Efforts to CSR required to Daiichi Sankyo Group

Efforts to CSR required to Daiichi Sankyo Group

We organized a “Dialogue with stakeholders” event to which we invited experts from various fields and our employees from the relevant fields, and we exchanged our opinions about “CSR unique to Daiichi Sankyo” with our employees, mainly comprising the heads of the departments.
We will utilize their valuable suggestions for our future business activity.

Overview of the event (The positions, etc. are as of the time of the event date)

Date
March 25, 2013 (Mon.) 13:30 to 16:30
Attendees (Experts)
Mr. Eiichiro Adachi
Counselor, Head of ESG Research Center
The Japan Research Institute, Limited
Mr. Kenji Shibuya, MD, DrPH
Professor and Chair, Department of Global Health Policy
Graduate School of Medicine, The University of Tokyo
Ms. Kaori Kuroda
Executive Director
CSO Network Japan
Mr. Takashi Fukushima
Chief Executive, CPA
Sustainability Accounting Co., Ltd.
Venue
Daiichi Sankyo Company, Head Office, B413 conference room
Attendant Daiichi Sankyo Staffs:
Yoshikazu Takano
Head of Legal Affairs & CSR Division
Hiroyuki Okuzawa
Corporate Strategy Department
Tsuyoshi Tanaka
Intellectual Property Department
Norimasa Kamura
Human Resources Department
Ryoichi Watanabe
General Affairs & Procurement Department
Hirohisa Sato
Vaccine Business Strategy Department
Koichi Akahane
R&D Planning Department
Hiroshi Honda
Supply Chain Planning Department
Chiharu Hashimoto
ASCA Company, Business Planning Department
Katsuyuki Yogosawa
Toyomasa Kaneda
Shigemochi Dobashi
Kazunari Shimizu
CSR Department

Message for the event

Yogosawa
The society is rapidly changing. In addition, our business globalizes and diversifies, and the Third Mid-term Business Management Plan starts from 2013 fiscal year. Considering these facts, I realize that we must more actively respond to social demands.
We would like all the attendees for presenting lectures about social changes in the future. On that basis, we would like to share the direction for us to address in our company, using this Dialogue as a stepping stone.

Global CSR

Contribution through business while tackling social issues. Mr. Eiichiro Adachi 
Counselor, Head of ESG Research Center, The Japan Research Institute, Limited

Adachi
The understanding of CSR differs depending on the country or region as it is based on the social context of each country/region. Furthermore, the stakeholders for corporations are also becoming diversified with the rapid globalization of businesses. The corporate sector is being increasingly expected to solve social issues that cannot be solved by the government alone. Under these circumstances, new approaches, such as changing the way of business or identifying latent customers’ requirements in the context of solving social issues are becoming a new trend of CSR, in addition to an extension of conventional “contribution through main businesses.” What changes do you feel strongly in the recent global management in your company?
Okuzawa
We actually feel that the diversity has been expanded at once in designing a business plan. In March of this year, we announced the Third Mid-term Management Plan starting from 2013 fiscal year. Compared with the previous two Mid-term Business Management Plans, this plan contains clearer collaboration with Ranbaxy group, expansion to East Europe, Africa, and Latin America where we perform investment activity and obtain returns, and clearer position as a growing driver. Approximately one thirds of senior managements who promoted the designing process of the Third Mid-term Business Management Plan comprise members from foreign countries, such as the United State, Europe, and India. As a result, the plan has more implication and more significance than expected, based on the opinions and propositions from various viewpoints. We feel that expansion of diversity and its integration will be essential in the global management in the future.
Adachi
For CSR, the keys to globalization are “Diversity and Inclusion※1.” Of course, the corporation must consider the areas and regions where it conducts business. In addition, for issues, such as labor and human rights, it is critical to consider the positive impact of Diversity and Inclusion.
  • ※1 “Diversity and Inclusion” means a situation where diverse people interact and are valued and respected as equals.

