk assessment requirement in UK – resilience policy and Safety (EHS) Excellence Awards recognise and the Quality group Employee Health Management developed a wide-ranging reward innovation by GSK sites. The winning entry • Self audit – training and workshop on self- resilience policy that successfully in the EHS Initiative health & safety category in 2006 auditing conducted at EHS Network Meetings addresses work-life balance and is featured on this page. pressure issues, to the benefit of • Management system elements – agreement of GSK and our employees. We See CEO’s EHS Excellence Award for more about Global Manufacturing and Supply to target define resilience as the ability the awards programme and winners from previous OHSAS 18001 certification (along with ISO to be successful, personally and years. See Employee Health on page 44 for more on professionally, in a high- 14001 certification) for all pharmaceutical and resilience. pressured, fast-paced and consumer manufacturing sites continuously changing environ- ment. The policy encompasses the team resilience process and personal resilience workshops, EHS AUDITS which focus on work and home balance and fulfillment. We aim to conduct EHS audits at each operational INJURY AND ILLNESS RATES This project has global site at least once every four years. We carry out more AND CAUSES application, although the focus frequent visits at selected sites, depending on an Our main measure of injury and illness is the number in the first year was the UK and assessment of risk and the issues raised by previous of reportable cases which we require sites to report. US. In the second and third year audits. We express this as a rate per 100,000 hours worked. of the programme the project has been offered globally and Auditors signal ‘critical’ findings if they conclude Our target is to reduce this reportable injury and is currently active in India, Japan, that there is a high probability of incidents with illness rate by 5 percent each year to the end of China, Brazil, Argentina, Finland, potentially serious consequences. They made five 2010. Czech Republic, Nigeria and such findings in 2006. These involved serious Israel. It has reached more than deficiencies in: We also measure the number of days lost from 7000 employees. injuries and illnesses. This provides an indication of This project won first place in • Controlling exposures to high hazard chemical the severity of the incidents, although it is only a the EHS initiative – health and agents rough guide. For example, an illness could lead to safety category of the CEO’s EHS Excellence Awards. • Managing dust explosion risks (related to a dust permanent hearing loss or other disability without collector) resulting in significant lost time. • Managing fire or explosion risks from The main data cover GSK employees and contract flammable liquids workers who we directly supervise. Separately, we report data for contractors who work on GSK • Preventing falls from elevated locations sites but supervise their own staff. (Contractors’ data Site actions are monitored to ensure that are not covered by the SGS verification). The data appropriate actions have been taken to mitigate are collected from all our 80 pharmaceutical risks and ensure ongoing compliance. None of the and consumer manufacturing sites, 12 of our 13 critical findings have become ‘delinquent’ (greater Biologicals manufacturing sites, all 22 pharma- than 90 days overdue). ceutical and consumer research and development sites, all 8 major office locations and 59 smaller We actively track audit findings and identify offices. improvements with follow-up audits. For sites scoring less than 50 percent, we also provide Causes of injuries and illnesses increased support from the audit team, including Injuries with and without lost time arise mainly from follow-up visits to ensure progress, and discussions slips, trips or falls, over-exertions or strains and with senior business management about increased motor vehicle accidents. site resources. Many sites require several years to Lost-time illness stems mainly from mental ill-health put adequate systems and programmes in place in and musculoskeletal problems (primarily repetitive these areas. strain injury). Musculoskeletal illness is the main We introduced or continued specific work in the cause of reportable illness which does not lead to following areas in 2006 to achieve improvements: days off work, accounting for about a third of the total. • Chemical agents – monitoring to determine exposure and ensure adequacy of respiratory 2006 highlights protective equipment that may be required at At 76 sites in 38 countries, there were no lost-time unit operations until engineering and other injuries or illnesses during the year. In addition: controls can be implemented • one site in India achieved 4 million hours • Resilience – rollout of the tool for assessing worked without a lost-time injury or illness team resilience, training during EHS Network • one site in India achieved 3 million hours Meetings worked without a lost-time injury or illness • Ergonomics – training in ergonomic risk • one site in the US achieved 2 million hours assessment during Network Meetings as well worked without a lost-time injury or illness as regional training

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Performance • Fifteen sites in Argentina, Canada, India, Five year trend in employee fatalities: In 2006 we recorded 995 injuries Philippines, Singapore, Spain, Sri Lanka, UK and Fatalities and 376 illnesses (total of 1371 the US achieved 1 million hours worked without incidents), compared to 984 and 344 respectively in 2005. a lost-time injury or illness. 2002 3 Employees lost working days Reportable injury and illness rate in 646 (47 percent) of these 2003 5 incidents (624 in 2005). 2004 2 GSK’s injury and illness Target performance placed us in the 2010 2005 1 third quartile of a benchmark industry group in 2005 which Baseline 2006 3 means we need to improve. 2006 Working time was lost in 552 injuries and 94 illnesses, We investigate the circumstances of all fatalities and other serious incidents and assess what can be a rate of 0.33 lost time injuries 2005 and illnesses per 100,000 hours learned to reduce the risks. We also issue global worked. alerts (posted on our intranet site) to communicate

There were 443 injuries and Baseline information that could help prevent similar incidents 282 illnesses without lost time, a 2001 at other sites. rate of 0.37 injuries and illnesses without lost time per 0.0 0.2 0.4 0.6 0.8 1.0 1.2 injuries & illnesses per 100,000 hours worked 100,000 hours worked. Target There were 11,281 lost calendar days from injuries and 4,386 SAFETY PROGRAMMES calendar days lost from illnesses, a rate of 8 calendar days lost We systematically assess risks to anticipate potential per 100,000 hours worked. Reportable injury and illness rate accidents, and put programmes in place to minimise Year I&I per 100,000 hours See data table on page 74 for them. We learn from investigating the causes of more details. 2001 1.19 accidents and make improvements accordingly. In this section we cover four key areas: driver safety, 2005 0.68 process safety, material hazard information and 2006 0.69 chemical exposure. Driver safety Our sales representatives drive long distances every year and are therefore particularly at risk of being SERIOUS INCIDENTS AND involved in work-related road traffic incidents. In FATALITIES 2006, there were 184 driving accidents, 1 resulting in a fatality and 116 resulting in lost time. These Fatalities accounted for 21 percent of lost-time injuries. In November 2006, two employees of contractors died as a result of injuries suffered in an explosion Our compliance tool for drivers, called ‘EHS and fire caused by a ruptured butane cylinder used Essentials’, includes instructions and guidelines on for cooking in the canteen of the Agbara, Nigeria driver training, vehicle selection, risk assessment and Consumer Healthcare factory. A thorough accident reporting as well as other information. We investigation was conducted by the global audit continue to use it as we implement our driver safety team and improvements identified. Progress in programme around the world. implementing the improvements will be monitored Around two thirds of GSK’s commercial businesses by the audit team and learnings from the incident have extensive driver safety programmes in place. will be shared across GSK. They include driving licence checks, guidance on the In April, one sales employee in India died as a result use of mobile phones in vehicles, driver safety of head injuries suffered when his motorbike training, tracking and reporting incidents. We are collided with another motorbike. working to ensure all sites have the same high standards in place. In 2006 we have been Irvine – explosion concentrating on improving areas such as accident A serious explosion occurred at the Irvine, UK site in and injury reporting and driver training. February 2006, involving a ‘placebo’ batch used to test plant conditions and controls. Two operators In a few countries we provide motorbikes or were injured. The event has been thoroughly scooters for employees and have produced a GSK investigated, learnings shared and improvements motorbike rider safety manual. This has been made. The UK Regulator, HSE, is considering its translated and distributed to employees in countries course of action, with prosecution a possibility. such as Bangladesh, India, Indonesia, Pakistan and Vietnam. These countries have now also fully Amputations implemented the GSK requirement for every driver In 2006, there were three incidents involving GSK of a motorbike to wear a helmet. We will continue employees that resulted in partial finger to follow up and monitor the implementation of amputations caused by work equipment. the motorbike safety programme.

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Process safety the source for 80 percent of unit operations Our process safety programme ensures that safety handling high hazard compounds, so that is built into all manufacturing, research and employees do not need to wear protective development processes. The programme is based equipment. on hazard identification, control and risk There has been substantial progress during 2006: assessment. • we have recruited a number of regional We launched a major review of our process safety hygienists to deliver an improved occupational strategy in 2006, following the explosion at our hygiene service to businesses around the world Irvine factory. This encompassed: • we are establishing our baseline performance • consistency of design standards and have developed and deployed across the • evidence for the Basis of Safety, including any business a tracking tool to monitor progress gaps in documentation and installation checks towards ‘respirator free’ and completion of Chemical Risk assessments • skills and competencies in process safety • we have enhanced collaboration between • control of change and non-routine operations engineers and occupational hygienists at all • culture issues – awareness, attitudes and levels to ensure that control solutions are behaviour implemented Material hazard information • we have revised and updated guidelines to the In 2006 we focused on preparation for new business on control measures legislation that will have a significant impact on how • we have begun to build our occupational we assess and communicate material hazard hygiene network by bringing specialists information. We continue to publish EHS together, and held the first network meeting information on our key products in safety data for occupational hygienists to ensure a common sheets. Some 600 of these for pharmaceutical and approach and understanding across the consumer healthcare products that are sold in the businesses US or Europe are available on our website – see safety data sheets for more information. • we have engaged with new product introduction teams to ensure that new We are using more alternatives to animal testing in installations meet ‘respirator free’ standards. our occupational toxicology programme. For example, in 2006 we assessed 23 chemicals for See more on our approach to Occupational potential to cause skin and/or eye irritation in our hygiene and control of chemical exposures on our workforce. All of these assessments were conducted background pages. without the use of laboratory animals by using information about chemical structures and novel human tissue tests. Our occupational toxicologists used this and other information to establish workplace exposure limits for 35 unique GSK materials. To support our commitment to ensure that our products do not adversely affect the environment (see pharmaceuticals in the environment) we have enhanced our environmental hazard testing programme to include a number of new studies aimed at assessing long term effects in aquatic organisms. In addition, due to new EU technical guidelines we are conducting more extensive environmental testing of new drug substances. Occupational hygiene and control of chemical exposure In 2006, exposure to chemicals resulted in 7 respiratory or skin-related lost-time incidents and 98 cases which did not result in lost time. Together, they accounted for 28 percent of work-related illnesses. In 2004 we developed a strategy to control chemical exposure up to 2010. This sets out a plan to achieve ‘respirator free’ status – having validated control at

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Supply chain Our supply chain is complex, with over 75,000 suppliers worldwide. It ranges from major strategic relationships with suppliers that manufacture active pharmaceutical ingredients, intermediates, raw materials and packaging for GSK medicines through to local contracts for goods or services such as office equipment, cleaning and security.

GSK’s supply chain e endeavour to ensure that all our Supplier selection GSK manufactures and sells a suppliers follow the same high standards Critical suppliers must pass detailed assessments diverse range of products which as GSK with regards to the environment, before they can be selected. As well as looking at means we source from a wide W health and safety (EHS), loss prevention and human quality, we assess their policies and procedures for range of suppliers. For example: rights. Given the size and global scope of our supply health and safety, human rights, and environmental Products: from agricultural chain this is a challenge and we recognise that some issues. This includes the use of questionnaires, on- sourced materials such as suppliers do not meet these standards (see supplier site reviews, quality audits and EHS audits of facilities blackcurrants and milk, to petrochemicals for our complex performance below). which will directly supply GSK. chemical compounds for the We work with suppliers on these issues. Our All contract manufacturers must also be approved active ingredients in our pharmaceuticals. approach includes: by the applicable regulatory authority before they can start manufacturing GSK medicines. Volumes: from high volume • pre-assessments before we start working with tailor-made packaging and a new supplier plastics through to lower volume raw materials such as flavours. • inclusion of human rights and EHS requirements in supplier contracts Services: from suppliers of SUPPLIER CONTRACTS temporary workers and cleaners, • review of EHS and human rights in routine to research companies and supplier engagements EHS professional advisors. We are Our supplier contracts contain requirements based buying from more service • EHS supplier audits on our Global EHS Standards. providers as we start to outsource services previously Our supply base is large and complex so it is not Human rights managed in-house. possible to engage directly with all our suppliers on Our supplier contracts contain human rights clauses these issues. We focus on critical suppliers. based on international workplace norms in the Critical suppliers are contract manufacturers and International Labour Organisation conventions and those suppliers that present the greatest risk to GSK the UN’s Universal Declaration of Human Rights. on one or more of the following issues: You can read the human rights clauses in the background section of our website. • threats to continuity of supply All new local and central supplier contracts • hazards associated with manufacturing worldwide include human rights clauses and these processes and materials are added to contracts with existing suppliers as they • environmental impacts are renewed. Most contracts are renewed on a three-year cycle so the vast majority of our contracts • regulatory requirements now include the clauses. • relevance to the supply of essential medicines Engagement and auditing These suppliers are based primarily in Europe, North We provide contract manufacturers with America, and Asia and account for approximately information on the EHS risks associated with the 30 percent of our total supplier spend. GSK materials they are producing or handling. We expect critical suppliers to work to high We inform suppliers about our ethical requirements standards and produce an uninterrupted supply of and policies. Our supplier booklet on working with materials and services to GSK. If they do not, the GSK includes our ethics policies and explains that safety, effectiveness or availability of our medicines GSK employees are prohibited from accepting gifts could be affected. For these reasons, it is important and entertainment. Suppliers are asked to respect that we forge long-term relationships and this position and to apply the same standards in their undertake regular monitoring to assess progress and business and interactions with GSK. In some to allow intervention where necessary. countries we send out letters to all suppliers during the local festival season making them aware of our policies and asking them to refrain from sending gifts and providing entertainment.

