Seeking Sustainable Solutions: Can Passion and Profit Coexist in Pharma ESG Efforts?

Pharmaceutical Executive convened an executive roundtable discussion during The Vanguard Network’s Life Sciences CEO Forum on May 21, 2024, in Boston. Participants included Amber Edwards, the new CEO of Sinclair Pharma and former chief commercial officer at Alastin Skincare (she officially assumed the Sinclair post on Oct. 1); Andrew Hall, CEO of Consano Biologics; and Murray Aitken, senior vice president at IQVIA and the executive director ofIQVIA Institute for Human Data Science. The lively and honest exchange focused on real-world sustainability issues and solutions for biopharmaceutical companies and their leaders—and how those fit within today’s global healthcare ecosystem. It’s a topic that means a lot of different things to different people, with no shortage of strong opinions and insights.

Pharm Exec: From a leadership perspective, how do you lead a group of people who are very passionate and knowledgeable about topics that older executives are still perhaps trying to catch up with?

ANDREW HALL, CEO, CONSANO BIOLOGICS: It’s a really important question, and it’s one of the things that I have had good success with. When working with the generation below the millennials, I work with them to find a passion project or center. It’s really easy in a startup mindset to have common passions to center them around. Hopefully if you’re passionate about something, you can be passionate about that in a larger company, but it’s a much greater challenge to find a passion project.

Andrew Hall, CEO, Consano Biologics

Particularly with respect to sustainability and items in that area, you need to identify a couple of centerpieces. When working with young people that have a sort of growth mindset, give them their role plus something more. While you can’t give them a title such as chief sustainability officer, you can make them [ in essence, a]head of sustainability. You can make them head of appropriate environmental awareness. I had great success with that, particularly coming from the communication side and the advocacy side of the business, where they’re naturally more patient-first, rather than shareholders-first.

I found great success in identifying people with that patient and environmental centricity and making them a center point of the organization. The community that follows that identification was strong and quite positive with respect to them giving us all the information we needed, as a public company, to have our quotas met.

AMBER EDWARDS, CEO, SINCLAIR PHARMA: I love the passion project idea, because a key thing with this age group is making sure that they feel like they are part of something and not just being told what to do. They want to feel like they actually have a voice and are helping to create something. It’s great for them to feel fulfilled and want to see something through to completion.

Amber Edwards, CEO, Sinclair Pharma, and former Chief Commercial Officer, Alastin Skincare

I am finding that younger employees are very assertive in their desire to know what leadership is doing about sustainability.The most important thing for leaders to do is basic: just listen. Don’t dismiss because it’s so easy, especially for those of us who have been around forever and think that we know everything, to tell them not to worry about that and that we have people who do that. It’s about being willing to create opportunities for them just to listen and hear what they have to say.

There’s an opportunity for education here, too, because the term and topic of sustainability is so immense. It’s not just one thing, it’s incredibly broad. A lot of people don’t understand that we also have a business to run and a P&L that we’re responsible for. Unfortunately, we can’t just go and do everything that we might like to do. In smaller companies, we’re just trying to stay alive, so every dollar is important. But, there’s an opportunity to educate and to listen to new ideas. Maybe we can cull it down and think of one or two things to start with in the broad topic of sustainability and make it a project. I love that idea of let [the younger employees help] run it and give them an opportunity to take it on.

It’s about finding situations where we can say to someone that we don’t care how old they are or how much experience they have, because they found a project that they’re passionate about that they can take and run with.

HALL: When you’re interviewing more junior people, it’s always very easy to ask them, “What do you want out of your career?” However, I’ve now started asking: “What do you want your career to mean for your life? How big a deal is your career to you and who do you want to be? And what do you want to accomplish here to be meaningful to your life?” I have found it so much more insightful in regard to the response. Rather than saying something like “I want to have your job in 10 years,” or “I want to be this title,” they start to think about what their career means to them.While this is true for people of varying ages, people under 35 years old often really sit back and consider how they want their career to go. I want to ask who they are outside of work, and I can’t ask that. You can, however, askquestions about their overall goals—and it brings all of that in together. For the younger millennial side, and even the side beneath that, it really provides a lovely insight into how passionate they are going to be about what they’re doing here, and how we need to lift up projects inside the organization to fulfill what their passions are going to be.

MURRAY AITKEN, SENIOR VICE PRESIDENT, IQVIA, EXECUTIVE DIRECTOR, IQVIA INSTITUTE FOR HUMAN DATA SCIENCE: As a leader, you do have a role to play in connecting sustainability to the business and ensuring that the passion project doesn’t run unfettered and disconnected from the interest. Over the last four or five years, we’ve had this huge surge of focus on ESG (environmental, social, and governance) broadly, but which is now coming down off the hype curve. Those who are coming through this part of the maturity cycle also are recognizing more acutely that connecting sustainability to the business—whether it’s directly, indirectly, in a big way, or a small way—is still important.