Global Health

To establish a win-win structure by building a new business model together with developing countries in accordance with their needs. Mr. Kenji Shibuya, MD, DrPH Professor and Chair, Department of Global Health Policy, Graduate School of Medicine, The University of Tokyo

Shibuya
I would like to tell you a trend of global health※2, which is a significant word for pharmaceutical companies. At first, globalization of medicine is rapidly processing and becoming polarized. The rich can receive better medical care across borders, while many people cannot receive even the least medical care in the world. The power of international organizations, such as World Health Organization (WHO), is relatively declining these days. To fill in the gap, a collaboration between public and private sectors is being facilitated. The large-scale private sector and foundations are also becoming increasingly active. In the future, the global health sector should collaboratively develop a new business model based on the requirements of the developing countries, using local methods and resources, and establish a win–win structure. It is important to develop a large strategy/business model as a part of the main business, including supply chain, considering who plays what role from R&D to distribution.
  • ※2 Global health refers to the issues concerning health and health-care across borders.
Hashimoto
Some of our group companies in Asia or Latin America, where global health targets predominantly, develop CSR activities uniquely according to the local requirements and spontaneously participate in the United Nations Global Compact. However, concerning efforts to global health across borders, most of the companies currently perform CSR activities separately in each country. I recognize that it is a future issue to integrally address as a whole group.
Tanaka
Obtaining a patent costs very expensive; therefore, the countries where we apply for a patent are currently limited. From the viewpoint of Access to Medicine, we can afford to consider various measures to take, such as non-exclusive license, for the countries where we applied for patents. On the other hand, we need to take a different approach for the countries where we did not apply for patents.
Shibuya
I agree with it. It will also be effective to support such regions by private–public collaborated alliances, not by international organizations alone. To get the latest information, various stakeholders need to gather together, and they need to directly participate in public health strategy discussions. In this way, they can understand the movement and lay the foundations for future business; thus, it is highly recommended. In addition, lifestyle-related diseases are rapidly increasing among the developing countries. Japan Pharmaceutical Manufacturers Association has launched two working groups to tackle the issues of lifestyle-related diseases and counterfeit medicines, which influence on the trend of global health. I hope that their processes in the future would be better.
Adachi
You told us that the interest in the developing countries is shifted from infection control to lifestyle-related diseases control. How do you analyze the disease structure over the world and how do you determine the priority when you start a new research and development?
Akahane
Until now, it was general to study with observing the disease distribution in the so-called developed countries. However, owing to our research centers worldwide, we are shifting to the direction of surveying unmet medical requirements over the world and producing drugs for many patients in trouble. With respect to the development of orphan drugs, such as nucleic acid treatment for Duchenne muscular dystrophy, their development steps have been slow due to low priority inside the company. However, we would like to help patients in trouble, by reducing risks in cooperation with funds out of our company. Further, we recognized that daily business activities have such a close relationship to CSR.
Adachi
Vaccines have been expected to play a major role in controlling infections in global health since smallpox was successfully eradicated. It seems that the vaccine business in your company has been greatly changed in recent years. I would like to ask you about the business perspectives for the future.
Sato
I think that vaccine business is a great contribution to the global health in terms of saving medical cost for the treatment of diseases beforehand. Our vaccine business has just taken shape and started. We consider that first we must make our own offerings from now to globally contribute after we stand our ground and make our business sustainable. It is not enough to produce vaccines. We are required to construct a system to collect funds with the local government because social infrastructure is required and it costs to deliver vaccines to patients from manufacturing process and through distribution processes. In addition, we have to set the opportunity or place to perform vaccination. We need to cooperate not only with pharmaceutical company but also with stakeholders for delivering vaccines.

