Claremont McKenna College Roberts Environmental Center

2006 Roberts Environmental Center Pacific Sustainability Index Scores Pharmaceuticals Sector

J. Emil Morhardt Elgeritte Adidjaja Holly E. Allen-Young William M. Ellison Claire Fowler Esbenshade Christopher David Frantz Kira Elizabeth Gaza Ina Hanna Labermeier Emery L. Mitchem James H. Vanden Bos Elliott Vander Kolk

Price: $20.00 Claremont McKenna College Roberts Environmental Center

Contents Page Publications from Roberts Environmental Center

The Roberts Environmental Center publishes analyses of Company Rankings 3 corporate environmental and social reports—together called sustainability reports—on the web and in special The Pacific Sustainability Index in a Nutshell 4 reports.

Visual Cluster Analysis 5 We also write books about environmental and sustainability reporting, the first of which is Clean, Green, Environmental Intent Element of the PSI Scores 6 and Read All Over: Ten Rules for Corporate Environmental and Sustainability Reporting, available Environmental Reporting Element of the PSI Scores 7 from ASQ Press, and publish articles in academic technical journals. Social Intent Element of the PSI Scores 8 Existing sector reports available online at Social Reporting Element of the PSI Scores 9 www.roberts.mckenna.edu:

Environmental Scores Ranking 10 2006 Pharmaceuticals 2006 Chemicals Social Scores Ranking 11 2006 Electronics, Semiconductor, and Peripherals 2006 Metals, Mining, and Crude Oil Production Use of Environmental Indicators 12 2006 Colleges and Universities 2005 Forest and Paper Products Use of Social Indicators 13 2005 Consumer Food, Food Production, and Beverages 2005 Energy and Utilities Relationship between overall PSI Score and 14 2004 Motor Vehicles and Parts Companies' Economic Indicators 2004 Petroleum Refining 2004 Electronics Use of Voluntary Guidelines and Partnerships 16 2004 Chemicals 2004 Pharmaceuticals Analysts’ Comments, alphabetically listed by 17 company name To order printed copies of this report, please contact:

Roberts Environmental Center, Claremont McKenna 22 Dr. J. Emil Morhardt, Director College, and The Claremont Colleges Roberts Environmental Center Claremont McKenna College 925 N. Mills Avenue Claremont, CA 91711-5916 USA

909-621-8190, Fax 909-607-1185 [email protected]

Front Cover Photo: Joint Science Department Biology Lab (REC)

The goal of corporate report analysis conducted by the Roberts Environmental Center is to acquaint students with environmental and social issues facing the world’s industries, and the ways in which industry approaches and resolves these issues. The data presented in this report were collected by student research assistants and a research fellow at the Roberts Environmental Center. Copyright 2006 © by J. Emil Morhardt. All rights reserved. www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 2 Claremont McKenna College Roberts Environmental Center

2005 Fortune Global 500 and Fortune 1000 Pharmaceuticals Corporate Environmental and Sustainability Reporting

During the past decade, large corporations have begun to report voluntarily on the PSI Overall Grading environmental issues affecting their companies and on how they deal with them. The addition of social issues to these reports has resulted in some firms designating them sustainability reports. A+ Bristol-Myers Squibb (U.S.) Some firms produce these reports yearly, others only occasionally, and some not at all. We A (U.S.) obtain these reports and any additional information exclusively from corporate web sites. A- AstraZeneca (Britain) This report covers the largest 30 companies in the Pharmaceuticals sectors of the 2005 Fortune Global 500 and the Fortune 1000 lists, whether or not they produced formal environmental A- Johnson and Johnson (U.S.) or sustainability reports. It is based on all environmental and social information available on their A- (U.S.) web sites during the period of our analysis. After we finished analyzing the companies' reports, B+ Eli Lilly (U.S.) we provided a draft sector report online to allow companies to review their score and provide comments. The quality of the environmental and social reporting was characterized by students B+ GlaxoSmithKline (Britain) at the Claremont Colleges using the Roberts Environmental Center’s Pacific Sustainability Index B Novartis (Switzerland) (PSI). B Roche Group (Switzerland) Analysis period: 10/20/2005 through 12/6/2005 B (U.S.) Draft sector report available for review: 3/30/2006 through 5/1/2006 B Sanofi-Aventis (France) Pharmaceuticals B Merck (U.S.) B- (U.S.) Company PSI Rankings C+ Schering-Plough Corporation

Bristol-Myers Squibb (U.S.) Abbott Laboratories C+ (U.S.) AstraZeneca D+ Genzyme (U.S.) Johnson and Johnson D (U.S.) During the past decade,Pfizer large corporations have begun affecting their companiesEli Lilly and on how they deal with them. D Chiron (U.S.) The addition GlaxoSmithKlineof social issues to these reports has resulted in some firms designating them “sustainability reports.” D Forest Laboratories (U.S.) Novartis Some firms produce these reports yearly, others only D IVAX (Teva Pharmaceutical) occasionally, andRoche some Group not at all. We obtain these reports and any additional informationAllergan exclusively from corporate (Israel) web sites. Sanofi-Aventis D- Watson Pharmaceuticals This report covers all ofMerck the companies in the energy and (U.S.) utilities sectors of the 2005 Fortune Global 500 and all Wyeth energy companies from the Fortune 1000 list, whether or D- Idec Inc. (U.S.) Schering-Plough Corporation not they produced formal environmental or sustainability D- NBTY (U.S.) reports. It is based onAmgen all environmental and social information availableGenzyme on their web sites during the period of D- Laboratories (U.S.) our analysis fromGilead October Sciences 20, 2004 through April 18, 2005, D- (U.S.) including annual reportsChiron and, for American companies, 10- K forms. We extended the period of our analysis by incorporatingForest feedbacks Laboratories received from companies from MayIVAX 20,2005 (Teva Pharmaceutical)through June 15, 2005. The quality of the environmentalW atson Pharmaceuticals and social reporting was characterized by students at theBiogen Claremont Idec Inc. Colleges using the Roberts Environmental Center’sNBTY Pacific Sustainability Index (PSI). Mylan Laboratories King Pharmaceuticals

0 255075100

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 3 Claremont McKenna College Roberts Environmental Center

The Pacific Sustainability Index (PSI) in a Nutshell*

The PSI Scoring System What do we mean by performance?