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We consider EHS and human rights issues during The EHS acceptability criterion for key suppliers and our routine interactions with critical suppliers. These contract manufacturers is scoring at least 50 percent interactions include ongoing supplier reviews as well in the EHS Quantitative Audit scheme. Where EHS as follow-up visits by procurement, quality and EHS performance is identified as unacceptable (less than staff. We also hold global and regional supplier 50 percent) progress is required before EHS risks and review meetings where senior GSK managers impacts can be considered to be managed robustly address and interact with suppliers on key issues. and sites considered as acceptable suppliers or contract manufacturers. During 2006 we started a pilot project to assess the risk of human rights issues occurring among A wide range of performance was noted for the suppliers of services. We decided to focus in the sites audited. The range of audit scores for these following two areas: suppliers was 23 percent to 90 percent. Eleven of these suppliers failed to meet the 50 percent EHS Suppliers of outsourced business processes acceptability criterion, and the companies were We are starting to work with more suppliers in India. either not progressed for supply or work is This includes providers of outsourced services, for underway to ensure improvements are made. example our accounts payable department is now managed by an Indian supplier, as well as providers During these EHS audits no human rights issues of of technology and professional services. Since this is significant concern were noted. a growing and important area we are focusing on Training for GSK procurement teams ensuring that we select the right suppliers with It is important that our employees understand our strong reputations for their Employee Satisfaction. standards. We provide training for procurement Our research shows that the suppliers we work with staff as part of our Sourcing Group Management typically lead the way in surveys on best Indian programme. This explains how we develop sourcing business process outsourcing employers. strategies and our criteria for supplier selection, Suppliers of promotional gift items including human rights and EHS. The training is Many of our gift items sourced from our Indian compulsory for all new procurement staff. business, are sourced from within India in an In 2006, we launched new training on Effective industry with a higher risk of the use of child labour. Contracting. This explains our requirement for We have implemented a process of unannounced human rights clauses to be included in all supplier spot checks for these suppliers, often during the contracts. It will be compulsory for all procurement night. As a result of these spot checks we have staff and we expect everyone to have completed agreed corrective actions with some suppliers to the training by the end of 2007. improve their standards in this area. Reporting suppliers’ EHS performance EHS audits We have tried to collect EHS data from key suppliers We conduct regular environment health and safety over the past five years but have had only limited audits of critical suppliers and contract manufact- success. Suppliers either do not collect the data and urers of pharmaceutical and consumer healthcare use it to manage their EHS programmes or they products. Priority for undertaking audits is based on cannot identify the impacts specific to manufacture business and EHS risks, including factors related to of GSK products. Data that we have received from continuity of supply, hazards presented by processes suppliers is often not reliable. and materials, regulatory regimes and essential In 2007, we will conduct a survey of suppliers, at the medicines. We focus on the 150 higher risk request of both the Corporate Responsibility suppliers. Committee and the Audit Committee of the Board, A quantitative evaluation is made of sites against to determine why the suppliers have not provided EHS standards and protocols. Acceptance criteria us with this information. We want to understand are in place and sites will not be used for supply suppliers’ impacts as well to measure the total EHS unless minimum performance levels are met. footprint of all of the processes that generate our Recommendations are made following audits and products, ie both GSK and supplier facilities. progress is monitored with particular focus on We are working with our Ribena suppliers and the poorly performing suppliers. Performance reviews Wildlife Trust to improve biodiversity on blackcurrant are undertaken to check progress and to help drive farms and to understand the overall environmental continuing improvements. For some sites this impacts of these operations. See the case study means, at the least, an annual visit. section on our website for more details. Supplier performance In 2006, 28 assessments were conducted of suppliers of active pharmaceutical ingredients and intermediate materials for the global pharmaceutical supply chain. Of these, ten were in the UK and Europe and 18 were in the Asia region. Six sites supplying other products and materials were audited in the UK, EU and US, one in Asia and one in South Africa.

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Environmental management Our vision is to achieve sustainable competitive business advantage and environmental sustainability through leadership and excellence. We aim to reduce our environmental impacts and address broader sustainability issues such as climate change, product stewardship and material and energy efficiency.

e discover, develop, manufacture and sell THE PLAN FOR EXCELLENCE pharmaceutical and consumer products. Q&A This requires significant resources, so we We launched an EHS Plan for Excellence in 2001 James Hagan W need to understand, address and report on which set out a strategy to improve EHS Vice President, Corporate performance over a ten-year period. In 2006 we Environment, Health and Safety environmental impacts. They include issues common to all manufacturers, such as the use of reviewed the first five years’ performance, renewed energy and water, and waste handling. We also the Plan for the second stage and extended it to need to consider potential impacts of certain 2015. chemicals which can release volatile organic We began our review of the Plan for Excellence with compounds (VOCs) and the chemicals in our an extensive consultation with key internal and inhalers which can damage the ozone layer and external stakeholders, who encouraged us to adopt contribute to climate change. And our industry can higher aspirations and align EHS objectives more have specific impacts through the release of closely with the business strategy. pharmaceuticals into the environment after use by patients. The first five years of the plan established fundamental programmes that protect employees, What is the top environmental A systematic approach to management of these our communities and the environment. The priority for GSK? issues is crucial because control needs to be renewed plan includes a commitment to The priority is to manage all the consistent over the long term. This is important as issues properly, looking at people, stakeholder engagement and strengthens the focus plant and processes, in the context we move away from controlling emissions from our on sustainable environmental practices through of a long-term strategic plan. processes to developing and implementing new operational efficiency. This requires a new approach processes that are more efficient and therefore use We have been working on that to manufacturing processes and means we will since GSK was formed. In 2001 less raw material and produce less waste. This is one move to incorporating environmental performance and 2002 I asked all operations of the first steps toward environmental sustainability in process design, moving from compliance and risk worldwide to contribute to the which is our long term goal. management to adding value and creating new creation of a self-regulating Overall responsibility for environmental issues opportunities. For example, we want to move from framework of programmes having to treat a hazardous waste stream to (i.e. policies, standards, guidance, rests with the Corporate Executive Team and the choosing processes that do not produce hazardous audits, etc.) that defines how we Board. The Board champion for Environment, believe we should operate, with Health and Safety (EHS) is JP Garnier, the Chief waste. legal compliance as the basic Executive Officer. Rupert Bondy, General Counsel, is The renewed plan is designed to complement the foundation. In 2003, we identified the operational champion of EHS on the corporate the key risks to GSK as employee business strategies and contains three EHS chemical exposure, process safety, executive team. We have a Corporate Responsibility Aspirations for GSK by 2015: ergonomics, and driver safety, Committee and Corporate EHS department. which we will continue to work • EHS fundamentals embedded in the on for some years to come. Environmental issues are managed together with business – we believe that to produce and health and safety through an integrated EHS sustain high EHS performance we need to In 2004, in discussions with our system that aims to ensure issues and risks are external stakeholders about combine structured EHS systems with the EHS issues, they said that climate identified, standards are established and adhered attitudes and values that create a positive EHS change and energy conservation, to, training is provided, targets set and audits culture. To achieve this we need to embed EHS pharmaceuticals in the conducted. awareness and systems in all GSK activities environment and the use of hazardous/toxic chemicals were Our EHS Policy, Vision and 64 Global EHS • Environmental sustainability – we believe we our key external challenges. In Standards set the overall framework. We provide need to embrace environmental sustainability 2005, we worked to complete core sites with an EHS management toolkit which as a driver for competitive advantage. To do this programmes and EHS contains instructions and descriptions of appropriate we have to define the principles of management systems and achieve procedures to help them comply with the standards. environmental sustainability and progressively our improvement targets. Now it’s time to move to the next stage. Further background information on our approach to integrate them into the business, translating them into practical action in line with advancing Q&A continues on next page managing environmental issues is available in the Environment, Health and Safety section of our knowledge website.

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• Open and transparent EHS external Each business sector will develop its own objectives The next step is to expand our relations – we believe that external to support the corporate targets and will develop focus by improving our use of stakeholders who have a legitimate interest in specific short and medium-term plans to achieve natural resources as a step towards sustainability. That’s the company’s EHS affairs should have ready them. Individual sites may also set local targets to complex. access to relevant information and the contribute to the business target. opportunity for dialogue about issues that We are working on material We use annual action plans to focus our efforts on efficiency in our production concern them. We also believe that building selected priority issues. The theme for 2006 was (see page 57). Energy is also a open relationships and partnerships can lead to ‘Embedding EHS in the Business’ following the initial critical component and in 2006 business opportunities, while failure to engage GSK adopted a life cycle focus on fundamentals in the first 5 years of the may damage our reputation approach to investing in energy Plan. efficiency and renewable energy. Each of these aspirations is supported by strategic The theme for 2007 is ‘EHS Stewardship’, which (see page 60). In fact our CEO objectives with performance targets in some areas. has requested a further review in means caring for the present and thinking to the 2007 of energy saving measures Progress and targets future when we make decisions, building excellence and use of renewable energy. Our EHS Plan for Excellence initially set out targets over time and maintaining the highest possible Product stewardship is another in 10 areas, with interim targets for 2005. standards in everything we do. Each business sector aspect of sustainability and we will encourage a culture that accepts this will need to focus on the issue See 2005 report for progress against these responsibility by incorporating EHS into their of pharmaceuticals in the targets. environment (see page 59). planning and business processes. The plan for the next 10 years is aligned with the What is the highlight of 2006? Corporate EHS will work with businesses to: GSK business drivers and with our desire to move Approval of the second stage of our Plan for Excellence, up to towards environmental sustainability. We have • determine which elements of environmental 2015 (see page 52). In the first introduced these new targets: sustainability we need to focus on and begin to stage of the plan, since 2001, we promote environmental sustainability principles focused on the fundamentals • Material efficiency – by targeting efficiency we throughout the business and improved our performance simultaneously target resource consumption, air in many areas, but we need to emissions, water pollution, waste disposal and • continue the pilot programme of developing do more. In the second stage of safety concerns and distributing product stewardship guides for the plan, we will keep a keen marketed products focus on maintaining • EHS audit scores – these are a measure of the improvements, based on that success of our management systems approach • expand our programme of discussions with EHS foundation and on new annual external stakeholders beyond the UK to the rest improvement targets. In 2006, These are the improvement targets across the of Europe and into the US. we established improvement company up to 2010, with 2006 as the new targets for manufacturing new baseline: See more in the Product Stewardship section and medicines which will move us our background web pages. toward our goal of sustainability. From a tangible standpoint, our Annual reductions per £ of sales manufacturing function (GMS) has accepted the challenge from Energy 1% the Board of Directors to be ISO STAKEHOLDER ENGAGEMENT 14001/ OHSAS 18001 certified, Solid waste 1% which will embed management Stakeholder engagement plays an important role in Water 2% systems into the business. We how we manage EHS. This section reports have also created new EHS Air emissions (volatile engagement specifically on EHS issues. See Director positions in GMS and organic emissions) 2% engagement with stakeholders in the Managing Biologicals who sit on the executive teams and will help CR section for details of engagement on other Wastewater (chemical EHS to be integral to all business corporate responsibility issues. oxygen demand) 3% decisions. In addition to inclusion in the Dow Jones Q&A continues on next page Material efficiency Sustainability Index and the UK FTSE4Good, Achieve average 2% material efficiency of GlaxoSmithKline is rated by Business in the manufacturing processes for new products introduced Environment (BiE), in the ‘premier league’ in a field between 2006 and 2010 of 145 participating companies. This rating indicates the extent to which we interpret environmental Cumulative targets for 2010 responsibility into the way we manage our business Ozone depletion 100% elimination and in our environmental performance. EHS audit scores We have frequently engaged through ad hoc meetings with a range of external stakeholders to – Average 82% help us understand their views and identify – Minimum 70% emerging issues. In 2005 we stepped up our internal and external engagement on EHS issues We no longer have targets in these areas: and created a formal stakeholder panel in the UK to provide a perspective on our EHS performance. The • global warming potential – we have replaced panel is facilitated by The Environment Council, an this with a target on energy efficiency independent charity, and the 10 members represent • hazardous waste – we are now addressing our customers, suppliers, regulators, public interest hazardous waste through the new material groups and investors, plus four senior EHS efficiency target representatives from GSK.

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Plans and systems aren’t It provides an opportunity for EHS experts from Engagement with EHS professionals helps us to enough, are they? across GSK’s businesses to meet stakeholders and work out details of programmes such as energy No, they’re not. First, we need discuss emerging EHS issues. Feedback has been initiatives. to have great people, with the used in developing the EHS Plan for Excellence. right qualifications and training, In 2006, we surveyed staff who are involved in EHS working on these issues. We also The panel meets every six months. In 2006 to assess the success of our communications and have to have the right culture, discussions covered: to identify areas for improvement. We also with senior management completed an internal review of Corporate support to promote the right • our engagement strategy behaviour and investment. We Environment Health and Safety (CEHS) are taking the position that we • the need for public position papers on climate communications. won’t compromise on change/energy management, the management The EHS Framework documents received high environmental protection or of hazardous chemicals, and pharmaceuticals employee safety.We are seeing marks for usefulness as a source of information, as in the environment (the final versions, approved consciousness about environ- did the EHS Community webpage. But the web by GSK management, are published on ment, health and safety really page needs to be more user-friendly and we will gsk.com) becoming embedded in the relaunch the site in 2007. business. This was our theme • a serious process safety incident at our Irvine for 2006 and we have seen it We found that there was high awareness of the EHS site (see the Health and Safety section) reflected in enhanced attitudes Plan for Excellence, of EHS programmes on chemical in the business on EHS. We are • the strategic plan for EHS agents and process safety, of EHS reward and moving from bolting on controls recognition programmes, and of the theme of for existing processes to building • EHS performance in 2005 them in so they are central to sustainability. But people said we needed to be the operation. This culture • how EHS aligns with GSK’s business direction clearer about our messages, especially priorities and change is central to the second their relationships to the overall mission of the Stakeholders have repeatedly highlighted their view stage of our 10-year plan. It corporate EHS department and GSK. We will means that we need to have that it is important for GSK to address broader issues address this in 2007. addressed issues with our people such as climate change and sustainable (qualified, trained and aligned), development. We are beginning to address broader In 2006, we also took feedback from company wide our plants (our infrastructure is aspects of sustainability, for example in our work on GSK employees to develop the 2006-2015 EHS properly designed, installed and maintained) and our processes material efficiency. Strategic Plan. and systems (our management We plan to extend our stakeholder engagement Engagement with regulators approach identifies the risks and activities to the US, Europe, and beyond over the GSK is keen to see proper measures in place to develops programmes to manage these risks). next few years, beginning in the US in 2007. (See protect the environment and safeguard the Stakeholder engagement background pages.) development and launch of new medicines. At the What is your priority for 2007? same time, regulations need to be workable for Our theme for 2007 is EHS Local engagement industry to avoid unnecessary cost and bureaucracy. stewardship. That means we Many of our sites also engage with stakeholders We collaborate with regulators to help them want to do more to embed the locally, through activities such as open days, new culture in the business, so develop effective controls. that people really understand newsletters and community projects. For example, that this is not a short-term our Dresden site conducted intensive In 2006 we engaged with regulators in the UK on exercise and they need to have a communications with the local community ahead of the government’s work to improve regulation of vision and an understanding of doubling the manufacturing capacity for its flu business. We submitted comments on 14 EHS the long-term impact of vaccines. The construction activity was particularly regulations which we consider should be reviewed everything that we do. And we sensitive because the site is in a residential area. This for practicability, and hosted a visit from the Better need to think about environmental impacts such as work won third place in our CEO’s EHS Excellence Regulation Commission to one of our pilot plants to climate change and embed Awards for community projects. demonstrate some of the issues. We also inherent safety over the whole participated in the House of Commons Select In 2006, we conducted a survey of EHS stakeholder life cycle of our products, from Committee Inquiry into the work of the engagement at 52 GSK sites around the world. This raw material to waste. This Environment Agency. change will reflect not only how found that our sites engage most frequently with GSK manages EHS but how EHS local government, the emergency services, We worked with trade associations, including the benefits GSK. For example, neighbours/resident associations, local environ- British, European and US pharmaceutical industry addressing climate change mental and advocacy groups, and local business EHS groups. through improved energy partners. Our sites reported that open dialogue with efficiency benefits not only We engaged in the consultation process for the communities helps to build strong relationships and the environment but also has European Union’s Regulation on the Registration to dispel preconceptions. In particular they reported a financial benefit for GSK. Evaluation and Authorisation of Chemicals (REACH) that it is beneficial to involve local communities in Q&A continues on next page and the Globally Harmonised System (GHS) for the environmental risk assessments and the develop- classification and labelling of chemicals. GSK ment of emergency response plans and site waste supports the aims of both these initiatives to protect management plans. human health and the environment. We are pleased Internal engagement by the outcomes and by the efforts made by all We engage with our GSK staff throughout the parties to achieve workable regulation. We continue business in several ways. This includes discussions to play our part in the development of supporting with business leaders to debate and agree the way guidance for REACH. forward for EHS at GSK, especially to agree the annual action plan and position papers on specific issues such as energy.