Human rights and labor practice

Commitment to responsible business practice, not only within the company but also in the supply chain. Ms. Kaori Kuroda Executive Director, CSO Network Japan

Kuroda
Let me tell you about human rights and labor practices. Human rights issues in Japanese companies have been limited to those of harassment or discrimination until now. However, it is a characteristic that actual issues of human rights range very broadly. In addition, over the last few years, human rights have been much discussed as part of mainstream CSR. As for how to actually tackle this, we must examine the activities and decisions of our own companies and demonstrate due diligence with regards to human rights. However, the greatest impact that our companies have had on the environment, on society, and on the economy has been through the supply chain. Therefore, it is essential to implement the commitment to responsible business not only in our own companies but also throughout the supply chain.
With business globalization, supply chain is also diversifying and becoming increasingly large and complex.
Watanabe
One of the things I really feel in daily procurement business is the difficulty in completely sharing the recognition of issues and commitment to solutions. I recognize that such issues are not unique to developing countries but may occur in developed countries. I sometimes feel it is even difficult to know whether our attitudes are accurately reached to the workplaces through our business partners. We recognize that this is an important approach for responsible business activities in the future, and we have just established CSR procurement standard and started the activity.
Honda
We survey attitude toward CSR of 185 business partners as an approach in domestic supply chain. We have just started to instruct or address to enhance the performance level for suppliers at low level of consciousness under their partnership. Although it would take some time to achieve a level to follow the PDCA cycle, we are promoting to address CSR in Japan at first. From a global viewpoint, we started discussion of functional phase, including exchange of suppliers’ information with Ranbaxy. We recognize that it is necessary to trace back to over the suppliers’ primary material into the suppliers’ source, but it is a very difficult problem of what extent to be involved for the buyer.
Kuroda
Yes, it is realistic to trace back to the primary supplier among many suppliers. The hurdle seems to be high to do something for all suppliers after secondary suppliers, but we should decide with a policy what you should do to estimate potential risks due to the necessity of preventive measure. For example, it is important to communicate with stakeholders, including NGOs playing an active role in the region and have attitude to immediately respond when criticized by the third party. Are Ranbaxy’s own CSR and supplier policies consistent with those of your company, under the situation where half of the employees are occupied by those from Ranbaxy? I think it is better to describe such phases in the report.
Adachi
By the way, how do you expand employees’ diversity in your company globalizing? Generally in Japan, diversity is predominantly grasped from the viewpoint of sex, but there are various diversities such as race, nationality, and religion in foreign countries.
Kamura
We have been discussed diversity as one of the issues in human resource management. However, issues of diversity in Japan currently rest in sex, age, and retirement age. As you said, we cannot easily be aware of the diversities called in foreign countries, such as minority and religion. Interaction for such matters with persons in charge of human resource in foreign countries will be the future issue. We also recognize that globalization and diversity in the Headquarters are important issues, so we will promote to address to increase those who work in Japan from our foreign group companies.
Akahane
Speaking of issues of sex, I have experienced the International Women’s Day when I went to a research company in India. What I saw there was that the whole company celebrated the day. Half of the researchers were women. I was told by an Indian woman at the television conference that all she can see over the television were only men. We have various activities, such as recommendation of women’s activity, but in fact it is difficult to promote.
Kuroda
The International Women’s Day is an important day in the world, but I heard there is no action for the day in offices in Japan. How about celebrating the day in Japan next year? It is said all over the world that few women occupy managerial positions, and I feel that this issue will not be resolved without some radical measurements. In addition, I think it better for you to take a lead in Japan for adopting effective measurements performed in other countries, such as the mentor program in the United States that is described in 2012 CSR Report of your company.
Adachi
For issues unique to the pharmaceutical company, how do you think of consideration of human rights in clinical studies or animal testings?
Akahane
We consider the patient’s protection as the priority matter in the clinical studies. We have a policy not to administer drugs to patients who cannot obtain their benefits, so we now use biomarkers※3 to specialize in personalized medicine※4 when developing pharmaceutical products. We also tackle an alternative method of animal testings and have started using human-derived iPS cells as tools. We would like to promote such approaches further with a high ethic as ever.
  • ※3 “Biomarkers” are substances derived from the living body that are contained in body fluid, such as serum and urine or tissues, and are indexes to quantitatively know biological change in the living body. Measuring quantity of the substances enable us to diagnose diseases, establish an effective therapy, and administer personalized medicine.
  • ※4 “Personalized medicine” means a medical care with establishment of an optical therapy that suits to a specific patient, considering genetic background, physiological condition, and disease status of the patient.