The Pacific Sustainability Index (PSI) uses two systematic Topics analyzed in the reporting and performance categories are questionnaires to analyze the quality of the sustainability reporting—a identical. The performance category is used to measure the performance base questionnaire for reports across sectors and a sector-specific of the reported environmental performance (EP) or social performance questionnaire for companies within the same sector. The selection of (SP) indicators. The maximum score for each topic in the performance questions is based on the most frequently-mentioned topics in over 500 category is two points: corporate sustainability reports analyzed from 2002 through mid-2005 at the Roberts Environmental Center. - Quantitative topics get one point if there is a positive data trend and another point if data are shown to be better than peer average. An The philosophy of the PSI is described in detail in our book, Clean, additional point is awarded if the company is clearly taking a leadership Green, and Read All Over published by and available from the American position for the sector, or if the data are at maximum performance (e.g. Society for Quality Press**. The selection of PSI topics is constantly 100% recycling rate, 0 emissions, 0 injuries). adapted to include topics discussed in the world’s best sustainability reports, raising the bar for better sustainability reporting in the future. - Qualitative topics get one point if there is a discussion on the benefits or advantages from the program, another point if the program is continuously being monitored or improved by the company and another How do we collect our data? when the company is a leader or role model as evidenced by external recognition or awards. Relevant English web pages are downloaded from the main corporate website for analysis. Our scoring excludes data independently stored - Philosophical topics get one point if the company subscribes to at outside the main corporate web site. When a corporate subsidiary has least one internal or external social program that deals with a particular its own sustainability reporting, partial credit is given to the parent issue (e.g. Company's own code of conduct or Global Compact), another company when a direct link is provided in the main corporate web site. point when there is an active (action required) program or policy the company uses to enforce this principle such as a compliance mechanism, zero-tolerance ruling for non-compliance, external auditor, whistleblower What does the score mean? program, certification program, etc., and another point if the company Although our scoring uses a uniform scoring guideline, analysts’ explicitly states that these guidelines or principles are being followed. subjectivity plays a role in judging the transparency and comprehensiveness of a particular topic. what is the weight of each category in the What do we mean by intent? overall PSI Scores? Scores for intent include discussion of the environmental intent (EI) or The pie diagram below shows the weight of each category in the overall social intent (SI) topics including vision, policies, and management PSI score. The weight for each category is based on the proportion of strategies. In some industries, discussion of procedures, mitigation the maximum possible PSI scores of all questions in a category. measures, and goals are also included in the intent category.

What do we mean by reporting? EI SP Scores for reporting reflect presentation in the report of data on 8% specific environmental reporting (ER) and social reporting (SR) 15% indicators, but not on the quality of performance—they indicate ER transparency in reporting independent of success in making 25% improvements. SR 22% The maximum score for each topic in the reporting category is three points. In each category, one point is assigned when there is a mention SI EP of the topic: 13% 17% - Topics that should have quantitative information get two points if the discussion includes numerical data and an additional point if historical data are presented. - Qualitative topics get two points if there is a discussion a program or policy the company uses to implement the program and another point if there is a discussion on the benefits or advantages from the program Key: EI (Environmental Intent), ER (Environmental Reporting), EP - Philosophical topics get two points if there is a discussion about (Environmental Performance), SI (Social Intent), SR (Social the company’s position on the ideology and another point if the Reporting), and SP (Social Performance). company subscribes to at least one internal or external social program or policy that deals with this particular issue (e.g. the company's own *PSI scoring sheets are available on our web site code of conduct, the Global Compact.) **http://www.qualitypress.asq.org/perl/catalog.cgi?item=H1145

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 4 Claremont McKenna College Roberts Environmental Center

Visual Cluster Analysis Visual cluster analysis multivariate data of the sort produced by the PSI is difficult to summarize. Here we have created radar diagrams of the performance of each company analysed in the sector by its environmental and social intent, reporting, and performance. Maximum scores will match the outer sides of the hexagon which total up to 100 percent.

EI = Environmental Intent, ER = Environmental Reporting, EP = Environmental Performance SI = Social Intent, SR = Social Reporting, SP = Social Performance

ER ER ER ER ER 100 100 100 100 100

75 75 75 75 75

EI 50 EP EI 50 EP EI 50 EP EI 50 EP EI 50 EP

25 25 25 25 25

0 0 0 0 0

SI SP SI SP SI SP SI SP SI SP

SR SR SR SR SR Bristol-Myers Abbott Laboratories AstraZeneca Johnson and Pfizer Squibb Johnson ER ER ER ER ER 100 100 100 100 100

75 75 75 75 75

EI 50 EP EI 50 EP EI 50 EP EI 50 EP EI 50 EP

25 25 25 25 25

0 0 0 0 0

SI SP SI SP SI SP SI SP SI SP

SR SR SR SR SR Eli Lilly GlaxoSmithKline Novartis Roche Group Allergan

ER ER ER ER ER 100 100 100 100 100

75 75 75 75 75

EI 50 EP EI 50 EP EI 50 EP EI 50 EP EI 50 EP

25 25 25 25 25

0 0 0 0 0

SI SP SI SP SI SP SI SP SI SP

SR SR SR SR SR Sanofi-Aventis Merck Wyeth Schering-Plough Amgen Corporation ER ER ER ER ER 100 100 100 100 100

75 75 75 75 75

EI 50 EP EI 50 EP EI 50 EP EI 50 EP EI 50 EP

25 25 25 25 25

0 0 0 0 0

SI SP SI SP SI SP SI SP SI SP

SR SR SR SR SR Genzyme Gilead Sciences Chiron Forest Laboratories IVAX (Teva Pharmaceutical) ER ER ER ER ER 100 100 100 100 100

75 75 75 75 75

EI 50 EP EI 50 EP EI 50 EP EI 50 EP EI 50 EP

25 25 25 25 25

0 0 0 0 0

SI SP SI SP SI SP SI SP SI SP

SR SR SR SR SR Watson Biogen Idec Inc. NBTY Mylan Laboratories King Pharmaceuticals Pharmaceuticals