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We welcome the introduction of formal guidelines Awareness How is GSK planning to move for the conduct of environmental risk assessment We raise the profile of environmental issues through beyond basic environmental established under the EU’s New Medicines a variety of means, including the EHS framework, protection to address sustainability more broadly? Legislation. GSK has lobbied for the environmental the Plan for Excellence and the Chief Executive As I mentioned before, our impacts of pharmaceuticals to be regulated solely Officer’s EHS Excellence Awards scheme. (See side first step toward sustainability through the European Agency for the Evaluation of bars on the next two pages for the 2006 first place concerns the efficiency with Medical Products, and not also through the winners.) which we use materials and proposed REACH framework which would lead to energy in manufacturing We also run an Earthweek every June (to coincide duplication of effort and place an unnecessary processes. We have a new with the World Environment Day) and send target to double the efficiency burden on the pharmaceutical industry. information kits to all sites to help them develop for manufacturing new For more details on Public Policy see the Managing ideas and plan activities. In 2006, 74 sites from products introduced up to 2010. After that date we hope CR section, see page 7. 34 countries celebrated Earthweek with activities we will be starting to use raw involving over 80,000 employees. materials from renewable Examples of activities in 2006 are: resources rather than petrochemicals. And in the • The GSK site in Mississauga, Canada celebrated more distant future we will TRAINING AND AWARENESS Earthweek by planting 2,000 seedlings or small want to be using biological transformations rather than trees which are indigenous to the local area, Raising employees’ awareness of environment, chemical synthesis. All of this health and safety issues and improving their skills involving 350 employees needs to happen with inherent through training are key parts of our EHS • 160 GSK employees from the Civac Consumer safety built in to all that we do. programme. This is critical to embedding our Healthcare site in Mexico raised the framework and building an EHS culture throughout environmental awareness of a group of local the business. Employees at all levels need to school children by showing them how to understand the EHS issues in their working separate household waste for recycling. environment. For example, employees need to understand the properties, hazards and necessary We cover EHS issues regularly through EHS bulletins, precautions associated with the chemicals they and articles in GSK’s internal magazines (GSK Spirit, handle. Those who handle waste need to know its e-Spirit). We encourage employees to consider properties, the regulations that govern its disposal, environmental issues outside the workplace, such and which materials can be recycled. as minimising household waste, saving energy and water. We help employees deal with these issues through meetings, bulletins and information on our intranet For more information see EHS Communication on site, as well as specific training events. We have an the background pages. EHS standard on training. The intranet site, myEHS Community, contains links to a range of programmes, including the EHS Manager information system which contains policies, standards, guidelines, tools, training materials, examples of best practice and news. It also provides customised management reports on EHS performance by site. Training Training takes place at site level and programmes are routinely included in induction training for new employees. EHS training is also accessible through myLearning, GSK’s online training service. In 2006 we carried out additional EHS manage- ment training for our Consumer Healthcare and Regional Pharma Supply organisations. We made site visits for one-on-one training on the use of the EHS Manager software system. EHS managers are encouraged to attend conferences and training programmes sponsored by local environmental organisations and academic institutions.

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Barnard Castle, UK This site has made huge progress EHS EXCELLENCE AWARDS in reducing its environmental The CEO’s EHS Excellence Awards recognise and weaknesses identified in the audit and auditors impacts over several years – reward GSK sites that show leadership in EHS. In monitor sites’ progress in implementing the plans. cutting electricity use by 2006 the programme was expanded to include Internal auditors are certified as lead auditors 22 percent, gas by 23 percent and water consumption by aspects of sustainability. The awards recognise against the international environment, health and 25 percent. people who have done exceptional work in safety management standards: ISO 14001 and promoting and implementing EHS projects. They OHSAS18001. Sites are also expected to conduct The site used energy audits to identify potential savings such highlight innovation and examples of good practice routine self audits of their EHS programmes. in EHS management to share with other sites. Each as improvements to heating In 2006 the majority of audits were conducted using and cooling equipment, winner receives a trophy and selects a charity to a new risk-based process that focused on significant installing automatic light receive a donation from GSK. controllers and optimising boiler operational EHS risks and environmental impacts, controls. The winners of our 2006 Excellence Awards rather than the full range of applicable EHS Posters and special events demonstrate once again that many projects which Standards. The audit frequency was determined by encourage employees to play improve environmental performance also save considering key site risks and the demonstrated their part. Employee ‘energy money. performance in managing them effectively. wardens’ have also been assigned to each department to In 2006 – the fifth year of the awards – there were We conducted corporate audits of 32 sites, help limit energy use in their 95 entries from 25 countries. There were including 2 office locations. The average score was area. These wardens are trained applications from all GSK’s business sectors: R&D, 74 percent (compared to 77 percent in 2005). No to identify potential energy manufacturing and commercial, and from facilities site achieved a score below 50 percent, which we savings, to make sure equipment management teams. regard as unacceptable. We aim to correct is being used efficiently and to unacceptable performance and continue to pursue raise awareness among their The winners were chosen by a panel that included further improvements to achieve best practice. colleagues. experts from academia, government and public The site has also installed two interest groups. In 2006, 12 projects representing A good level of performance was found at most 250 kW wind turbines to reduce Europe, North America, Central America, the sites, especially in areas covered by GSK the amount of energy used from Middle East and Asia received top honours. environmental standards. But several aspects were fossil fuel sources. This earned identified for improvement, especially safety issues, the site four regional awards Three of the 2006 first place award winners are see Health and Safety page 46. and has acted as an example for featured on these pages. See further details on other local industrial complexes the CEO’s EHS Excellence Award background In 2006, two sites achieved ‘leadership’ scores – two of which have installed pages. above 90 percent (two in 2005), while a further similar turbines. 10 achieved scores over 80 percent (seven in 2005). Since 2001, Barnard Castle’s energy initiatives have reduced The best performance on environmental issues CO2 emissions by a total of about was in 12,500 tonnes and have saved more than £3 million. AUDITS AND COMPLIANCE • management of solid wastes This project won first place in At the request of the Audit Committee of the Board • air emissions the EHS Initiative – Environment of Directors, GSK has embarked on a programme category. to achieve ISO 14001 and OHSAS 18001 • emergency planning Poznan, Poland certification. Sites were generally weakest on Our Poznan site founded the In 2006, the leadership of GSK’s manufacturing GSK Science and Public Centre • self auditing and inspection in 2004. The Centre has become division (GMS) approved a four-year programme to a meeting venue for community certify all remaining GMS sites to ISO 14001/OHSAS • risk assessment processes education events about public 18001. This programme began early in 2007 and • biodiversity healthcare and disease will be completed in 2010. Some sites had already prevention through community achieved certification and in 2006, one additional Compliance education. It is run by GSK site was certified to ISO14001 and OHSAS 18001, As a minimum, our policy is to comply with all legal employees who organise requirements. There were no fines or penalties activities that have included: bringing the total of dual certified sites to 21. This means that 27 of our 80 pharmaceutical and reported in 2006. We regret that in 2006 we were • helping teachers to promote consumer manufacturing sites are now certified in breach of regulations in three cases, prompting healthy behaviour among the US Federal Aviation Administration to issue their students (6 sites are certified to ISO 14001 only). warning letters without penalties regarding non- • workshops teaching We carry out regular EHS audits of GSK compliance with shipping regulations. Deficiencies 1,000 pupils from operations, contract manufacturers and key were: 60 Poznan high schools suppliers. The aim is to assess how well they control how to deal with threats risks and comply with key legislation, and the extent • Non-compliance with marking, labelling and such as drugs, HIV/AIDS, to which management systems and standards are documentation of a shipment of inhalation aggressive behaviour and aerosols alcohol being implemented to improve performance and maintain compliance. See supply chain page 50 • helping people with • Inoperative emergency number for hazard disabilities to put on for more information, including human rights information theatre performances audits. for the local community • Undeclared dangerous goods (flammable Our audit programme requires all manufacturing liquid) shipped via inter-office mail This project won first place in and R&D sites to undergo EHS audits by our internal the EHS Community Partnership audit team. Audits occur every one to four years, category. depending on our assessment of risks. Sites are required to develop plans to address any

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Stevenage, UK MATERIAL EFFICIENCY Our R&D site in Stevenage We aim to improve the efficiency with which we • vastly reduces the use of solvent and therefore reduced the environmental convert raw materials to finished product, as part of waste – a 70 percent reduction in the mass of impacts of manufacturing a compound which was in the our drive for environmental sustainability. It will help waste, which avoids up to 80 tonnes of waste development stage. us to reduce our consumption of resources, the per annum waste we generate and the cost of production. The original process for • is more robust than the previous process, manufacturing the drug We have set a target to double the average material resulting in less waste through failed batches involved the use of seven efficiency of manufacturing processes for new different solvents and a number • reduces exposure of employees to hazardous products introduced between 2006 and 2010. This of hazardous chemicals. It materials. produced low yields and high will achieve material efficiencies of 2 percent for waste volumes. these new processes i.e. two tonnes of active The chart shows the extent to which we are pharmaceutical ingredient (API) for every 100 improving material efficiency as compounds move The team at Stevenage developed a new technique tonnes of input chemicals. through development stages. These data relate to that tripled material efficiency compounds in development in 2006. Pharmaceutical processes are typically very complex, from 0.7 percent to 2.0 percent, which will reduce waste by often requiring large amounts of solvent. Typically, 68 percent, using less organic the industry uses about 100 tonnes of material for solvent and hazardous chemicals. Mass productivity distribution every tonne of API produced. That 1 percent It also required less energy and material efficiency compares to about 20 percent the majority of waste could be for fine chemicals and 50 percent for bulk 100% handled on site. chemicals. It represents a waste of valuable This project won first place in resources, with financial as well as environmental the Green Chemistry/Technology consequences. 80% category. Our approach to addressing EHS issues already includes minimising the amount of material used – 40% for example, through the eco-design toolkit (see Percent page 58). We are now placing a higher priority on improving our use of materials and are bringing 20% together R&D and manufacturing teams to increase material efficiency in the product development 0% stage, as well as for selected existing products. Stage 1 Stage 2 Stage 3 Stage 4

Our key measure of material efficiency is ‘mass Mass productivity % > 3 Mass productivity % 1 to 2 productivity’. This is the mass of all materials (except water but including solvents) used in the process Mass productivity % 2 to 3 Mass productivity % 0 to 1 compared to the mass of product produced. Our new 2 percent target applies to this measure. In early development almost all compounds have a We are already making improvements to material mass productivity less than 1 percent. But the efficiency. For example, a research and development proportion with this low level efficiency falls in each team at our Stevenage, UK R&D site, worked with stage. By the last stage of development, before our Cork, Ireland site to achieve substantial transfer to manufacturing, the majority achieved environmental benefits by developing a simplified productivity of more than 2 percent and some are process for manufacturing dutasteride, a treatment above 3 percent, with one process achieving for benign prostate hyperplasia. The project will productivity of 4.9 percent. continue to deliver benefits to at least 2015. This work won third place in the Green Chemistry category of the Chief Executive Officer’s EHS Excellence Awards in 2006. The new process: • produces 40 percent more drug substance from the same amount of starting material, saving up to £5.7 million/year • saves energy – the chemical reaction now requires only four hours at 86°C compared to 22 hours at 100°C previously