Murray Aitken, Senior Vice President, IQVIA, Executive Director, IQVIA Institute For Human Data Science

For business leaders, regardless of the generation they’re managing, reminding them of the importance of that connection is important. The good news is that sustainability is a broad enough concept that there’s always a way to bring it back to the business. But I think putting those reminders out occasionally is useful.

HALL: We need to define what we mean by sustainability. Is it purely environmental? This is where the ESG bit comes in. Where is it just the environmental piece? Is it sort of fostering diversity? Is it fostering all of the subtle elements of people in a large organization? Because to me, sustainability is way more than just what are you doing to be carbon neutral? And I think if you take a carbon-neutral approach to it, that’s just checking a box. I’ve worked at big companies where the check-the-box mindset is that there’s an ESG group over here, and it’s two people. According to NASDAQ, that’s all we have to have.

Pharm Exec:The pharmaceutical industry faces a unique problem with sustainability, because the industry is producing necessities, as opposed to luxury items. Years ago, massive cars such as Hummers were really popular, but they were terrible for the environment and generally weren’t practical. Now, you almost never see a Hummer driving around. Companies can just stop making a bad car. However, if a medication is good and effectively treats a condition, resulting in people living longer with a better quality of life, pharma companies can’t just stop making it because there’s a sustainability issue attached to it.

EDWARDS: Two points come to mind. First, you’re not going to solve everything overnight. However, you can improve things by having some long-term goals. One of the companies I recently worked with tried to align with some of the bigger government goals. For example, they want to have reduced emissions by a certain percent by 2030. They also have a target for reduced water consumption. Everyone must understand that this doesn’t happen overnight, but there are ways of implementing incremental changes within every facet of an organization and business.

This does become a generational conversation very quickly, however, since, right now, we’re looking at these environmental issues very retroactively. We have companies that are already in place. We have manufacturing plants that already run the way they run, and we’re asking, what can we go back now and change?Whereas, I think the way things are going to be moving forward is that before you even build a manufacturing plant, you must already be thinking about how to make it as efficient and as environmentally friendly as possible. So, the new facilities and businesses will be built better from the beginning, versus going back and trying to put on Band-Aids or fix things retroactively.

AITKEN: I have a fairly strong point of view around the discussion about sustainability and the role of the life sciences sector in addressing environmental concerns. Yes, it’s all very nice to reduce carbon footprints and water utilization, but the life sciences sector has a unique opportunity and perhaps obligation to prepare for the eventuality in the next two-to-three decades that we don’t achieve the climate and carbon production emission goals and that we see continued disruptions linked to climate change. We see disease incidents changing and supply chains having to be reconfigured, and we will have new pathogens. New health issues will be coming to the fore. And while there’s a fair amount of modeling on kind of the health impact of climate change, there’s been very little thinking through on, what do all of these changes mean for life sciences companies in terms of how to rethink their business to actually be sustainable?

HALL: There’s an intersection that exists here. There’s building future thoughtfulness for P&L benefit, versus changes that come at the expense of P&L that are trying to do things that are environmentally protected. The opportunity this industry faces to facilitate whatever comes of climate change is sustainable. There’s no doubt that this industry has caused average life expectancy to go up 30 years in the last century, and that’s a big deal. There’s no question that the increase in lifespan also has economic consequences, because the population in the world is just that much older and consuming. If you’re a pharmaceutical executive, our obligation is to ask, how do we look forward to enable human health to be sustainable through whatever comes of global warming? That’s a much more interesting conversation.

AITKEN: There’s a real opportunity in this industry to overlay on top of the climate models the impact on healthcare. That way, we can know where there will be new needs—both for a new disease or for existing diseases that will progress in different ways—and from migration issues. Climate zones are moving. There is malaria in Florida, it’s moving up the East Coast, and we’re not used to it.

HALL: Maybe this is an aside, but this industry made a huge mistake at the end of the pandemic with respect to public image. The people making outlandish claims about the pharma industry creating COVID-19 aren’t just conspiracy theorists; we’re also hearing stuff like that from the general public. That’s what the legacy of just bad PR is for this industry. It’s the same way with healthcare reform not being embraced by this industry, which instead lobbied against it. It’s the wrong message.

As Houston becomes impossible to live in, as Florida starts to become subtropical, how do we as an industry start to protect against the consequences of that? And what sort of innovation is going into development? You know, the companies that the industry develops around are the ones that the venture capital (VC) investment focus on. Right now, it’s obesity. You could probably imagine that in 30 years’ time, it’s going to be five degrees warmer and the average American will be two points lower on the obesity scale because of what the innovation is. What happens next? I think that’s a really excellent question that the industry should start to think about putting some work into, because there probably is value there.

EDWARDS: As an industry, we do have such a bad reputation. Fair or not fair. If we’re just being foolish and frivolous, that doesn’t help anybody. We need to do our part. Packaging is one example. Many products are sold in packaging that is not sustainable—plastics and metals. Changing it can be a huge and costly initiative. It’s a brilliant point, though. Yes, let’s do what we can do today. But where are the people? And we need to create the people, the forums, and the think tanks and say, “let’s get real here.” Because hope is not a strategy. Things are going to happen. They already are happening.