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 5 Claremont McKenna College Roberts Environmental Center

Pharmaceuticals Environmental Intent Element of the PSI Scores

Environmental Intent Topics Distribution of Environmental Intent Scores * A. Company Profile This diagram shows the average percent of total possible score for each subcategory for all companies in the sector. 1 Company financials 2 Products, services, brands, and markets 3 Divisions, facilities, and activities 4 Report contact person A. Company Profile * B. Vision 60 5 Environmental Visionary statement 50 6 Environmental impediments and challenges 40 30 7 Commitment to minimize consumption 20 8 Commitment to minimize environmental impacts 10 * C. Policy D. Management 0 B. Vision 9 Environmental policy statement 10 Climate change or global warming policy 11 Habitat/ecosystem conservation policy 12 Biodiversity policy 13 Green purchasing 14 Environmental goals C. Policy 15 Supplier screening based on environmental performance 16 Environmental education 17 Voluntary memberships in internal or external environmental standards or rating organization 18 Voluntary environmental certifications * D. Management 19 Environmental organization and strategy 20 Environmental management system 21 Environmental accounting, business case for following such a vision environmental intent Subcategories 22 Voluntary environmental initiatives including donations and grants A. Company Profile 23 Stakeholders, consultation with, on environmental issues Does the company describe the nature of its business, its sphere of 24 Stakeholders, external, use of environmental information from influence, and include contact information. 25 Stakeholders, internal, use of environmental information from B. Vision Notes: How clearly does the company report its environmental vision, * These numbers correspond to the numbers in the PSI questionnaire. challenges faced by the industry, commitments to minimize consumption, Items with numbers higher than 99 are sector specific questions. and environmental impacts? C. Policy Has the company clearly stated its policies to address global environmental issues and internal environmentally-responsible business practices? D. Management How clearly does the company describe its environmental management, accounting, and dealings with its stakeholders?

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 6 Claremont McKenna College Roberts Environmental Center

Pharmaceuticals Environmental Reporting Element of the PSI Scores Environmental Reporting Topics Distribution of Environmental Reporting Score * A. Energy This diagram shows the average percent of total possible score for each subcategory for all companies in the sector. 26 Energy used 27 Energy used, from renewable sources 28 Electricity consumption 102 Energy produced from renewable resources A. Energy 60 B. Water * 50 29 Water used H. Materials usage 40 B. Water 30 * C. Recycling 20 30 Waste recycled 10 F. Management and 0 C. Recycling 31 Hazardous waste recycled Misc. 32 Office recycling rate

* D. Waste E.iii. Emissions to D. Waste 33 Waste produced water 34 Waste disposed of 35 Hazardous waste produced E.i. Emissions to air 36 Hazardous waste disposed of 109 Packaging materials waste Distribution of Environmental Performance Scores 110 Waste water released This diagram shows the average percent of total possible score for each subcategory for all companies in the sector. * E.i. Emissions to air 37 Hazardous waste released 112 Carbon dioxide (CO2) 114 Volatile organic carbon (VOC) A. Energy 118 Carbon monoxide (CO) 20 119 Ozone depleting substances H. Materials usage 15 B. Water

121 Nitrogen oxides (NOx) 10 123 Particulate matter 5 127 Sulfur oxides (SOx) F. Management and 0 C. Recycling * E.iii. Emissions to water Misc. 129 Suspended solids, total (TSS) 130 Chemical Oxygen Demand (COD) 131 Biochemical Oxygen Demand (BOD) E.iii. Emissions to water D. Waste * F. Management and Misc. 38 Environmental notices of violation E.i. Emissions to air 39 Environmental expenses and/or investments 40 Environmental fines Environmental Reporting Subcategories 41 Protection & enhancement of natural environment A-E. Energy, Water, Recycling, Waste, Emission to Air * H. Materials usage Does the report include discussions on these environmental indicators, 145 Hazardous material used such as efforts to reduce impacts and minimize consumption, with its 147 Life Cycle Analysis (LCA) monitoring and performance data? 148 Packaging materials used F. Management and Misc. Notes: * These numbers correspond to the numbers in the PSI questionnaire. Does the report include environmental expenses, investments, fines, and Items with numbers higher than 99 are sector specific questions. penalties, and efforts to enhance the natural environmental beyond what the law requires?

Notes: * These numbers correspond to the numbers in the PSI questionnaire. Items with numbers higher than 99 are sector specific questions.

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 7 Claremont McKenna College Roberts Environmental Center

Pharmaceuticals Social Intent Element of the PSI Scores

Social Intent Topics Distribution of Social Intent Topics * A. Vision This diagram shows the average percent of total possible score for each subcategory for all companies in the sector. 42 Social visionary statement 43 Social impediments and challenges 44 Commitment to minimize staff turnover B. Policy * A. Vision 45 Social policy statement 50 45 46 Social goals 40 47 Code of conduct or business ethics 35 30 48 Code of conduct compliance monitoring 25 20 49 Supplier screening based on social performance 15 50 Sustainable society 10 5 0 * C. Management 51 Social organization and strategy 52 Demographic nature of the workforce 53 Social organization and strategy C. Management B. Policy 54 Third party validation of environmental and sustainability report 55 Social initiatives, including donations and grants 56 Stakeholders, external, use of social information from 57 Stakeholders, internal, use of social information from Notes: * These numbers correspond to the numbers in the PSI questionnaire. Items with numbers higher than 99 are sector specific questions.

Social Intent Subcategories A. Vision How clearly does the company discuss its social vision, challenges faced by the industry, and commitments to minimize staff turnover?

B. Policy Has the company clearly stated its policies to address social issues faced by the management, employees, suppliers, and surrounding communities? C. Management How clearly does the company describe its employee demographics, programs, and organizational communications?