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PRODUCT STEWARDSHIP We address environmental issues associated with Each module was designed to ensure that all EHS our products throughout their life cycle. This begins impacts of materials, processes and services are with product design and continues through considered, from the manufacture of the raw manufacturing to eventual disposal. We refer to this materials through to the ultimate fate of products as product stewardship. and wastes in the environment. This section covers product design (including See more on the toolkit and our approach to packaging) and the impacts of pharmaceuticals in product design in the background pages. the environment. The research and development section of this report covers our approach to animal testing. Read more about environmental issues associated with our products on our background pages. PACKAGING Product design We are working to improve the environmental Environment and health and safety staff work with performance of our packaging across several areas. product development teams to incorporate EHS Our Green Packaging Guide provides guidance and considerations into the design of products and a business process for evaluating and selecting sourcing materials, and to identify residual EHS risks packaging options. It includes an interactive as products move from R&D to manufacturing. “wizard” known as WRAP – Wizard for the Rapid Eco-design toolkit Assessment of Packaging – which helps packaging We have developed an eco-design toolkit which designers and managers to benchmark new and scientists and engineers use to identify process existing packaging designs, considering five metrics improvements and address EHS issues early in the over the product life cycle: development process. The toolkit is available on the • manufacture of the material GSK intranet and consists of five modules: • mass of the material • a Green Chemistry/Technology Guide, which helps GSK scientists and engineers apply Green • biodegradability Chemistry concepts to achieve more efficient • PVC content use of resources, reduce EHS impacts and minimise costs • resource depletion • Materials Guides, containing information on The example of bottles for consumer products such a range of materials used within GSK as Lucozade illustrates the range of work on operations, including solvents that should be packaging: avoided. One guide covers solvent selection • reducing the amount of packaging – we moved while a second deals with chemical base from glass to a plastic bottle, making a huge selection saving in weight, energy and transport costs • a Green Packaging Guide – an assessment Then we progressively reduced the weight of tool which includes guidance and a business the plastic bottle by 14 percent process for evaluating and selecting packaging • increasing the use of recycled material – bottles options (see Packaging next) currently contain between 20-30 percent of • FLASC (Fast Lifecycle Assessment for Synthetic recycled material and we intend to increase this Chemistry) – a web-based tool and process that to 100 percent as soon as we can develop a allows bench chemists to perform a streamlined reliable supply life cycle evaluation of the environmental • improving design to facilitate recycling of our impacts of new or existing processes based on bottles – recycling is easiest from clear bottles the materials used. FLASC helps scientists and with no contaminating residues. We have managers to rapidly identify the ‘greenest’ changed from coloured to clear bottles and materials option by comparing and have developed shrink sleeves which do not benchmarking processes. It identifies the need adhesive and can easily be separated materials that have the most significant life cycle environmental impacts and provides guidance • promoting recycling in the community – we are on how to reduce those impacts active members of Recoup, which is a charitable organisation promoting plastics recycling in the • The Chemicals Legislation Guide (CLG) UK (www.recoup.org). Through Recoup, GSK identifies legislation in various parts of the world was a key contributor to a study on ‘Design for aimed at phasing out hazardous substances recycling of plastic containers’ and we are from routine use. The CLG provides risk-based funding another project to promote recycling guidance, about a variety of chemicals of of plastic containers by providing ‘reverse concern, in an easily accessible form. vending machines’ in public places

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• investigating biodegradable plastics – we are We also engage in joint projects in the pharma- following developments of materials such as ceutical industry through the Pharmaceutical polylactic acid (PLA) made from corn starch but Research and Manufacturers of America (PhRMA). currently believe return and recycling of In 2006: conventional (PET) bottles is the best • a GSK model was used to upgrade the environmental option Pharmaceutical Assessment and Transport • using other packaging types – we aim to use Evaluation (PhATE TM) model so it can be used to the best type of container for each product. For estimate the potential environmental impact of example, we use cartons from Tetra PakTM for sewage sludge applied to the land. PhATE™ is Ribena, which minimises weight and improves used to make risk assessments based on specific distribution efficiency, although recycling local stream flows and population patterns systems are still under development • we contributed to developing a database of • other packaging impacts – we have invested in scientific literature on the impacts of a distribution centre that is closer to the bottle pharmaceuticals on aquatic life supply company, which means we can • we contributed to an analysis of the impact of maximise the efficiency of lorry movements unused medicines on the environment, a report which is being shared with regulatory agencies and will be developed into a paper for publication in the scientific literature PHARMACEUTICALS IN THE We also continue our own work in this area. In 2006 ENVIRONMENT we: Medicines work through active pharmaceutical • conducted chronic ecotoxicity testing on ingredients (APIs) that are absorbed in the patient’s selected APIs based on new EU guidelines. We body. These materials – including anything that is now use these guidelines as an integral part of not absorbed – are eventually excreted through the our environmental risk assessment strategy body’s normal mechanisms and enter the sewage • continued comprehensive environmental risk system. Wastewater treatment plants remove most assessments for about 40 APIs. We developed pharmaceutical residues, but small concentrations ‘Allowable Daily Intake’ levels for human do end up in rivers or in the sea. In areas without consumption through drinking water and fish wastewater treatment, higher concentrations enter consumption, as well as ‘No-Effects Levels’ for the environment. aquatic organisms. We make quantitative risk GSK has developed business processes to ensure assessments by comparing these levels with that we carry out appropriate environmental tests. predicted environmental concentrations. We Environmental risk assessments are part of the presented data on selected sets of these approval process for new medicines in the EU and compounds at scientific meetings US, so we provide regulatory agencies with • provided data and risk assessments on more assessments to evaluate and allow for mitigation of than 20 GSK APIs to the Swedish Association of any potential environmental impacts. In 2006 we the Pharmaceutical Industry (LIF) as part of a were part of industry groups that met with voluntary programme to provide data to regulatory agencies on this issue, including the Food physicians. GSK is also part of the technical and Drug Administration and Environmental team that developed the LIF Guide document Protection Agency in the US and the Environment ‘Guidance for Pharmaceutical Companies’. Agency of England and Wales. Risk assessments indicate that our products do not appear to pose an appreciable risk for humans or See more on our approach to pharmaceuticals in the environment based on current methods for the environment on our background pages. ascertaining safe levels. But we continue to monitor the latest scientific studies and findings to improve our risk assessments in this area. We work with other pharmaceutical companies, universities and research groups to develop the science and methodologies to assess the environmental risks of pharmaceuticals in the environment and increase understanding of such risks. In 2006 we started to investigate the issue of mixtures of pharmaceuticals, and have established a relationship with Brunel University in the UK to develop research plans in addition to our own in- house programme.

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Environmental performance In 2006, we continued to improve our use of energy and reduce emissions to the atmosphere. We used slightly more water than in 2005 and generated more waste but succeeded in keeping the percentage increase below the percentage rise in sales.

Scope of the data e manufacture pharmaceutical and ENERGY EFFICIENCY The environmental data covers consumer products using processes that the calendar year 2006. They are involve chemicals, so we need to We need energy to discover, develop, manufacture collected from all of our W and distribute medicines. Most of our energy use is 80 pharmaceutical and consumer understand, address and report on environmental in our facilities, especially manufacturing, but also manufacturing sites, 11 of our impacts. They include issues common to all 13 biologicals sites that are in manufacturers, such as the use of energy and water, R&D and office sites. Global Manufacturing and operation, 18 of 22 pharma- and waste handling. In common with some other Supply (GMS) and Research and Development ceutical and consumer research sectors, we also need to consider potential impacts (R&D) accounted for 58 percent and 25 percent and development sites and 6 of of certain chemicals which can release volatile respectively, of our consumption in 2006 and this is 8 major office locations. We where we are concentrating efforts to increase include available data for sites organic compounds (VOCs). Our manufacture of energy efficiency. Transport is the main source of that were in operation for all or asthma inhalers also means we use chemicals which part of the year. We do not can damage the ozone layer. our remaining energy use. require environmental data from Improving energy efficiency will help to reduce our small offices and distribution In 2006 we reviewed our reporting to consider the global warming impact. It is now widely accepted centres. materiality of environmental impacts, in the light of pharmaceutical industry practice and the Global that the activity of humans is changing our planet’s Notes attached to the data table climate. There is a scientific consensus that on page 72 explain the scope Reporting Initiative, as well as inputs from ‘greenhouse gases’ (GHGs) such as carbon dioxide and data collection process for stakeholders. each parameter in more detail. and methane are causing the ‘greenhouse effect’ – Unless specified as being per unit Stakeholders have told us they want simplicity in trapping heat within the earth’s atmosphere, of sales, figures are absolute reporting, but they also need an appropriate level of causing a global increase in temperatures. Burning numbers (i.e. total consumption detail, and we have tried to balance these fossil fuels has greatly increased the presence of of energy, water etc.) sometimes conflicting requirements. For example, these gases in the atmosphere. Most experts now we have reduced and simplified the graphs and agree that this increase in GHGs is causing the earth charts in this report, concentrating on areas with to warm, a process which could bring about targets. We include a full data table for disastrous changes to our climate. completeness at the back of the environment section on page 72. We will continue working to minimise energy use and emissions, despite expected growth in new We concentrate our reporting on: products which will require additional energy. We • issues with potential financial benefit or impact expect to continue finding opportunities for greater for GSK such as material efficiency and energy efficiencies in new and existing facilities and efficiency operations. As a result, our new target is to reduce energy consumption by 1 percent per unit of sales • issues directly related to the use of chemicals each year until 2010. such as volatile organic compounds, chemical oxygen demand of wastewater and hazardous In 2006 we finalised a position paper on our future waste use of energy, following extensive internal and external consultation. The position paper sets out a This is the seventh year that we have reported on strategy for energy efficiency, renewable energy and GSK’s environmental performance (and the legacy emissions trading. It commits GSK to: companies reported for several years before the creation of GSK). Copies of these reports are • reduce our reliance on fossil fuels whenever it available on the Corporate Register. is technically and economically possible Verification • support effective market-based mechanisms The data in this Environment section and in the such as emissions trading, but seek to reduce health and safety pages of the employment section our own emissions first of this report are externally verified by SGS UK Ltd. • evaluate the use of renewable energy Details can be found in the verification statement on page 70. • evaluate energy investments over their lifetime rather than over the normal payback period used by GSK • encourage suppliers, contractors and employees to improve their energy consumption • report transparently our energy consumption using internationally recognised protocols

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Energy performance Energy consumption In 2006, we used 19 million gigajoules of energy, approx- imately 1.4 percent less than in 2005. We bought 43 percent of our energy as electricity and generated most of the rest from Target fossil fuels burned at our sites. 2010 The reduction in energy use came despite an increase in sales. Energy consumption per £ sales was 8.1 percent lower than in 2005. Baseline 2006 We continued to work on energy efficiency initiatives in 2006, with active energy teams in manufact- uring and R&D and energy managers at many of the larger sites. Examples include: 2005 • installing energy efficient lighting and motion sensors • thermographic surveys to identify heat losses, resulting in insulation repairs Baseline • ultrasonic surveys to identify 2001 air leaks • site voltage reduction projects

0 200 400 600 800 1000 1200 • efficiency improvements to heating, ventilation and air gigajoules per £ million (sales) conditioning Target • retro-fitting economisers to steam boilers • steam trap surveys and Energy consumption maintenance improvements Year gjper £ million (sales) • electricity and steam metering improvements with 2001 1010.6 centralised monitoring and 2005 887.8 targeting software systems 2006 816.2 • refrigeration and chiller efficiency improvements The data table on page 72 includes additional details about energy and greenhouse gas emissions, such as amounts Renewable energy of electricity purchased and fuels We have started to invest in renewable energy installed combustion capacity are required to consumed, and carbon dioxide projects. For example, Barnard Castle has installed participate and 16 GSK sites are covered. On equivalent emissions from two wind turbines and other sites are using solar balance GSK had surplus carbon credits. Any energy sources and from inhaler production and use. energy to heat water. Some sites purchased some proceeds from the sale of carbon credits are invested of their electricity from renewable resources. In the in energy efficiency projects. future we will report the amount of electricity from Energy investments renewable sources. We have adopted an approach to energy Emissions trading investments which reflects the long-term nature of A number of UK sites participate in the the projects and the importance of energy supply to government’s emissions trading scheme (ETS), the business. Instead of applying our normal helping us to gain experience in carbon trading. The investment criteria we will assess the return on the UK ETS is a voluntary scheme which rewards investment over the project’s lifetime. companies with lower energy taxes if they improve We expect that this will result in approving energy energy efficiency. Sites that keep emissions below an efficiency and renewable energy projects which agreed target can ‘bank’ the spare credits to help would not qualify under our normal investment comply with limits in subsequent years, or they can criteria. sell the credits to other participants in the scheme. The first project to be approved was for solar water In 2006 all GSK sites complied with their Climate heating at our site at Slough, UK. Change Agreements. The European Union trading scheme came into force at the start of 2005 for an initial three-year period. Sites with more than 20 megawatts of

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Transport We estimate that transport accounts for 340 million We have launched a number of initiatives to reduce kilograms of CO2, about 20 percent of our global the impact of transporting products. They include warming impact from energy in 2006. consolidating freight shipments so pharmaceutical and consumer products are transported together, Business air travel accounts for almost half consolidating shipping points, and making more use (44 percent) of our travel-related CO2 emissions. In of round tripping (managing inbound freight trucks 2006, employees travelled a total of almost so they do not return empty). We also switch from 900 million kilometres by plane resulting in air to sea transport where possible. 106 million kg of CO2 emissions. Air travel does not include group travel originating outside the UK. Our We have ‘green travel plans’ at a number of sites to global sales fleet drove a total of over 1 billion encourage employees to reduce the environmental kilometres on business travel – resulting in impact of their travel to work. For example, at GSK 136 million kg of CO2. House in Brentford, UK, privileged parking spaces are given to car-sharers and drivers of fuel efficient In addition to business travel, we also transport cars, buses powered by biodiesel run to and from products from our manufacturing plants to the local train station, while changing rooms and distributors. In 2006, GSK products were showers are provided for cyclists as well as discounts transported a total of 227 million kilometres – the for bicycle equipment and repairs. We are beginning majority (81 percent) by air freight. We estimate that to use hybrid-engine cars for our chauffeur service. the air freight resulted in 87 million kg of CO2 while ocean and road freight resulted in an additional We encourage employees to use video and 11 million kg of CO2. teleconferencing where possible to reduce air travel. Virtual meeting software is available to employees This year we used the Greenhouse Gas Protocol for for making presentations and collaborative working. all of our calculations of CO2 emissions. We are also In 2006, GSK employees conducted over 5,000 now able to obtain more details about freight video meetings, over 464,000 teleconferences and shipments. With these details we can be more over 5,000 web conferences. precise in our calculations of CO2 emissions from freight transport. Because of these changes we are unable to compare CO2 emissions from transport with previous years. We are still working on obtaining the same level of detail from our passenger air travel.