Environment

To implement consistent, broad-minded and thoroughly thought-out environmental management that is linked to management indicators. Mr. Takashi Fukushima Chief Executive, CPA, Sustainability Accounting Co., Ltd

Fukushima
I would like to raise some issues of environmental management from some points of view. According to SRI rating agencies in foreign countries, the number of Japanese companies with high rating in CSR management has been decreasing to approximately one thirds as small as that approximately ten years ago. In the past, the evaluation of environment was more focused; therefore, Japanese companies, which were first-class students with respect to environmental issues, could obtain overall high score, but now the evaluation of environment decreases in volume. This is one of the causes of such decreased number of companies. Furthermore, although the wider range of totaling in the Scope 3※5 has been required, honest Japanese companies cannot accept to reduce the accuracy of the totaling and keep the range of totaling as ever. There also seems to be another reason. However, accuracy of totaling is not essential. I think we are asked to show the depth of your perspective of the issue in practicing an approach. This includes how well you recognize the estimate of strategic risks and chances concerning the environment, such as grasping impacts on your supply destinations due to climate change and how far you can reduce the anticipated environmental burden in the same mid-term target fiscal year when you set a target level of sales, etc. as a management index. Genuine companies performing environmental management establish such matters as environmental goals. Furthermore, I would like you to express the actual environmental aspect of the medicine and its degradation products as well as your view as a professional involved in a pharmaceutical industry.
  • ※5 The scope paragraph with respect to the indirect emissions in the entire supply chain, except for the indirect emissions associated with usage of electricity, steam, and heat in the volume of greenhouse gas emission.
Shimizu
I understand that in the background where totaling items for environment and expansion of their range are required, there is a purpose for our company to grasp and recognize more exactly the impact caused from our business on the environment. As you indicated, there is a dilemma with maintaining accuracy. However, I would like to continuously address more appropriate integration of the business plan and consideration of environment with limited information. Speaking of medicine and its degradation products, we have not obtained sufficient scientific knowledge now whether such products had already achieved to the level where they inversely affected the ecosystem or human health, which I recognized as an issue. I would like to discuss a new approach, such as collaboration with governmental offices, academias, and industry organizations on the matters, which are difficult to tackle by our company alone.
Fukushima
I hope that companies ranked in the top sales also rank in the top for evaluation of CSR. In particular, resuscitation in environmental evaluation is necessary for Japanese companies to rank in the top for CSR. I hope you to steadily promote the thoroughly thought-out environmental management with response to the expansion of range of Scope 3. I have a high expectation of your leadership concerning the environmental management in pharmaceutical industry.

Summary

Adachi
Now I summarize the milestones of your company’s CSR with three significant words.

(I) Promote CSR activities along with the globalization of your main business (II) Take initiative spontaneously (III) Enhance the activity to promote CSR for employees

First, we feel that there are still many areas to be tackled more in the future in global CSR, while products and R&D have been globalized. It is important to enhance global CSR activities so that your reputation will not damage the competitiveness of your main business.
Next, it is also important to take spontaneously initiative in CSR activity. Specifically, it means the efforts to the fields of orphan disease or vaccine. Under the situation where the roles of international organizations have been relatively declining, your company can express many messages, such as “Yes, we can do the matters in the field.” We think there will be various synergetic effects as you continue to put such messages together and express information. Finally, we propose the activity to promote CSR for employees. Why do companies called global pharma enthusiastically engage in CSR and express information? Can each employee accept the recognition that necessity to protect and enhance the company’s reputation lies in other than “contribution through main business,” and CSR is not an additional matter, particularly in developing global business? For this, we think that the activity to promote CSR is required and that it must be a future issue.

Takano
I think that the attending participants were convinced with what the professionals said from the perspective of business and CSR or from different perspective. We again recognized that CSR as a managerial strategy is important, and both business and CSR are not only wheels of a car but comprise a whole car itself. Business must respond to stakeholders’ demands changing with the time, and so CSR must do. Daiichi Sankyo has set this Dialogue for the first time, and we again think that the time has come to change ourselves. We are going to approach three indications summarized as issues for the future.