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 8 Claremont McKenna College Roberts Environmental Center

Pharmaceuticals Social Reporting Element of the PSI Scores

Social Reporting Topics Distribution of Social Reporting Scores * A. Human Rights Topics This diagram shows the average percent of total possible score for each subcategory for all companies in the sector. 58 Business ethics / Anti-Corruption practices A. Human Rights 59 Corporal punishment of employees Topics 60 Equal opportunity/Elimination of Discrimation 70 61 Free association and collective bargaining of employees 60 50 62 Compensation of employees 40 30 63 Forced labor of employees 20 64 Working hours 10 0 65 Use of illegal child labor

* B. Qualitative Social Topics C. Quantitative Social B. Qualitative Social 66 Community Development Topics Topics 67 Employee satisfaction 68 Community Education 69 Customer health and safety Distribution of Social Performance Scores 70 Employee health and safety This diagram shows the average percent of total possible score 153 Animal testing standard for each subcategory for all companies in the sector. 154 Access to health care A. Human Rights * C. Quantitative Social Topics Topics 71 Customer satisfaction 14 12

72 Employee voluntarism 10 73 Compliance with code of business conduct 8 6

74 Incident Case Rate - TICR 4 75 Lost Workday Case Rate - LWCR 2 0 76 Health and safety citations 77 Health and safety fines C. Quantitative Social B. Qualitative Social 78 Employees, females in management Topics Topics 79 Employees, women and minorities in management 80 Employment for individuals with disabilities 81 Social community investment 82 Employees, trained Social Reporting Subcategories 157 Training, hours per number of employees A. Human Rights Performance 160 Employment, minorities Does the report include a particular human rights ideology along with the company’s position on the issue, a company-wide policy, a Notes: reinforcement program, and a discussion of how the company is * These numbers correspond to the numbers in the PSI questionnaire. measuring progress on these issues? Items with numbers higher than 99 are sector specific questions. B. Qualitative Social Performance Does the report include discussion on social topics along with the company’s policies, rationale, monitoring program, and leadership as evidenced by external recognition and awards?

C. Quantitative Social Performance Does the report include the how the company views, monitors, and improves quantifiable social data, such as level of employee satisfaction, proportion of women employee, or incident rates.

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 9 Claremont McKenna College Roberts Environmental Center

Environmental Intent Scores Ten Highest Ranked Scores Environmental Intent Bristol-Myers Squibb Johnson and Johnson A+ Bristol-Myers Squibb Abbot t Laborat ories Eli Lilly A+ Johnson and Johnson AstraZeneca Allergan A+ Abbott Laboratories Merck Roche Group A Eli Lilly Pfizer Wy et h A AstraZeneca Amgen GlaxoSmithKline A- Allergan Schering-Plough Corporat ion Novart is B+ Merck Sanof i-Avent is Genzyme B+ Roche Group IVAX (Teva Pharmaceut ical) Mylan Laborat ories B+ Pfizer King Pharmaceut icals Forest Laborat ories B+ Wyeth Biogen Idec Inc. Gilead Sciences Environmental intent scores include topics about the firm’s Chiron NBTY products, environmental organization, vision and commitment, Watson Pharmaceut icals stakeholders, environmental policy and certifications, 0255075100environmental aspects and impacts, choice of environmental performance indicators and those used by the industry, Environmental Reporting Scores environmental initiatives and mitigations, and environmental goals and targets.

Bristol-Myers Squibb Wy et h Environmental Reporting Abbot t Laborat ories GlaxoSmit hKline Allergan A+ Bristol-Myers Squibb Roche Group Pfizer A- Wyeth AstraZeneca A- Abbott Laboratories Novart is Sanof i-Avent is A- GlaxoSmithKline Eli Lilly Johnson and Johnson A- Allergan Merck Schering-Plough B+ Roche Group IVAX (Teva Pharmaceut ical) Gilead Sciences B+ Pfizer Amgen Genzyme B+ AstraZeneca NBTY King Pharmaceut icals B+ Novartis Forest Laboratories Biogen Idec Inc. B+ Sanofi-Aventis Chiron Wat son Pharmaceut icals Mylan Laborat ories Environmental reporting scores are based on the degree to which the company discusses its emissions, energy sources 0255075100and consumption, environmental incidents and violations, materials use, mitigations and remediation, waste produced, and water used. They also include use of life cycle analysis, environmental performance and stewardship of products, and Environmental Performance Scores environmental performance of suppliers and contractors. Environmental Performance Bristol-Myers Squibb Abbot t Laborat ories Allergan A+ Allergan Eli Lilly AstraZeneca A+ Bristol-Myers Squibb Wy et h Pfizer A+ Abbott Laboratories Johnson and Johnson B+ Eli Lilly GlaxoSmit hKline Sanof i-Avent is B+ AstraZeneca Roche Group Novart is B+ Wyeth Merck IVAX (Teva Pharmaceut ical) B+ Pfizer Schering-Plough Corporat ion Forest Laborat ories B Johnson and Johnson Biogen Idec Inc. Genzyme B- GlaxoSmithKline King Pharmaceut icals Chiron B- Sanofi-Aventis NBTY Watson Pharmaceut icals Mylan Laborat ories Environmental performance scores are based on whether or not Gilead Sciences the firm has improved its performance on each of the topics Amgen discussed under the heading of environmental reporting, and on 0255075100whether the quality of the performance is better than that of the firm’s peers. Scoring for each topic is one point if performance is better than in previous reports, two points if better than industry peers, three points if both. www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 10 Claremont McKenna College Roberts Environmental Center

Social Intent Scores Ten Highest Ranked Scores

Abbot t Laborat ories Social Intent Bristol-Myers Squibb Amgen GlaxoSmithKline A+ Abbott Laboratories Johnson and Johnson Pfizer A+ Bristol-Myers Squibb Eli Lilly Sanof i-Avent is A Amgen Roche Group Novart is A GlaxoSmithKline AstraZeneca Merck A- Johnson and Johnson Schering-Plough Corporat ion Allergan A- Pfizer Wy et h Chiron A- Novartis Biogen Idec Inc. Forest Laborat ories A- Roche Group Gilead Sciences Genzyme A- Sanofi-Aventis King Pharmaceut icals NBTY A- Eli Lilly Watson Pharmaceut icals Mylan Laborat ories Social intent scores include topics about the firm’s financials, IVAX (Teva Pharmaceut ical) employees, safety reporting, social management organization, 0255075100social vision and commitment, stakeholders, social policy and certifications, social aspects and impacts, choice of social performance indicators and those used by the industry, social initiatives and mitigations, and social goals and targets. Social Reporting Scores Social Reporting