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Water performance Water consumption In 2006, we used 22 million cubic metres of water, 1.5 percent more than in 2005. In spite of the small increase in water consumption, with the rise in sales, water consumption per Target £ sales was 5.3 percent lower 2010 than in 2005. Our consumption is about average for the industry, based on benchmarking with other major pharmaceutical companies. Baseline Water usage has gone up 2006 mainly due to increased activity at biologicals sites, especially higher vaccines production at Biologicals Belgium. Higher production at manufacturing plants in Ireland and the UK 2005 also required more water. These increases were partly offset by partial closing of one site and small improvements at several sites as a result of water Baseline conservation measures. 2001

0 300 600 900 1200 1500 cubic metres per £ million (sales) Target

Water consumption Year m3 per £ million (sales) 2001 1310.0 2005 999.6 2006 946.2

WATER USE GSK uses water in manufacturing (for processes, products, cooling and cleaning) and for general site uses including drinking, food services and sanitation. Primary supply sites – those that manufacture active pharmaceutical ingredients – are typically heavy users of water, as are sites that manufacture vaccines or produce drinks. Those involved in research and development and commercial activities typically use less. Water is a valuable natural resource that needs to be conserved – especially in areas where there are shortages – and protected from pollution. The GSK water standard requires sites to minimise water use, re-use water whenever feasible and ensure that all wastewater is treated and discharged in a way that minimises adverse environmental impacts. Our target is to reduce water consumption by 2 percent per annum per £ of sales.

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Wastewater performance We generated 10 million cubic Chemical oxygen demand of wastewater metres of wastewater in 2006. The total volume was 6.4 percent less than 2005. This reduction was partly due to changes at several sites including Target a new specialised wastewater 2010 treatment facility at a primary manufacturing plant which removes solvent from the wastewater, closure of some manufacturing operations in another plant and other changes Baseline to wastewater treatment and 2006 product mix. Total chemical oxygen demand (COD) discharged after on-site treatment was 15 million kilograms which was 15 percent 2005 less than in 2005. The reduction in COD per £ sales was 21 percent.

Baseline 2001

0 300 600 900 1200 1500 kilograms per £ million (sales) Target

Chemical oxygen demand of wastewater Year kgper £ million (sales) 2001 1223.7 2005 802.5 2006 632.8

WASTEWATER Most sites discharge wastewater to municipal from ‘domestic’ activity (such as washrooms and treatment facilities. Some large sites, especially canteens). The vast majority of COD comes from primary manufacturing, have their own on-site manufacturing and the contribution from these wastewater treatment systems. Some sites are other activities is not sufficiently significant to permitted to discharge wastewater direct to the sea. warrant the time and effort required to collect the data. This change may result in a decrease in We assess the quality of wastewater by measuring reported COD of up to 5.7 percent. We have the chemical oxygen demand (COD) – the oxygen recalculated prior years’ data so that it is required to chemically oxidise compounds in the comparable. water. The lower the COD, the cleaner the water. Our target from 2006 is to improve COD discharge by 3 percent a year per £ of sales. We have changed COD measurement to concentrate on wastewater from manufacturing processes and exclude sites whose waste is mainly

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WASTE Our research, production and commercial activities Non-hazardous waste all produce waste, which we aim to manage safely Most non-hazardous waste is general material such and responsibly from when it is generated to its final as office waste paper, kitchen waste and non- disposal. We want to eliminate waste where we hazardous substances used in manufacturing. A can, reduce it where we cannot, re-use materials if very small part is biological waste that has been possible, recycle other waste and dispose of any treated so it is not hazardous. We do not include remaining material sensitively. construction and demolition rubble and similar material not related to day-to-day operations, which We generate different kinds of waste in different we describe separately as non-routine waste. parts of the business: We continue to look for ways to reduce waste and • production – hazardous wastes such as solvents have undertaken waste management reviews at and other chemicals many sites. Our new target is to reduce non- • R&D and quality laboratories – small amounts hazardous waste per £ of sales by 1 percent per of chemicals including products and annum. intermediates, as well as broken glassware and Hazardous waste plastics More than 93 percent of our hazardous waste • offices – paper and other standard commercial consists of solvents that are used in production waste processes. We also dispose of some lubricants and fluorescent lights, while research waste includes • renovations take place in production, office and animal carcasses. lab space which produce non-routine waste such as obsolete equipment, office furniture Regulations vary widely around the world, but our and structural materials first choice for solvents is to re-use or recycle material. When this is not possible the main disposal Most of the active ingredients in our pharmaceutical option for solvents is incineration. We aim to recover products are manufactured using chemical energy from incineration wherever possible. processes. This means that a significant proportion of our waste is classified as hazardous because it contains solvents and chemicals used in these Hazardous waste disposed processes. We classify waste as hazardous, non- hazardous, and non-routine (for waste such as construction and demolition rubble). Baseline 2006 Most production facilities segregate their wastes, re-use what they can, send what they can for recycling, and incinerate or landfill anything else. Incineration is usually the preferred choice for dealing with solvents that can’t be reused or 2005 recycled. Where practicable, sites use waste management companies which use incinerators that recover energy from burning the materials. We require disposal contractors to comply with our Baseline 2001 EHS requirements and local regulations. Sites audit their waste contractors or hire consultants to carry out the audits. 0 500 1000 1500 2000 2500 3000 kilograms per £ million (sales) We continue to work on reducing waste, especially Target hazardous waste. Improving material efficiency will reduce waste, especially the number and volume of Hazardous waste disposed solvents. We have set a target to increase material Year kgper £ million (sales) efficiency of new products going from R&D to 2001 2850.1 manufacturing to 2 percent. 2005 2917.3 In the past, some waste and chemicals handling 2006 2871.1 practices contaminated land and groundwater. These practices are no longer followed, however we Most hazardous waste comes from primary are continuing to clean up these sites to deal with production activity, and this is where we concentrate health and environmental hazards. our efforts. We have stopped collecting hazardous GSK and its heritage companies have spent more waste data from consumer manufacturing plants, then £100m cleaning up more than 50 sites in the laboratories, offices and most secondary manufac- US over the last 20 years. We are continuing to clean turing sites. These sites produced about 3 percent up 25 of these sites. Most of them are waste of our hazardous waste in the past. disposal sites where GSK is one of several We have not set a target for reduction of hazardous responsible parties. These figures are not included waste. Our target to improve material efficiency is in the data verification. geared to accomplish reductions in hazardous waste.

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Waste performance In 2006, we generated Non-hazardous waste disposed 234 million kilograms of hazardous waste and 114 million kilograms of non-hazardous waste. We recycled 244 million Target kilograms of waste (168 million 2010 kilograms of hazardous and 76 million kilograms of non- hazardous). That represents 70 percent of the total generated (excluding non- routine waste.) The proportion Baseline of waste recycled was 2 percent 2006 lower than in 2005. We disposed (via landfill or incineration) of 67 million kilograms of hazardous waste and 38 million kilograms of 2005 non-hazardous waste. The total hazardous waste disposed was 5.5 percent higher than 2005. Adjusted for the rise in sales it was 1.6 percent lower. Baseline Hazardous waste was mostly solvents (94 percent), the rest 2001 being general site waste. We incinerated over 99 percent of hazardous waste disposed, 0 500 1000 1500 2000 2500 3000 with energy recovered from 42 percent of this. kilograms per £ million (sales) Target Total non-hazardous waste was 8.7 percent lower than in 2005. The amount disposed per £ of sales decreased by 15 percent over the year. Of the non- Non-hazardous waste disposed hazardous waste generated, Year kgper £ million (sales) we sent 19 percent to landfill. 2001 2610.7 2005 1901.8 2006 1620.0

Recycling We recycle hazardous and non-hazardous waste, Two sites in India have stopped land filling their coal aiming to minimise environmental impacts as well ash generated on site; instead they sell it as raw as the cost of materials and waste. material for the production of construction material. The largest waste component is solvent which has In addition, three nutritional-drink manufacturing been used in the manufacturing process. Some sites send some of their process wastes (barley husk) solvent is purified on our sites and reused in the for animal food while others recycle canteen waste original manufacturing process. Sometimes we sell or effluent treatment plant sludge by converting it the solvent to commercial reprocessing companies, into bio-compost. which we also include in the recycling statistics. The data table on page 72 includes additional Solvent which is not recycled in this way is usually details about waste such as amounts of hazardous incinerated. and non-hazardous waste that go to recycling, Recycling non-hazardous waste such as paper, landfill and incineration and the amount of non- cardboard, glass, plastic or aluminium, usually routine waste. means sending it for reprocessing so it can be reused to make new products.

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Ozone depletion performance Ozone depletion potential Total ozone depletion potential (ODP) from production of inhalers and from equipment was 23.5 thousand kilograms, 56.5 percent lower than 2005 (based on estimates for Target emissions from equipment). 2010 Ozone depletion potential estimated from equipment and production losses per £ of sales was 61.8 percent lower than 2005. Baseline CFC 11 and CFC 12 are contained 2006 in 163 pieces of equipment, amounting to 16,137 kilograms of CFC. Over 4 thousand items of equipment contain other ozone depleting substances with the ODP of 7,315 kilograms 2005 of CFC 11 equivalent. We estimate that 2.75 percent or 645 kilograms CFC 11 equivalent were released from the equipment (using an estimation Baseline factor from the British Refrigeration Association). 2001

0246810 kilograms per £ million (sales) Target

Ozone depletion potential Year kgper £ million (sales) 2001 9.2 2005 2.7 2006 1.0

OZONE DEPLETION The ozone layer is essential to human survival The chart refers to ODS lost from production because it filters out harmful ultra-violet (UV) rays activities and equipment leakage. See data table on from the sun. It has been damaged by ozone page 72 for information about patient use of depleting substances (ODSs), mainly chlorofluoro- inhalers. carbons (CFCs), hydrochlorofluoro-carbons (HCFCs) We are installing new equipment which will help us and halons. meet our target of eliminating CFCs from Our main use of ODSs in the past was as the equipment and product use by 2010, apart from propellant gas in metered dose inhalers (MDI) for halon fixed fire protection systems and equipment asthma sufferers. The gas is released when patients containing under one kilogram of CFC. use the inhalers and a small amount escapes during In 2006, 186 thousand kilograms of CFC propellant production. In the past we used CFCs but have been were released when patients used our products. switching to hydrofluoro-carbons (HFCs) and dry A much smaller amount – 22.8 thousand kilograms powder technology which does not require a – were released during production of inhalers and propellant. HFCs do not deplete the ozone layer but we estimate that 645 kilograms CFC 11 equivalent do contribute to global warming. were emitted from equipment. We also use ODSs in some cooling systems and for other ancillary uses at GSK facilities. We have switched to using HFCs, ammonia and hydrocarbons. Ammonia does not contribute to either ozone depletion or global warming and hydrocarbons have a small global warming impact.

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Equipment and production Metered dose inhalers ODSs – mainly HCFCs – are sealed inside cooling Metered dose inhalers (MDIs) are commonly used systems and are only released in the event of a leak to deliver the main forms of treatment for asthma or during maintenance. sufferers. They are pressurised, hand-held devices that use propellants to deliver doses of medication The only way to eliminate emissions is to eliminate to patients’ lungs. They were first introduced in the CFC and HCFC from cooling systems and that is our 1950s and CFCs were traditionally used as the new strategy. propellant because they are non-toxic, non-reactive, In 2006 we carried out an inventory of all CFC and non-flammable, and do not have any odour or HCFC containing equipment and will repeat the taste. exercise in the first quarter of 2007 and annually so When a patient uses the MDI, the propellant is we can monitor the decrease in the CFC content. In released into the atmosphere. The Montreal 2007 we will also collect data on HFCs. Protocol bans the production of CFCs but it exempts We recognise that there is also a risk of catastrophic a number of ‘essential uses’ which include MDIs. failure of equipment and larger releases, until we Nevertheless we plan to eliminate the use of CFCs eliminate these chemicals. We are focusing from our worldwide product portfolio by 2010. attention on the larger pieces of equipment to We have stopped using CFCs in the US and the remove them from service before the end of 2010. European Union. We now offer a selection of We do not intend to replace equipment containing alternatives to ODS-containing inhalers in most 1 kilogram or less because these are typically countries. The main alternative propellant we use is hermetically sealed and less likely to leak. HFC 134a, which does not affect ozone but does We no longer collect data on losses from equipment have high global warming potential, although it is as we are concentrating on eliminating the less than CFCs. We have also invested heavily in dry equipment rather than controlling the releases. For powder delivery systems that do not use CFCs or comparison to prior years we have estimated that HFCs. 2.75 percent of the total amount of CFC and HCFC We will continue to manufacture CFC MDIs in India, is lost from the remaining equipment. The ODP China and Pakistan and will use subcontractors to chart shows the emissions from producing inhalers produce CFC devices for the Bangladesh and Latin and the estimated emissions from equipment. Last America market until 2010. Our target is to year we reported 2985 kg released based on losses eliminate all CFCs by then. during equipment failures and replacements. Ozone depletion potential from patient use of metered dose inhalers was 32 percent lower than in 2005. In previous years we only had this information from the US and EU. We now have data from India, Pakistan and China and have calculated the decrease from all CFC inhalers that we produce. As production of CFC-containing MDIs decreases, the amount of CFC lost during production also declines. Total ozone depletion potential from production was 55 percent lower than 2005.

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Control of volatile organic Volatile organic compound emissions compound emissions at the GSK Cork site VOCs arise from many of the processes at Cork, where we use solvents such as dichloro- methane, ethyl acetate and Target ethanol. 2010 The introduction of the UK Air Pollution Act in 1987 led to a focus on control and elimination of solvent emissions and we carried out a complete review Baseline of all points of emission. 2006 All solvent emissions from reactions, vacuum pump discharges, centrifuges, pressure filters and tanks are collected through a site-wide system and 2005 passed into two high temper- ature incinerators. They operate at 1100ºC and destroy all organic vapours with an efficiency greater than 99.99 percent.