Abbot t Laborat ories Bristol-Myers Squibb A+ Abbott Laboratories GlaxoSmithKline AstraZeneca A- Bristol-Myers Squibb Eli Lilly Johnson and Johnson A- GlaxoSmithKline Novart is Merck A- AstraZeneca Pfizer A- Eli Lilly Roche Group Sanof i-Avent is B+ Johnson and Johnson Amgen Schering-Plough Corporat ion B+ Novartis Genzyme Wy et h B+ Merck Allergan Gilead Sciences B+ Pfizer Chiron Forest Laborat ories B Roche Group Watson Pharmaceut icals Biogen Idec Inc. IVAX (Teva Pharmaceut ical) NBTY Social reporting scores are based on the degree to which the Mylan Laborat ories company discusses various aspects of its dealings with its King Pharmaceut icals employees and contractors. They also include social costs and 0255075100investments. Social Performance A+ Bristol-Myers Squibb Social Performance Scores A+ Johnson and Johnson B+ Pfizer Bristol-Myers Squibb Johnson and Johnson B- AstraZeneca Pfizer Abbot t Laborat ories B- Abbott Laboratories AstraZeneca Eli Lilly C+ Eli Lilly Merck Amgen C+ Merck Novart is GlaxoSmithKline C Amgen Schering-Plough Corporat ion Sanof i-Avent is C- Novartis Roche Group Forest Laborat ories D+ GlaxoSmithKline Genzyme Watson Pharmaceut icals Allergan Social performance scores are based on improvement, Chiron NBTY performance better than the sector average, or statements of Wy et h King Pharmaceut icals compliance with established social standards. IVAX (Teva Pharmaceut ical) Mylan Laborat ories Gilead Sciences Biogen Idec Inc.

0255075100

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 11 Claremont McKenna College Roberts Environmental Center

This graph shows both the percentage of companies mentioning a particular environmental indicator in their reports (darker bars), and the overall depth of discussion of a particular indicator by all companies within the sector (lighter bars). Use of Environmental Reporting Indicators

Waste produced

Waste disposed of Water used

Protection & enhancement of natural environment

Energy used Waste recycled

Ozone depleting substances

Hazardous waste produced

Waste water released Hazardous waste disposed of

Environmental fines Environmental expenses and/or investments

Electricity consumption

Carbon dioxide (CO2) Environmental notices of violation

Hazardous material used

Energy used, from renewable sources

Energy produced from renewable resources Volatile organic carbon (VOC)

Packaging materials waste

Nitrogen oxides (NOx) Hazardous waste released

Hazardous waste recycled

Sulfur oxides (SOx)

Packaging materials used Chemical Oxygen Demand (COD)

Suspended solids, total (TSS) Life Cycle Analysis (LCA)

Particulate matter

Office recycling rate Carbon monoxide (CO)

Biochemical Oxygen Demand (BOD)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

= Percentage of companies reporting an indicator in the sector = Average percent of total possible score for each indicator for all companies in the sector

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 12 Claremont McKenna College Roberts Environmental Center

This graph shows both the percentage of companies mentioning a particular social indicator in their reports (darker bars), and the overall depth of discussion of a particular indicator by all companies within the sector (lighter bars). Use of Social Reporting Indicators

Business ethics / Anti-Corruption practices

Customer health and safety

Equal opportunity/Elimination of Discrimation

Compliance with code of business conduct

Community Development

Employees, trained

Employee health and safety

Community Education

Compensation of employees

Social community investment

Employee voluntarism

Employee satisfaction

Animal testing standard

Access to health care

Free association and collective bargaining of employees

Use of illegal child labor

Corporal punishment of employees

Working hours

Incident Case Rate - TICR

Forced labor of employees

Training, hours per number of employees

Lost Workday Case Rate - LWCR

Health and safety fines

Customer satisfaction

Employees, females in management

Employees, women and minorities in management

Health and safety citations

Employment for individuals with disabilities

Employment, minorities

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

= Percentage of companies reporting an indicator in the sector = Average percent of total possible score for each indicator for all companies in the sector www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 13 Claremont McKenna College Roberts Environmental Center

Relationship Between Overall PSI Score and Companies' Economic Indicators

80

R2 = 0.578 70 66.16

62.37 60

54.29 54.04 53.03 50 51.01 50.76 46.2146.21

42.68 42.17 41.67 40 41.16

33.33 32.07 30 Overall PSI Scores PSI Overall

20 18 . 6 9

12 . 12 10 10 . 109.60 8.33 7.587.07 5.81 3.794.55 0 0 10000 20000 30000 40000 50000 60000 Revenue ($M)