Baseline Emissions from the incinerator stacks are continuously 2001 monitored for VOC residues, carbon monoxide, sulphur oxides, nitrogen oxides and 0 50 100 150 200 250 300 350 for hydrogen halides. This incineration operation is kilograms per £ million (sales) regarded as the best available Target technology for efficient destruction of VOCs and prevention of emissions of these substances to atmosphere. Volatile organic compound emissions Control of VOC at Ulverston Year kgper £ million (sales) The manufacture of two intermediate stages in the 2001 321.3 antibiotic, cefuroxime axetil 2005 231.6 uses solvents including 2006 180.5 dichloromethane (DCM) and tetrahydrofuran (THF). In 2006, GSK approved a project to install a carbon adsorption unit to remove VOCs from these process stages. Carbon adsorption technology was VOLATILE ORGANIC selected as the methodology to reduce VOC emissions because COMPOUNDS the technology offers a robust, We use volatile organic compounds (VOCs) mainly Our target from 2006 is to reduce VOCs by industry standard abatement as solvents in our primary manufacturing operations 2 percent per annum per £ of sales. Improvements solution and represents best and R&D pilot plants. Solvents are also used to coat in VOC emissions in 2006 were due to several available technology. some tablets and in cleaning for sterile operations. projects at primary manufacturing sites to capture Existing vents to air will be We also use small quantities in laboratories but do fugitive emissions, changes in production and redirected to the carbon not measure emissions from this use. changes in the way VOC emissions are calculated in adsorption Unit where they will be adsorbed on an activated alignment with local regulations. VOCs react with nitrogen oxides in the presence of carbon bed. The system operates sunlight, creating ozone in the lower atmosphere. Photochemical ozone creation potential was continuously and uses steam regeneration to remove This results in smog, which is a factor in human 19.8 percent lower than in 2005. adsorbed solvents which will be respiratory illness. Workplace exposure to certain We have changed the way we measure VOCs to recovered at the site by an VOCs can also pose a health risk. exclude the small quantities from laboratories, existing solvent recovery unit for re-use in the process. In 2006, we released 4.2 million kilograms of VOCs estimated to be 3 percent of total VOC emissions in to the atmosphere. This was 16 percent lower than prior years. We have recalculated VOC emissions in This project will remove 30 to in 2005. Emissions per £ of sales were 22 percent prior years to make them comparable. 40 tonnes per annum of DCM releases to air and 130 to lower than in 2005. 150 tonnes per annum of THF. The site will also save an estimated £100k per annum from the recovery and re-use of these solvents.

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Independant verfication/assurance statement

www.sgs.uk.ltd

SGS United Kingdom Ltd’s report on Environment, Health and Safety data in the GlaxoSmithKline Environment, Health and Safety (EHS) Report for 2006.

Nature and Scope of the Verification/Assurance SGS United Kingdom Ltd was commissioned by GlaxoSmithKline to conduct an independent assurance of their 2006 EHS Report. The scope of the assurance, based on the SGS Sustainability Report Assurance methodology, included 2006 Environment and Health & Safety performance data and graphs, contained in pages 46 to 49 and 52 to 69 of this report and in the accompanying table on pages 72 to 74. Data relating to contaminated land pages 65 and health and safety data relating to non-GSK employees (page 47) were not included in this assurance process. Financial data drawn directly from independently audited financial accounts has not been checked back to source as part of this assurance process. The information in the EHS Report of GlaxoSmithKline and its presentation are the responsibility of the directors and the management of GlaxoSmithKline. SGS United Kingdom Ltd has not been involved in the preparation of any of the material included in the EHS Report. Our responsibility is to express an opinion on the data, graphs and relevant statements within the scope of verification. The SGS Group has developed a set of protocols for the Assurance of Sustainability Reports based on current best practice guidance provided in the Global Reporting Initiative Sustainability Reporting Guidelines (2002) and the AA1000 Assurance Standard (2003). The data in this report has been assured using our protocol for content veracity. The assurance comprised a combination of interviews with relevant employees; evaluation of data collection and submission methodologies, documentation and record review and validation with external bodies and/or stakeholders where relevant. Six sites were visited (in UK, USA, Belgium, Italy and Singapore) and a further eight sites were contacted by telephone (in UK, USA, Ireland, India and Australia). The sites selected included those submitting high proportions of key data and included all parts of the GSK business. Additionally visits were made to the Corporate Head Quarters and web-conferencing with key individuals was utilised in order to complete our verification activities. Statement of Independence and Competence The SGS Group of companies is the world leader in inspection, testing and verification, operating in more than 140 countries and providing services including management systems and service certification; quality, environmental, social and ethical auditing and training; environmental, social and sustainability report assurance. SGS United Kingdom Ltd affirm our independence from GlaxoSmithKline, being free from bias and conflicts of interest with the organisation, its subsidiaries and stakeholders. The assurance team was assembled based on their knowledge, experience and qualifications for this assignment, and comprised auditors registered with IRCA, IEMA and EMAS Verifiers. Verification/Assurance Opinion On the basis of the methodology described and the verification work performed, we are satisfied that the data contained within the GlaxoSmithKline 2006 EHS Report is reliable and provides a fair and balanced representation of GlaxoSmithKline’s EHS activities in 2006. We believe that GlaxoSmithKline has chosen an appropriate level of assurance for this stage in their reporting.

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Independant verfication/assurance statement

Key areas for improvement to data collection, submission and manipulation were identified as follows: • Definitions for data to be submitted were not always fully understood or adhered to consistently at site level; • Estimations are used to calculate certain data and further guidance could be provided to sites to ensure that such calculations are approached consistently; • Establish a more rigorous process to check entered data for anomalies, such as data entered in error, or missed data; • Consider incorporation of an internal audit of data and data management systems alongside corporate EHS audits; • Ensure training is undertaken when key individuals are replaced to ensure consistency and full understanding of systems and requirements; • Ensure that, when sites submit data, comments are included to explain estimations, calculations and any significant changes; • Ensure that the process used to extract data from electronic systems is used consistently and appropriately to enable the correct values to be obtained by all individuals utilising the system.

Key areas for improvement in data verification process were identified as follows: • Ensure that all relevant data is available and internally checked in advance of external verification process.

For and on behalf of SGS United Kingdom Ltd

Pauline Earl Business Manager Systems and Services Certification

27 February 2007

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Global warming potential 1. Global warming potential Metric 2006 2005 2004 2003 2002 2001 (GWP) from energy sources is calculated as CO2 or CO2 equivalent using Energy use the Greenhouse Gas (GHG) Energy for operations Protocol developed by the World Resources Institute (million gigajoules) 19.0 19.2 18.9 20.0 20.0 20.7 and the World Business Natural gas 9.00 8.66 8.68 9.44 9.71 9.86 Council for Sustainable Fuels 1.08 1.53 1.53 1.43 1.07 1.42 Development. Coal 0.47 0.63 0.56 0.64 0.95 1.04 2. GWP from air, land and sea transport is calculated Steam imported 0.22 0.19 0.17 0.17 0.06 0.28 using the GHG protocol Electricity imported 8.19 8.21 7.98 8.31 8.27 8.10 from distance travelled, not directly from fuel used. Global Warming Potential (CO2 equivalent) In years before 2006, GWP from operations1 we did not collect all energy(million kilograms) 1,666.1 1,692.5 1,665.5 1,749.8 1,734.0 1,824.5 categories of freight transport or employee Natural gas 453.0 435.9 437.1 475.4 488.6 496.5 business travel. Fuels 81.1 114.0 113.0 104.0 76.9 102.0 In 2006 we are missing Coal 22.0 29.3 25.9 29.8 44.1 48.3 group air travel that originated outside of UK. Steam imported 15.0 14.3 11.5 11.6 9.4 38.7 Motor vehicle travel Electricity imported 1095.1 1099.5 1078.0 1128.9 1114.5 1138.5 conversion assumes medium vehicles for sales employees and heavy GWP from transport2 (million kilograms) 339.9 233.0 206.0 178.0 180.0 123.0 diesel vehicles for freight Sales force 136.1 102.0 78.0 70.0 75.0 33.0 transport. Air travel 105.5 112.0 114.0 95.0 92.0 71.0 3. GWP from refrigerants released from equipment Product logistics 98.3 19.0 14.0 13.0 13.0 19.0 is calculated using factors from the Kyoto protocol. GWP from other production We have changed from collecting data on releases activities (million kilograms) 400.7 607.8 665.2 723.5 1,082.8 1,385.2 of refrigerants to Inhaler production losses 283.4 420.3 491.9 539.1 857.4 1219.0 collecting data on the Equipment containing greater amount of refrigerant 3 contained in the than 1kg refrigerant 6.99 46.82 46.66 50.20 64.38 58.43 equipment and calculating CO2, Methane and Nitrous Oxide 36.29 48.42 54.64 54.90 71.50 57.13 the releases using a factor Waste treatment 46.40 76.40 56.86 52.56 44.86 47.06 from British Refrigeration Association for probable Other sources 27.32 15.86 15.09 26.76 44.61 3.58 leakage. We calculate releases only from GWP from use of inhalers refrigeration equipment 4 holding greater than one by patients (million kilograms) 4,335 - - - - - kilogram refrigerant. CFC 11 inhalers 197 - - - - - 4. GWP from ozone CFC 12 inhalers 1,083 - - - - - depleting substances in HFC 134a inhalers 3,055 - - - - - inhalers uses factors from the Kyoto protocol. We did not have enough Water use and discharge information to calculate Water (million cubic metres) 22.0 21.6 20.8 23.0 24.2 26.8 GWP from inhaler use in previous years. Municipal 12.73 12.77 12.72 13.03 14.23 15.12 Water Wells or boreholes 8.95 8.59 7.96 9.88 9.98 11.60 5. Water from other sources Other Water5 0.302 0.289 0.137 0.072 0.014 0.037 includes recycled sources.

Wastewater volume6 (million cubic metres) 10.2 10.9 11.4 11.5 11.9 13.1 WW to recycling 0.58 0.43 0.91 0.42 0.42 0.20 WW to municipal sewer 3.74 3.85 3.86 3.74 3.65 3.76 WW to water bodies 5.88 6.63 6.62 7.35 7.88 9.17

COD after on-site treatment6,7 (million kilograms) 14.7 17.4 18.9 21.6 22.3 25.1 COD in recycled water <.01 <.01 <.01 0.90 1.98 <.01 COD to sewer 2.93 3.60 4.45 4.77 4.42 3.91 COD to water bodies 11.77 13.80 14.50 16.01 15.94 21.17

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Wastewater Metric 2006 2005 2004 2003 2002 2001 6. In 2006 we changed the wastewater calculations to include wastewater and Volatile organic compound emissions chemical oxygen demand only from the major Volatile organic compound emissions8 contributors; primary (million kilograms) 4.2 5.0 5.3 6.2 6.4 6.6 operations, pilot plants, POCP from total VOC emissions9 1.29 1.60 1.74 2.11 2.14 2.10 and coating and sterile operations. We recalculated data for previous years so Top five solvents released (million kilograms) they can be compared. Acetone 1.02 1.15 1.11 1.30 1.46 1.23 7. Chemical oxygen demand (COD), a measure of water Dichloromethane 0.84 0.88 0.95 1.13 1.25 1.72 pollution, from manufact- Methanol 0.44 0.71 0.66 0.92 0.76 0.73 uring processes is measured when the wastewater leaves Ethanol 0.42 0.44 0.51 0.32 0.28 0.26 our sites, following any on- Isopropanol 0.25 0.18 0.23 0.26 0.22 0.35 site treatment. Volatile organic compounds 8. In 2006 we changed 10 Ozone depleting substances calculation to include ODS Releases from VOC only from the major production (thousand kilograms) 22.8 51.0 59.0 71.5 120.8 183.5 contributors; primary operations, pilot plants, CFC11 releases from production 6.9 14.1 12.6 27.0 52.4 88.5 and coating and sterile CFC12 releases from production 15.9 36.9 46.3 44.5 68.3 94.9 operations. We recalcul- ated data for previous years so they can be compared. ODS Releases from 9. In addition to kilograms of equipment (thousand kilograms) 0.65 2.99 2.66 2.59 6.81 4.32 VOC emitted, we calculate photochemical ozone CFC11 releases from equipment 0.42 1.62 0.93 0.30 2.70 0.56 creation potential (POCP) CFC12 releases from equipment 0.02 0.21 0.31 0.32 0.40 0.33 in kilograms ethylene equivalents. Conversion Other ODS from ancillary equipment 0.20 1.15 1.41 1.97 3.71 3.42 to ethylene equivalents is based on the European Chemical Industry Council ODS Releases from patient use (CEFIC) “Responsible Care of inhalers11 (thousand kilograms) 185.6 272.5 HSE Reporting Guidelines” CFC11 from patient use 51.85 76.15 for VOCs (1998). CFC12 from patient use 133.72 196.38 Ozone depleting substances 10. Ozone depletion potential (ODP) from ozone depleting ODS contained in substances is calculated 12 using factors from the Kyoto equipment (thousand kilograms) 23.4 protocol. 11. In previous years we did not Waste generated and disposed have information about inhalers produced in Asia for 13,14 Hazardous waste generated emissions from patients’ use. (million kilograms) 234.3 253.4 251.6 291.0 312.8 345.9 12. In the previous years we did Hazardous waste recycled 167.65 190.23 182.19 234.86 255.09 287.5 not have information on the Hazardous waste disposed 66.68 63.19 69.40 56.13 57.74 58.40 ODS amount contained in equipment. Hazardous waste incinerated with Waste energy recovery15 28.06 28.78 35.47 25.83 27.56 27.76 13. We consider a waste to be Hazardous waste incinerated with hazardous if it is radioactive, no energy recovery 38.18 33.41 32.54 28.81 28.06 27.82 bioengineered or biohazardous, or it has any Hazardous waste to landfill 0.44 1.00 1.38 1.50 1.93 2.82 of the properties defined by the 1989 Basel Convention. This includes flammability, Non-hazardous waste generated explosivity, water or air (million kilograms) 113.7 125.0 149.3 134.6 135.3 132.8 reactivity, corrosivity, Non-hazardous waste recycled 76.06 83.82 103.99 90.63 85.61 79.34 oxidising potential, acute or chronic toxicity, ecotoxicity Non-hazardous waste disposed 37.63 41.19 45.29 43.97 49.66 53.49 or infection. Biological Non-hazardous waste incinerated waste rendered non- hazardous after treatment is 15 with energy recovery 8.90 9.18 7.76 8.34 8.43 5.92 considered a non-hazardous Non-hazardous waste incinerated waste. with no energy recovery 7.09 8.28 10.07 6.23 9.40 12.05 Non-hazardous waste to landfill 21.64 23.73 27.45 29.40 31.83 35.52

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14. In 2006 we changed calculation to include Metric 2006 2005 2004 2003 2002 2001 hazardous waste only from the major

contributors; primary 16 operations, pilot plants, Non-routine waste generated and coating and sterile (million kilograms) 34.9 77.5 34.9 26.1 29.8 25.1 operations. We Non-routine waste recycled 16.86 39.97 6.80 2.59 14.17 16.86 recalculated data for previous years so they Non-routine waste disposed 18.02 37.54 6.68 23.49 15.66 18.02 can be compared. Non-routine waste incinerated 15. Incineration with energy with energy recovery 2.55 7.46 0.14 0.17 0.03 2.55 recovery means burning Non-routine waste incinerated with the material and using no energy recovery 0.66 0.37 0.08 1.88 0.15 0.66 the resulting energy. Non-routine waste to landfill 14.81 29.71 6.46 21.45 15.49 14.81 16. Non-routine waste includes construction and demolition rubble and is Estimated costs and investments not included in hazardous or non-hazardous waste Operations and maintenance calculation. cost (million £) 33.6 39.1 43.0 39.0 47.3 41.4 Injury & illness Capital investment (million £) 9.7 12.1 9.4 11.0 18.5 24.4 17. The health and safety data cover both our employees Injury and illness – GSK employees17 and contract workers who are directly supervised by Hours worked (millions) 194.7 196.6 195.0 201.8 203.7 191.1 GSK employees. We report Fatalities 3 1 2 5 3 5 a snapshot of the injury 18 and illness performance Number of injuries with lost time 552 547 519 567 638 751 for the year. Cases may be Calendar days lost – injuries19 11,281 11,080 12,748 12,344 14,077 16,268 added later but we do not Number of illnesses with lost time18 94 77 91 95 116 133 correct prior years. Calendar days lost – illnesses19 4386 2518 2959 1377 5342 5304 18. Lost time injuries and Number of injuries without lost time20 443 437 430 784 955 1079 illnesses are work-related 20 injuries and illnesses that Number of illnesses without lost time 282 267 354 529 378 315 are serious enough to result in one or more days away from work. Injury and illness – non GSK employees (not verified by SGS) Hours worked (millions) 22.8 22.8 20.6 19.8 20.5 17.0 19. Lost calendar days are the calendar days that Fatalities 0 2 1 4 1 0 employees could not work Number of injuries and illnesses because of work-related with lost time 114 100 84 63 71 69 injuries and illnesses, including weekends. This Calendar days lost 965 1575 1369 883 1069 754 helps to provide a measure Number of injuries and illnesses of the severity of injuries without lost time 373 275 293 199 238 1 and illnesses. 20. Reportable injuries and illnesses without lost time are reported incidents that did not result in time away from work (lost time). They are more serious than first aid but generally less serious than lost time.

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Our work with communities We make donations of money, medicines, time and equipment to support under-served communities around the world. The focus of this investment is on programmes that are relevant to our business and the skills of our people – improving healthcare and education. Full details of our criteria for giving support are available on gsk.com.

e believe that using some of our profits to Our total community investment also includes Awards in 2006 benefit under-served communities is part £46 million ($86 million) in cash grants and During 2006, we received: Wof being a responsible company. It also £15 million ($28 million) in management costs. • A World Business Award supports our business by: from the International GSK is a member of the UK’s Percent Club for Chamber of Commerce, • demonstrating our commitment to tackling companies which donate at least 1 percent of their the United Nations healthcare and education challenges pre-tax profits to charitable causes. In 2006 GSK Development Programme was listed sixth in the UK’s Guardian Giving List and the Prince of Wales • making our employees feel proud to work for which listed FTSE 100 companies by the percentage International Business Leaders Forum for our lymphatic GSK of pre-tax profits contributed to charitable causes filariasis elimination • improving our reputation with stakeholders during 2005. For the fifth year in a row we were the programme biggest overall giver in the value of our donations. Community investment is not linked to short term • The Excellence in Corporate business benefits and is not intended to create We belong to the UK’s London Benchmarking Philanthropy Award from commercial markets for GSK. Group (LBG) and the Committee Encouraging the US based Committee Corporate Philanthropy (CECP) in the US. We report Encouraging Corporate Philanthropy (CECP) Donations are made at group level to support our donations in line with CECP guidelines which disease prevention and increase healthcare capacity value our medicines at wholesale acquisition cost, as • The Frost and Sullivan 2006 in developing countries, and by individual GSK sites with other pharmaceutical companies. Wholesale Global Excellence Award in to support local communities. Malaria Prevention and acquisition cost is the wholesale list price, not Treatment In 2006, our total community investment was including discounts. • The Star Business valued at £302 million ($558 million), equivalent to Method of giving (£ million) Commitment to Education 3.9 percent of pre-tax profits. Award from the Philadelphia Education Fund Our objective is to ensure that projects are Management Cash 46.2 sustainable in the long term and will continue once costs 15.2 •A Global Health Award for our funding comes to an end. Most of our Leadership and Scientific Inkind 3.0 Excellence from the New York community investment is made through non-profit Academy of Sciences organisations that are experts in the field of healthcare and education. This helps ensure our • A ‘Platinum Ounce’ Award from the Russian pharma- giving is targeted effectively at the communities that ceutical industry for GSK need it most. Russia leadership in Multi- Coloured Lives project

VALUE OF COMMUNITY INVESTMENT Product 237.4 In 2006, GSK donations were valued at £302 million Breakdown of cash giving (%) ($558 million) compared to £380 million ($691 million) in 2005. This is equivalent to 3.9 percent of Environment 2 Other 12 pre-tax profits compared to 5.6 percent in 2005. Art and The introduction of a new Medicare prescription culture 4 Health 44 drug benefit in the US in 2006 meant fewer patients requested help through our Patient Assistance Programs. As a result we donated medicines worth £200 million ($370 million) to low-income patients in the US compared to £255 million ($464 million) in 2005. In addition we made £22 million ($41 million) of humanitarian product donations for under-served communities around the world and donated albendazole tablets valued at £16 million ($29 million) for the lymphatic filariasis elimination Education 38 programme.

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INVESTMENT IN GLOBAL PUBLIC HEALTH INITIATIVES The greatest contribution we can make to In 2006, we donated 155 million albendazole healthcare in developing countries is through treatments (2005: 136 million), worth £16 million research into new treatments and vaccines and ($29 million) valued at wholesale prices, to preferential pricing that makes life-saving medicines 34 countries. We have donated almost 600 million more affordable. treatments since 1998. Two new countries joined the programme in 2006. However, we can also help to address barriers to access to medicines through our investment in In 2006, we also gave £1.0 million ($1.9 million) in community health programmes. grants to support the Global Alliance to Eliminate LF. We donate money, medicines and expertise to Several countries are starting to integrate the LF support initiatives to improve healthcare and to raise programme with other neglected tropical disease awareness about disease prevention in developing prevention initiatives, extending the benefits for countries. public health. Zanzibar, for example, is taking an integrated approach by distributing treatments for We focus on five major programmes in the two other parasitic diseases schistosomiasis developing world: (bilharzia) and onchocerciasis (river blindness) • We are a founding member of the Global alongside LF treatments. Alliance to eliminate lymphatic filariasis (LF or Each country aiming to eliminate LF must treat all at- elephantiasis) risk people with two drugs (albendazole and • Positive Action is our programme to reduce diethylcarbamazine or Mectizan®) once a year for stigma and improve capacity for HIV and AIDS at least five years. So far, Egypt, several Pacific Island prevention and treatment countries, Sri Lanka, Zanzibar and Togo have completed five annual mass drug administrations. • Our African Malaria Partnership is supporting Mobilising for Malaria, an advocacy initiative to Now these countries will monitor their populations generate political commitment and funding to and evaluate the impact of the programme on the combat malaria, in addition to behaviour disease. In 2006, the Bill and Melinda Gates change initiatives Foundation donated $11.7 million for operational research to help them do this evaluation. An • PHASE is our education programme to prevent assessment conducted in Egypt showed that LF has diarrhoea-related disease through hand been eliminated in most areas of the country. washing In 2006, GSK and the Global Alliance received a • We also donate essential antibiotics and other World Business Award from the International products in response to humanitarian disasters Chamber of Commerce for the LF programme. and to support basic healthcare provision in impoverished communities (Mectizan is a registered trademark of Merck & Co.) These initiatives are all delivered in partnership with Future challenges non-profit organisations, in 2006 we made the Sub-Saharan Africa presents a significant challenge following progress. as many countries have yet to commence LF elimination programmes due to lack of funding and Eliminating lymphatic filariasis (LF) health infrastructure. Those countries that have We are donating our medicine albendazole for started LF programmes need additional resources the global programme to eliminate LF to enable them to scale up to reach their full at-risk (www.filariasis.org). LF is a disfiguring disease populations. An additional challenge will be the prevalent in tropical countries, which is transmitted integration of LF programmes with interventions for by mosquitoes. It can lead to severe swelling of the other neglected tropical diseases which may involve arms, legs, breasts and genitals and thickening of co-administration of albendazole with other the skin. LF is one of the world’s leading causes of medicines. permanent disability with more than one billion people in 80 countries (over 15 percent of the Positive Action on HIV and AIDS world’s population) at risk of infection. Our Positive Action programme, set up in 1992, supports the communities most affected by HIV and The global programme led by the World Health AIDS. It aims to strengthen the capacity of Organization (WHO) and the governments of the community organisations providing HIV and AIDS endemic countries aims to eliminate LF by 2020 by prevention, education and healthcare services. A key treating the one billion people at risk. We have area of focus is to reduce stigma and discrimination committed to donate free of charge as many doses (a major barrier to controlling HIV and AIDS) and to of albendazole, our anti-parasitic drug used to increase the number of people coming forward for prevent transmission of LF, as are needed to do this. testing and treatment. It recognises that involving We expect this to require billions of tablets. A team people affected by HIV and AIDS is key to controlling of GSK employees helps the Global Alliance in its the HIV pandemic. advocacy, research, community mobilisation and education initiatives. During 2006 we supported 19 Positive Action programmes running in 17 countries.

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Activities in 2006 included: will scale up national HIV prevention efforts. This is Asia operating in ten countries, with high HIV prevalence Asia is at tipping point – research suggests there – Ukraine, Russia, China, India, Kenya, Nigeria, may be a catastrophic HIV and AIDS epidemic in the Botswana, Rwanda, Belize and Jamaica. region if disease prevention and treatment efforts For information on our preferential pricing do not improve. Access to HIV therapies and arrangements for HIV and AIDS medicines, see page knowledge about how to use them correctly is 22. critical to effective treatment. In partnership with the American Foundation for AIDS Research GSK’s African Malaria Partnership (amfAR), Positive Action is supporting TREAT Asia, Our African Malaria Partnership has supported a network of clinics, hospitals, research institutions education and behaviour change initiatives in eight and patient support organisations helping African countries, through partnerships with NGOs communities prepare for new treatment such as Freedom from Hunger, the African Medical programmes being launched in the region. This and Research Foundation (AMREF) and Plan includes community projects in China, Cambodia, International. Since 2003, we have invested Thailand and Vietnam and the creation of a regional £0.9 million ($1.7 million) targeting approximately advocacy network. two million people. We have fostered effective prevention and prompt treatment, particularly India has surpassed South Africa as the country with among young children and pregnant women, who the most HIV infections in the world. Positive Action are the most vulnerable to malaria. Our funding for is supporting Freedom from Hunger’s Reach India these initiatives has now come to an end, but our project which aims to tackle cultural and social support will have a long-term positive impact in the factors that expose women in rural India to HIV. target communities. Reach India is using self help groups (an established and respected means for women to access However the scale of the malaria problem requires information and support) to educate women about a significantly bigger response. We have given a HIV and AIDS. It will reach 500,000 women and £0.9 million ($1.7 million) grant, over three years, to their three million family members over three years, support Mobilising for Malaria, an advocacy and train local organisations in delivering education initiative to generate greater awareness, political projects. commitment and sustained funding to combat the disease. In 2006, national Coalitions Against Malaria Mexico were launched in the UK, Belgium, France, Ethiopia 2006 was the second year of our project with the and Cameroon bringing together advocates and International HIV and AIDS Alliance and Colectivo activists from the public sector, NGOs, the media, Sol in Mexico, to reduce stigma and discrimination the private sector and the political, academic and associated with HIV and AIDS. Thirteen community scientific communities. organisations which help people living with HIV and AIDS (including gay men, sex workers and drug GSK won the Frost and Sullivan 2006 Global users) have joined the project. Colectivo Sol is Excellence Award in Malaria Prevention and helping them to identify the impact of stigma on Treatment. The judges noted that GSK ‘has made HIV transmission and access to services, then work facing the challenge of malaria a key corporate to address this through advocacy with the media, responsibility issue, using its core business skills and local police and health services and government. resources, as well as philanthropic community programs, to contribute to global efforts to tackle Africa this disease’. We have committed £1 million ($1.9 million) over three years to strengthen and integrate HIV and Personal Hygiene And Sanitation AIDS treatment into general healthcare clinics in Education (PHASE) Kenya. This will enable patients to avoid the stigma Every year more than two million people die of of visiting a dedicated HIV clinic and will help diarrhoea-related disease, mostly children in doctors to provide ongoing services to people developing countries. These deaths can often be diagnosed with HIV. Positive Action is now working easily prevented through better hand washing and with 70 clinics (over a third of the sites currently sanitation. offering ARV treatment in Kenya) to identify the PHASE is helping to reduce diarrhoea-related most successful approaches to improving take-up disease by encouraging school children to wash of ARV treatment. their hands. We established PHASE in 1998 and Global since then we have invested over £1.7 million We sponsored the Global Village – the community ($ 3.1 million) into the programme. exhibition and workshop area – at the International PHASE is run in partnership with AMREF, Plan AIDS 2006 conference held in Toronto, Canada. This International and Save the Children – as well as highlighted key issues for affected communities and Ministries of Health and Education in each of the stimulated dialogue and networking among the countries. global community. Around 20,000 people attended. We are also supporting a project with the International Council of AIDS Service Organizations (ICASO) to boost community-based advocacy which