Company Name Overall Revenue Net Income Net Profit Number End Score ($million) ($million) Margin* of Fiscal Employees Year Bristol-Myers Squibb 66.16 $19,380.00 $2,388.00 0.12 43000 Dec 04 Abbott Laboratories 62.37 $19,680.00 $3,235.80 0.16 60600 Dec 04 AstraZeneca 54.29 $21,426.00 $3,813.00 0.18 64000 Dec 04 Johnson and Johnson 54.04 $47,348.00 $8,509.00 0.18 109900 Dec 04 Pfizer 53.03 $52,516.00 $11,361.00 0.22 115000 Dec 04 Eli Lilly 51.01 $13,857.90 $1,810.10 0.13 44500 Dec 04 GlaxoSmithKline 50.76 $39,032.00 $8,248.00 0.21 100019 Dec 04 Novartis 46.21 $28,247.00 $5,767.00 0.20 81392 Dec 04 Roche Group 46.21 $27,629.70 $5,867.30 0.21 64703 Dec 04 Allergan 42.68 $2,045.60 $377.10 0.18 5030 Dec 04 Sanofi-Aventis 42.17 $20,377.00 ($4,890.00) -0.24 96439 Dec 04 Merck 41.67 $22,938.60 $5,813.40 0.25 63000 Dec 04 Wyeth 41.16 $17,358.00 $1,234.00 0.07 51401 Dec 04 Schering-Plough Corporation 33.33 $8,272.00 ($947.00) -0.11 30500 Dec 04 Amgen 32.07 $10,550.00 $2,363.00 0.22 14400 Dec 04 Genzyme 18.69 $2,201.10 $86.50 0.04 7100 Dec 04 Gilead Sciences 12.12 $1,324.60 $449.40 0.34 1654 Dec 04 Chiron 10.10 $1,723.40 $79.00 0.05 5400 Dec 04 Forest Laboratories 9.60 $2,650.40 $735.90 0.28 4967 Mar 04 IVAX (Teva Pharmaceutical) 8.33 $1,837.40 $198.00 0.11 10100 Dec 04 Watson Pharmaceuticals 7.58 $1,640.60 $151.30 0.09 3851 Dec 04 Biogen Idec Inc. 7.07 $2,211.60 $25.10 0.01 4266 Dec 04 NBTY 5.81 $1,652.00 $111.80 0.07 10000 Sep 04 Mylan Laboratories 4.55 $1,374.60 $334.60 0.24 2800 Mar 04 King Pharmaceuticals 3.79 $1,304.40 ($160.30) -0.12 2758 Dec 04 Source: Latest available data for all companies of the same year from Hoovers.com (*calculated)

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 14 Claremont McKenna College Roberts Environmental Center

70 66.16 R2 = 0.61 62.37 60

54.29 54.04 53.03 50 51.01 50.76 46.21 46.21 42.68 42.17 41.16 41.67 40

33.33 32.07 30 Overall Scores PSI 20 18 . 6 9

12 . 12 10 9.6010 . 10 8.33 7.587.07 5.81 3.794.55 0 0 20000 40000 60000 80000 100000 120000 140000 Number of Employees

70 66.16 62.37 60

54.2954.04 53.03 50 51.01 50.76 46.2146.21 42.17 42.68 41.16 41.67 40 R2 = 0.028

33.33 32.07 30 Overall PSI Scores PSI Overall 20 18 . 6 9

12 . 12 10 10 . 10 9.60 8.33 7.07 7.58 5.81 3.79 4.55 0 - 0.3 - 0.2 - 0.1 0 0.1 0.2 0.3 0.4 Net Profit Margin

70 66.16 2 62.37 R = 0.3128 60

54.29 54.04 53.03 50 51.01 50.76 46.2146.21 42.17 42.68 41.16 41.67 40

33.33 32.07 30 Overall PSI Scores PSI Overall 20 18 . 6 9

12 . 12 10 10 . 10 9.60 8.33 7.077.58 5.81 3.794.55 0 -6000 -4000 -2000 0 2000 4000 6000 8000 10000 12000 14000

Net Income ($M)

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 15 Claremont McKenna College Roberts Environmental Center

Use of Voluntary Guidelines and Partnerships 1 AA1000, AccountAbility 2 Business for Social Responsibility (BSR) 3 Centre for Environmental Assessment of Product & Material (CPM) 4 Global Environmental Management Initiative (GEMI) 5 Global Reporting Initiative (GRI) 6 Global Village Energy Partnership (GVEP) 7 ILO Core Labor Standards 8 ISO14001 Environmental Management System 9 OECD Guidelines for Multi-National Enterprises 10 Oikos International 11 Pew Center on Global Climate Change 12 SA8000, Social Accountability International 13 Transparency International 14 United Nations Global Compact, Universal Declaration of Human Rights 15 World Business Council for Sustainable Development 16 World Energy Council 17 World Wide Fund for Nature (WWF) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Abbott Laboratories Allergan Amgen AstraZeneca Biogen Idec Inc. Bristol-Myers Squibb Chiron Eli Lilly Forest Laboratories Genzyme Gilead Sciences GlaxoSmithKline IVAX (Teva Pharmaceutical) Johnson and Johnson King Pharmaceuticals Merck Mylan Laboratories NBTY Novartis Pfizer Roche Group Sanofi-Aventis Schering-Plough Corporation Watson Pharmaceuticals Wyeth

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 16 Claremont McKenna College Roberts Environmental Center

E = Total Environmental Score, ESA = Environmental Sector Average Score, S = Total Social Score, SSA = Social Sector Average Score Abbott Laboratories Abbott Laboratories 2004 Global Citizenship report and web pages Abbott Laboratories' sustainabillity report is well conceived and executed, addressing most of the PSI topics and demonstrating excellent performance. It E E is supplemented by extensive additional relevant web pages that together ESA invoke a strongly ethical and environmentally sensitive company. S 46% S

SSA 54%

0255075 ~ Gaza Allergan Allergan 2004 EHS Sustainability Report and EHS web pages Allergan has a spartan but extremely informative data report with a series of simple, highly legible data graphs showing multiyear trends of many of the E variables tracked by the PSI along with suitable commentary. These are ESA S E augmented by additional web pages that address a variety of social and S 39% environmental issues in a series of numbered paragraphs that make it easy to

SSA 61% understand the company's positions and activities.

0255075 ~ Esbenshade

Amgen Amgen 2004 web pages Amgen made no attempt to produce an environmental or sustainability report but did address many of the PSI topics in a series of web pages. These were, E E however, disjointed, difficult to navigate, and often more self congratulatory ESA 33% than informative. Amgen talked loftily about its environmental goals but S S provided very little information about its environmental progress. There was more information on its social practices and impressive volunteer activities. SSA 67% 0255075 ~ Gaza

AstraZeneca AstraZeneca 2004 Corporate Responsibility Summary Report and web pages Astral Zeneca's summary report is straightforward and concise. At 24 pages it packs in a considerable amount of corporate responsibility sentiment and hard E data and leaves us with the impression of a serious attempt to increase social ESA E S responsibility and decrease environmental footprint. S 48%

SSA 52%

0255075 ~ Esbenshade Biogen Idec Inc. Biogen Idec 2005 web pages Biogen Idec did not have an environmental or sustainability report nor any substantial web pages devoted to the topics. There was no discussion of E E environmental responsibility at all, and only a small amount of information ESA 22% regarding some employee policies. S S SSA 78% 0255075 ~ Frantz Bristol-Myers Squibb Bristol-Myers Squibb 2005 Sustainability Report web pages Bristol-Myers Squibb has given up the practice of producing its sustainability report as a pdf which would make it easier to download and read, but the E replacement web pages are very thorough. They are quite detailed and allow ESA E S for almost complete transparency of the company's environmental and social S 48% policies and performance. The company's emissions are very well documented

SSA 52% as well as its consumption of resources. This web site projects an environmentally and socially friendly image. 0255075 ~ Ellison www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 17 Claremont McKenna College Roberts Environmental Center

E = Total Environmental Score, ESA = Environmental Sector Average Score, S = Total Social Score, SSA = Social Sector Average Score Chiron Chiron Pharmaceuticals 2005 web pages Chiron does not have an environmental or sustainability report. Its web site goes over basics, but more into the company’s social policy and vision than its E E environmental position. There is a Code of Conduct that describes Chiron’s ESA 15% business ethics along with employee responsibilities, however, there is little S S mention of environmental responsibilities other than a general statement SSA regarding the company’s obligation to follow regulations in the countries where 85% its facilities exist. As a result, there is no information on the types or amounts of 0255075 emissions, waste, or energy sources.

~ Labermeier

Eli Lilly Eli Lilly 2005 Corporate Citizenship Website Contents 2005 Eli Lilly has a comprehensive set of corporate citizenship web pages that it also provides in pdf report format in a handsome report of the above name. We like E the approach of offering identical data in both formats. Rather than using data ESA E S graphs, the report characterizes a large amount of Lilly's environmental and S 47% social data in a single well designed table (which incidentally makes the report

SSA 53% easy for us to score). It is a good example of clarity in data presentation with both raw and normalized data, and showing mostly good performance. 0255075 ~ Ellison

Forest Laboratories Forest Laboratories 2005 web pages Forest Laboratories provided no information on its environmental policies, and very little on its social initiatives. The company has been listed on the Forbes E E Platinum list for the past 3 years, and was given special recognition for best ESA 19% management in the Drug and Biotechnology Sector in 2004, so it surprises us S S that it provides no environmental information or recognition of environmental SSA iissues. The information the company does provide on financials, divisions, 81% subsidiaries, and products is detailed and well presented. 0255075 ~ Esbenshade

Genzyme Genzyme Pharmaceuticals 2005 annual report and web pages The Genzyme annual report notes that "In 2004, the Dow Jones Sustainability World Index selected Genzyme for membership because of our economic, E E environmental, and social performance." Genzyme must have supplied ESA 34% qualifying data to Dow Jones, but It does not present them on its web site or in S S its annual report. If Genzyme is doing a good job in these areas, it seems a shame not to publish the basic data. SSA 66% 0255075 ~ Ellison

Gilead Sciences Gilead Sciences 2004 10-K web pages Gilaed Sciences did not have any form of sustainability report. There were no web pages devoted to the environment and very few for social and community E E related activities. There are brief descriptions of a few volunteer social ESA 31% initiatives and a couple of pages aimed at attracting employees by outlining S S certain employee benefits. The few points that were earned in the SSA environmental section of the PSI were due to the mention of efforts to comply 69% with environmental regulation in the 10-K. Overall Gilead Sciences made a 0255075 minimal effort to achieve transparency in the environmental and social aspects of the company.

~ Frantz

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 18 Claremont McKenna College Roberts Environmental Center

E = Total Environmental Score, ESA = Environmental Sector Average Score, S = Total Social Score, SSA = Social Sector Average Score GlaxoSmithKline GlaxoSmithKline, 2004, Annual Report, Corporate Responsibility Report 2004, Employee guide to Business Conduct GlaxoSmithKline has made a great attempt at making their business transparent and accessible to the public. However, they could organize it a bit better. It E E would be beneficial, for example, to have all the downloadable pdfs in one ESA area. Also, similar to the Annual Report and Business Conduct sections, the S S 46% Corporate Responsibility Report should be in a pdf. This way anyone looking at

SSA 54% the report knows they are not missing information. This is a problem at the moment since there are not only the Business Conduct and Annual Report to 0255075 look through, but also several hundred pages on the web.

~ Labermeier

IVAX (Teva IVAX 2004 Annual Report and web pages Pharmaceutical) Ivax presents no information on environmental and social issues. The annual report is largely financial with no extra information on other company activities.

E The only environmental policy stated is compliance with all local laws where S Ivax operates. ESA 28% S E SSA 72% 0255075 ~ Gaza Johnson and Johnson Johnson and Johnson 2004 Sustainability Report and 2005 web pages This Johnson and Johnson report is attractive, conveying a strong sense of environmental and social responsibility with clear goals and informative E E discussion of a broad range of environmental and, particularly, social issues. It ESA has an excellent page of data charts showing absolute environmental S 44% S performance and performance indexed to sales, the latter all showing clear

SSA 56% systematic improvement. It would be nice to have information on energy use and something about recycling, nor is their any information on specific pollutant 0255075 releases.

~ Ellison

King King Pharmaceuticals 2005 web pages Pharmaceuticals We found almost no environmental or social information on King Pharmaceuticals' corporate web pages. There is a mention of a social program

E under the Public Relation link, titled "In Pursuit of Human Potential", a E community investment program. However, this social program is only targeted ESA 36% for external stakeholders. There is no social policy that addresses the S S company's dealing with the welfare of its employees. SSA 64% 0255075 ~ Adidjaja Merck Merck and Co. 2005 web pages Merck produces neither an environmental nor sustainabillity report but includes much of the appropriate information in its web pages. The web pages are not, E E however, particularly easy to assimilate since the information is dispersed and ESA 42% presented in inconsistant styles. There are a few data graphs, but other data S S are buried in paragraphs or in isolated tables. Even though much information is SSA 58% present, and the PSI score is high, the effect is decidedly haphazard. 0255075 ~ Allen-Young

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 19 Claremont McKenna College Roberts Environmental Center