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Our approach to donations The programme has had impressive results. For OUR INVESTMENT INTO medicines example, evaluation data from a sample of PHASE GSK follows the World Health schools in Nicaragua over a four year period show Organization Interagency LOCAL PROGRAMMES Guidelines for Drug Donations. that the frequency of hand washing after using the We support a wide range of health and education These state that donations toilet among pupils in participating schools initiatives in the communities where we operate. should be: increased five-fold, and the proportion of children Donations are made centrally and by our sites in • made in response to an reporting diarrhoea in a two week period fell from response to local needs. expressed need over 40 percent to just 13 percent. Below are just a few examples of the many • sent with prior consent In Bangladesh, which joined in 2005, PHASE has community partnerships we supported in our major •labelled correctly been implemented in 64 schools reaching 38,000 regions in 2006: children so far. It has been integrated into the School • have a minimum one-year Health and Nutrition Programme of Save the Supporting Health shelf life Children (our PHASE partner in Bangladesh). Europe We do not donate medicines In addition to our long-term support for the ‘Hole for diseases which require a PHASE was extended to Mexico and Tajikistan in the Wall’ children’s camps in Barretstown, Ireland continuous, assured supply. during 2006 and now operates in eight countries. and L’Envol, France we are giving £300,000 We are an active member of the The total number of children reached by PHASE is ($555,000) each to programmes in five European Partnership for Quality Medical now estimated to be 375,000. countries to improve children’s healthcare. Donations (PQMD), an alliance of pharmaceutical companies Future challenges The other major country programmes are: and charities that encourages We plan to launch PHASE in Kibera, Kenya – Africa’s best practice in the donation largest slum. This will be the first time PHASE has • Italy – Reading for Growing, a reading aloud and delivery of medicines. operated in an informal settlement, creating a programme for children with neuro-functional model for improving children’s health in one of the disabilities hardest urban communities. • Romania – Beacon of Hope, a palliative care Multi-Coloured Lives in Russia Humanitarian relief programme for children We support Multi-Coloured Lives GSK donates essential products, such as antibiotics, • Slovakia – Change in Advance, a disease to help improve the quality of to help relief efforts in disaster areas and support prevention programme for children on urban life of disabled children in Russia. basic healthcare provision in impoverished housing estates The programme brings together communities. the Regional Charity Community • Spain – Children’s Shelters, providing healthcare Foundation, the Government of Donations are made at the request of governments for homeless and abandoned children Moscow and GSK Russia. Six and major charitable organisations and may be thousand children aged 9 to manufactured specifically for these partners. This • Russia – Multi-Coloured Lives. See sidebar. 12 years old with limited health capabilities are taking part. enables charities to hold a range of medicines in International stock so they can respond promptly in an Multi-Coloured Lives is using We support major public health initiatives to tackle emergency. We work in partnership with several community-based communi- HIV and AIDS, lymphatic filariasis, malaria and cations such as TV, magazines, relief charities including AmeriCares, Direct Relief, diarrhoea-related diseases in developing countries. workshops, schools liaison and InterChurch Medical Assistance, MAP International exhibitions to educate and and Project HOPE. In addition we are funding country-specific gradually change individuals‘ programmes, each with a grant of £200,000 perceptions of disabled people. Activity during 2006 ($370,000), over three years. During 2006 we donated life-saving medicines GSK Russia received a ‘Platinum Our other country programmes in our international Ounce’ Award for its leadership worth £22 million ($41 million) valued at wholesale in Multi-Coloured Lives from the prices, to support relief efforts and community region include: Russian pharmaceutical industry. healthcare in 99 countries. • Brazil – Attituda Positiva, uses drama in schools Requests for our medicines are sometimes made to to educate teenagers about HIV and good help people affected by conflict. This can be reproductive health controversial and requires careful management. We • Philippines – Pinoy Health Pass, Family Health seek to ensure equitable treatment in our approach, and Well Being that provides health education directing our commitment to support health needs for families on low incomes and the provision of long term support, and to work with our partners to get essential drugs to doctors, UK patients, clinics and hospitals. In 2006 GSK supported over 100 charitable organisations in the UK. This included over For example, in 2006 we made four shipments of £580,000 ($1.1 million) to support medical research our medicines to support people displaced by the by Asthma UK, the British Retinitis Pigmentosa conflict in Lebanon. This was in response to specific Society, Deafness Research UK and the Muscular requests by our humanitarian aid partners. We Dystrophy Campaign. provided supplies of Augmentin, Amoxil, Zinacef, Zantac and Lanoxin valued at over £216,000 ($400,000), with the products being handled by our partners, AmeriCares, IMA and Direct Relief.

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Other donations to support health charities Vietnam midwives included: Since 2004, we have been • The Princess Royal Trust for Carers ‘Out of Since 1998 the GSK France Foundation has supporting a unique training programme based in Tu Du Hospital’ initiative – a donation of £209,000 supported 77 programmes in 13 countries. These Hospital, Ho Chi Minh City, ($387,000) over 3 years to develop guidelines focus on people living with HIV and AIDS in Vietnam. The project is training and support for GPs and hospitals working with developing countries and aim to improve healthcare 500 birth attendants to provide carers through prevention, education and training. During maternal healthcare services in 2006, 23 new programmes were implemented in rural villages. The project aims to • Myasthenia Gravis Association – a donation of six countries with grants of £469,000 ($868,000). reduce childbirth complications £524,000 ($969,000) over three years to and decrease newborn fatality provide specialist nurses for people suffering The GSK Foundation Canada focuses on hospice from the unacceptably high level from Myasthenia Gravis, a chronic auto- care, helping terminally ill patients and their families. of 6 percent. immune neuromuscular disorder The Foundation also supports community Supported by Tu Du medical and programmes in Africa, including AIDS Orphans nursing staff, and housed within • The Down’s Syndrome Association ‘Shifting Uganda, a three-year programme building a residential training centre built Perspectives’ – £100,000 ($185,000) to support by GSK, the trainees spend four community support for vulnerable children in the a photographic exhibition showing that people months gaining practical Luweero District, working with African Medical with Down’s Syndrome can lead full, rewarding knowledge of maternal and Research Foundation (AMREF). and semi-independent lives child healthcare. Over 350 midwives have now graduated The North Carolina GSK Foundation in the USA is Our IMPACT Awards recognise community with a government-recognised an endowed, self-funding organisation. It supports organisations whose work has significantly qualification. Each midwife has initiatives in the areas of mathematics, science and been equipped with a medical improved health. Each year we award £275,000 health education in North Carolina. In 2006, this pack and some are provided ($509,000) to a range of healthcare charities, Foundation awarded grants totalling £1.4 million with a motor scooter to assist selected by a panel of judges. In 2006 Hartlepool ($2.5 million). access to remote areas. Families First was judged the overall winner for its work in bringing health services to deprived areas of Crisis Open Christmas Hartlepool in a refitted double-decker bus. Crisis Open Christmas offers much needed support for 1,500 US homeless people across London We are increasing our support for the Zone Health SUPPORTING EDUCATION during the festive season. In School Obesity programme run by the North GSK supports education in the UK and US with a 2006, we supported Crisis in the Carolina Prevention Partners, following a pilot particular emphasis on making science more following ways: programme that successfully reached 8,000 relevant to young people and supporting • Donations of food and children. professional development for science teachers. clothing from GSK employees The programme provides elementary, middle and Our education programmes help to increase the • A donation to the Christmas high schools in North Carolina and Philadelphia with card challenge campaign, pool of potential future employees by encouraging instead of sending corporate a learning model to encourage healthy weight young people to pursue science careers. Christmas cards through nutrition, education and exercise. A new component of the programme will include distance Science education in the UK • A donation of £24,000 to cover the operating costs of learning. Puppets: Talking Science•Engaging Science is a new initiative launched in 2006 and sponsored by GSK, their mobile medical service that visits the Crisis centres The other programmes we support in the US which uses puppets to increase children’s include: understanding of science. • The Children’s Health Fund’s Referral Research by the Nuffield Foundation found that Management Initiative (RMI) which helps high- when teachers used puppets in science lessons the risk and homeless children receive the specialist children treated them as if they were real characters. medical care they need The puppets engaged the pupils in helping them to • We recognise excellence in community solve science problems. As a result the children healthcare in the Philadelphia area through our talked more about science which increased their US GlaxoSmithKline IMPACT Awards. Each year understanding of the subject. This was particularly up to ten non-profit organisations receive noticeable among low achieving children and those £22,000 ($40,000) each to help them continue who did not normally speak in lessons. Typical their work remarks included ‘It’s like talking to a group of friends not a teacher’ and ‘I understand much better Foundations with the puppets’. GSK does not operate a single charitable foundation for its community investment programmes, but has We have invested over £480,000 ($888,000) to country-based foundations in Canada, Czech train 9,000 teachers in 4,500 UK primary schools to Republic, France, Italy, Romania, Spain and North use the puppets effectively in science lessons. Carolina in the US. Our local foundations support a Schools will also receive a book of science based wide range of charities and healthcare initiatives. stories, an animated CD and two hand held puppets. In each story the two puppets are faced with a problem with a science theme, and ask the children to help them solve it.

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In 2006 we announced funding for the CREST  EMPLOYEE INVOLVEMENT Investigators education project. This programme will be run in partnership with the British Association We encourage employees to contribute to their for the Advancement of Science to provide science local communities as volunteers. This benefits the activities and awards for after school clubs in community and our employees who gain new primary schools. By 2010, we aim for 5,000 schools experiences and skills. and 55,000 children to be taking part. Hundreds of employees give their time to good Our support for INSPIRE (INnovative Scheme for causes through our Days of Caring in the US, and Post-doctoral researchers In Research and to support school science education through our Education), enables post-doctoral researchers to UK Science and Engineering Ambassador Scheme spend half their time in specialist science schools and US Partnership for Educational Discovery. and to gain a Post-Graduate Certificate in Education In the UK and US we make cash donations to (PGCE). charities where employees have done voluntary Education in the US work. In 2006: We are a founding partner of the Institute for a • The GSK Investment in Volunteer Excellence Competitive Workforce, a business coalition run by (GIVE) programme gave £183,000 ($339,000) the US Chamber of Commerce to improve to 365 charities in the US where employees or educational standards through partnerships their partners volunteered at least 50 hours between business and education providers. • Our Making a Difference programme We are working with the National Board of provided grants of £225,000 ($416,000) to Professional Teaching Standards (NBPTS) by over 380 charities where employees providing scholarships and an endowment of volunteered £541,000 ($1.0 million) to increase the number of science teachers who are National Board Certified. In many countries we encourage employees to So far we have focussed on North Carolina donate money to charity by matching the money and Philadelphia but will now be expanded to all they give or by providing tax-efficient ways for them 50 states. to make a donation, in accordance with local taxation guidelines. We support a range of local education initiatives in the US to help engage young students in science. In 2006 in the US, GSK matched donations Examples include: by employees and retirees at a value of £2.7 million ($5 million). In addition, GSK gave £703,000 • Science in the Summer, a free ($1.3 million) to match donations by GSK programme in Philadelphia, giving employees through the annual GSK and United children the chance to participate in Way campaign. hands-on experiments and science courses • We have been a major sponsor of the University of North Carolina’s travelling science laboratory, Destiny, since its inception in 1999. Destiny serves approximately 100 under-served secondary schools and reaches 4,000 students per year

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Data summary

2002 2003 2004 2005 2006 Access to medicines Number of countries supplied with preferentially priced ARVs1 50 56 57 56 51 Number of preferentially priced Combivir and Epivir tablets shipped (millions)1 7.9 15.9 67.1 126.3 86.3 Number of generic ARVs supplied by GSK licencees (millions) ––––120 GSK Combivir not-for-profit price ($ per day)2 1.7 0.65 0.65 0.65 Voluntary licences granted to generic manufacturers for GSK ARVs (cumulative total) 6 7 8 Value of products donated through GSK Patient Assistance Program in the US (£ millions) 112 125 203 255 200

Research and development Expenditure on R&D (£ billions) 2.9 2.8 2.9 3.1 3.5 GSK animal research facilities accredited by the Association for Assessment 7 7 10 10 103 and Accreditation of Laboratory Animal Care Number of trials published on the GSK Clinical Trial Register (cumulative total) – – 143 2,125 2,7604

Ethical conduct Number of managers completing certification to the GSK Code of Conduct 700 9,000 9,600 >12,000 >12,000 Number of contacts through our ethics compliance channels5 2,580 3,644 5,363

Employment Women in management grades (%) 32 34 35 35 36 Ethnic diversity – minorities (US, %) 19 19.5 19.5 19.6 19.8 Ethnic diversity – ethnic minorities (UK, %) – – 15.5 16.8 18.3 Lost time injury and illness rate (cases per 100,000 hours worked) 0.34 0.30 0.30 0.30 0.33

Environment Number of contract manufacturers audited 16 28 35 41 36 Energy consumption (million gigajoules) 20 20 19 19 19 Water consumption (million cubic metres) 24 23 21 21 22 Ozone depletion potential from metered dose inhalers (tonnes CFC-11 equivalent)6 1,500 782 464 273 186 Ozone depletion potential from production (tonnes CFC-11 equivalent) 121 72 59 51 23 Ozone depletion potential from refrigeration and other ancillary uses 73331 (tonnes CFC-11 equivalent) Volatile organic compound emissions (thousand tonnes)7 66554 7 Global warming potential from energy sources (thousand tonnes CO2 equivalent) 1,734 1,750 1,666 1,693 1,666 Hazardous waste disposed (thousand tonnes)7 58 56 69 63 67

Community investment Total community investment expenditure (£ millions) 239 338 328 380 302 Value of humanitarian product donations, including albendazole (£ millions) 24 116 57 41 38 Number of albendazole tablets donated for prevention of lymphatic filariasis (millions) 66 94 67 136 155

1. Includes ARVs sold at not-for-profit and discounted prices. We are unable to collect data for the number of patients treated. 2. Includes delivery costs. The Médecins Sans Frontières pricing report lists the average cost of generic equivalents. 3. This covers 91% of animals used in GSK facilities. In 2005 we had 14 animal research laboratories. In 2006 we closed a laboratory in Japan, aquired laboratories in Croatia and Canada, and established contracts to use laboratories in Singapore and the US, making a current total of 17 GSK laboratories where we use animals. 4. 98% of trials completed since the merger which created GSK. 5. Includes contacts with line managers, compliance officers, our confidential Integrity Helplines or offsite post office box (in the US). 6. 2002 to 2004 data do not include inhalers made in Asia. 7. We have changed the way we calculate these data and the previous years’ data reflect this change. See full environmental report for details.

Trademarks Brand names appearing in italics throughout this publication are trademarks either owned by and/or licensed to GSK or associated companies.

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