E = Total Environmental Score, ESA = Environmental Sector Average Score, S = Total Social Score, SSA = Social Sector Average Score Mylan Laboratories Mylan web pages 2005 Mylan Laboratories presented no environmental or social responsibility report. The company only received points for its code of conduct and financial E E reporting. In the code of ethics there is a brief environmental statement which ESA is followed by an assurance that waste is disposed of in a manner that complies S S 45% with all applicable laws. In order to score better, Mylan needs to do many of

SSA 55% things—a good start would be a clear set of environmental and social goals and some degree of transparency. 0255075 ~ Vander Kolk

NBTY NBTY web pages 2005 NBTY’s low score results from almost no information about what steps it takes (if any) to deal with environmental or social issues. The only policy regarding E E the environment must be inferred from its goal to follow all state and federal ESA 27% laws though environmental laws are never specifically mentioned. S S SSA 73% 0255075 ~ Mitchem Novartis Novartis 2004 GRI Report and 2005 web pages Novartis has made a valiant first attempt at reporting based on the Global Reporting Initiative guidelines, and has scored quite well on the Pacific E E Sustainability Index. Among other nice features, it reported its waste production ESA and waste destination in greater detail than we have seen in any other report 43% S S (but, unfortunately, limited itself to the current year’s data). There were also

SSA 57% multiple sections where Novartis admitted to not having the data prepared, but said it would have it in the next report. All in all, Novartis did quite well on its 0255075 first attempt and hopefully its second will be even better.

~ Vanden Bos

Pfizer Pfizer 2005 company web pages Pfizer’s produces country-specific sustainability reports-- i.e. Pfizer in China, Phillipines, Brazil, and Hungary-- and a brief (36 page) summary report for the E E company as a whole. All of the country reports are different and provide good ESA additional information, but our policy is to score corporate-wide reporting only. S S 45% Scattered sustainability information can be found by using the search function

SSA 55% provided on the website. Were Pfizer to pull this disparate information together and increase the uniformity of reporting company-wide, they would achieve a 0255075 much higher score.

~ Allen-Young

Roche Group Roche 2004 Sustainability Report, web pages, and 2004 Annual Report Overall the Roche Group presented an extremely thorough collection of environmental and social information. Almost every single category in the PSI E Index was at least discussed. The less than perfect scores in environmental ESA E S performance were caused by a lack of information regarding hazardous waste, S 49% and pollution levels that have increased between 2003 and 2004. The latter was 51% SSA influenced by a major acquisition that subsequently increased production and thus increased pollution levels. It was also somewhat difficult to find clear 0255075 policy statements in the Sustainability Report itself, although these statements were available through the web pages.

~ Frantz

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 20 Claremont McKenna College Roberts Environmental Center

E = Total Environmental Score, ESA = Environmental Sector Average Score, S = Total Social Score, SSA = Social Sector Average Score Sanofi-Aventis Sanofi-Aventis 2004 Sustainable Development Report, 2004 Annual Report and 2005 web pages Sanofi-Aventis has a nice 2004 sustainability report that clearly reports its attempt to create and distribute medication to the world with proper regard to E both environmental and social issues. Most of the data relevent to the PSI is ESA E S housed elsewhere in its web pages. S 48%

SSA 52%

0255075 ~ Mitchem Schering-Plough Schering-Plough Corporation 2005 web pages and Corporation 2003 Report on Safety, Health and the Environment Schering-Plough's 2003 SHE Report (updated with 2004 data since our analysis cutoff date) has some information on many of the Pacific Sustainability Index E E topics, accounting for the dramatic increase in its PSI score over that in our ESA previous pharmaceutical sector report. Compared to the industry leaders its S S 45% score is still not very high but it is definitely moving in the correct direction.

SSA 55% Almost all the information considered by the PSI is in this report rather than in the associated web pages. 0255075 ~ Vanden Bos

Watson Watson Pharmaceuticals, 2005, web pages Pharmaceuticals Watson does not have any type of environmental or social report. It was graded instead on what information it supplied on its web site. As the scores

E show, there was not much of the type of information the Pacific Sustainability E Index looks for. ESA 22% S S SSA 78% 0255075 ~ Vanden Bos Wyeth Wyeth 2004 Environmental and Safety Report and 2005 web pages Wyeth has a nicely designed ESH report with similar material both in pdf form and in hyperlinked web pages. It is particularly strong on the environmental E side, with the middling overall score a result of a lack of much social data. ESA S E S 39% 61% SSA

0255075 ~ Vander Kolk

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 21 Claremont McKenna College Roberts Environmental Center

Roberts Environmental Center The Roberts Environmental Center is an environmental research institute at Claremont McKenna College (CMC). Its mission is to provide students of all the colleges with a comprehensive and realistic understanding of today’s environmental issues and the ways in which they are being and can be resolved, and to identify, publicize, and encourage policies and practices that achieve economic and social goals in the most environmentally benign and protective manner. The Center is funded by an endowment from George R. Roberts (Founding Partner of Kohlberg Kravis Roberts Co. and CMC alumnus), other endowments, grants, and gifts, and is staffed by faculty and students from the Claremont Colleges. Center staff are happy to consult with companies wishing to improve the quality of their environmental and sustainability reporting. Center students are often looking for corporate summer internships and post- graduation positions, and the center director can aid firms in finding the right student. Claremont McKenna College Claremont McKenna College, a member of the Claremont Colleges, is a highly selective, independent, coeducational, residential, undergraduate liberal arts college with a curricular emphasis on economics, government, and public affairs. The Claremont Colleges The Claremont Colleges form a consortium of five undergraduate liberal arts colleges and two graduate institutions based on the Oxford/Cambridge model. The consortium offers students diverse opportunities and resources typically found only at much larger universities. The consortium members include Claremont McKenna College, Harvey Mudd College, Pitzer College, Pomona College, Scripps College, Keck Graduate Institute of Applied Life Sciences, and the Claremont Graduate University—which includes the Peter F. Drucker and Masatoshi Ito Graduate School of Management.

www.roberts.mckenna.edu 2006 Roberts Environmental Center Pharmaceuticals Industry Report 22