AITKEN: What does it mean for disease? What does it mean for healthcare? What does it mean for how we distribute resources geographically? Are we sending everything from malaria to another country, when we should be sending it to Florida?

Pharm Exec: There are two issues. The first is that new diseases will appear that require new treatments. The second is that diseases are going to spread to regions that never had to deal with them. From an industry perspective, is the idea of handling these issues daunting?

HALL: I see it as opportunistic. The minute I left med school and went into this industry, I figured I could make more of a difference in this industry than others. With the advent of opportunity comes innovation. This includes everything from the changing landscape of the world from a pathogen perspective, new diseases, new opportunities, the aging population, and the changing climate. It provides an opportunity that this industry can be really good at working out. I don’t see it as an unsolvable mystery. I see it as, this is why we have the smartest people in the world in this industry, because you need the opportunity to be presented with the challenge before you can start to fix it.

This comes full circle to sustainability. This center of the universe of innovation coming out of the United States is only sustainable for so long. And if more diseases typical of the third world creep into the United States landscape, then maybe that is the opportunity to say, “hey, we need better malaria treatments. Hey, we need better treatments for obscure tropical diseases that the medical textbooks have in the appendix section only.” There is always reward for innovation. I see this as a great challenge, but everyone tells me my glass is always way too half-full. So I might be bias on this one, but I think it’s a reason this industry exists.

EDWARDS: Something that is very exciting about this is the younger generation—that they do care so much. They are thinking about these things and want to make the change. The catch 22 is that we as businesses, and even as people in general, we’re rewarded for what we do today. We’re rewarded for our stock price and profitability. This industry is getting eaten up more and more by PE (private equity) and VCs, and they care about profits. You have these two very conflicting pressures happening, where it’s all about what you can do and deliver today from a financial standpoint. The other pressure is thinking about what’s happening in the world right now and preparing for the future. That’s what’s daunting to me.

Pharm Exec: Is it hard to get VCs excited to invest in solutions to problems that may not materialize for another 10 years?

HALL: There is a lot more interest in sort of seed venture capital today than I think there ever has been in going after proper early innovation. The challenge is always creating a story to say that it’s going to be meaningful on a commercial front. But, there is still an obscure imbalance between clinical readout versus proper discovery with respect to value creation. Thereis also an increasing willingness to invest in discovery, to invest in something that we know is a problem. And as we get better with AI and we get better with discovery science, there is a chance for that part of this industry to grow more. Sadly, it’s going to be driven through VC, but it might be driven through VC with a 10-year rather than a five-year horizon. If that happens, then you start to get proper efforts against solving real problems. We proved it by identifying a sequence of a virus to an approved therapy in 12 months.

AITKEN: It’s also a way for the industry to help address the sustainability question, to the extent that we believe we’re on the cusp of a major inflection in discovery stage productivity, for example. You could also convert that to an equation that says the amount going in relative to the amount coming out of discovery efforts has suddenly increased. I don’t think we’ve quite thought through what exactly that means.

It’s also important, however, that public health authorities—from local regulators all the way up to the federal level—recognize the problem we have. We must work on this together, because the lack of trust in the industry and the spread of conspiracies doesn’t bode well for the next pandemic. And there will be a next one. This means getting the CDC back in better shape, but also doing work down at the local level as well. It’s not an easy task by any means. We track the data on vaccination rates, and we’re still well below where we were pre-pandemic. And when you go to lower-income countries, it’s even worse. So, it is a big problem.

EDWARDS: There’s just a general distrust of pharma. No one is talking about all of the lifesaving measures and all the great work the industry does. We all deal with this at our own Thanksgiving dinners, right? I find myself defending my industry and pointing out how everyone at the table is healthy and alive because of this industry. Are there bad actors? Of course there are.

The government managed to get a huge infrastructure bill passed that is planning for the future. We should be doing that with healthcare. The government should be putting together plans to prepare for the future of healthcare.

And let’s get creative and look at some other options. We need to make sure that the pharmaceutical companies are getting the support. There should be university focus on these things, too. Unfortunately, I’m not going to get into specifics, but there’s a lot of disease states where a lot of money and attention go to because there’s revenue opportunity.

Pharm Exec: What should the relationship between the pharma industry and the government look like?

EDWARDS: From a reputation standpoint, from a trust standpoint, from a regulatory standpoint, from a funding standpoint, you name it, the industry and the government must stop being at odds with each other and actually be partners.

HALL: My big issue is a lot of people in the industry are saying that we must protect the end-game, healthcare price point so that we can protect innovation. Instead, the position should be asking what can be done in partnership between the government, academia, industry, private equity, and everything in between, to create a more sustainable and meaningful path to maybe having one good treatment for a rare disease that is likely going to become more of a problem as the world changes. I think it should be my generation, but it’s probably going to be the generation behind mine, or maybe even the generation behind them. It requires a whole mindset shift.

Pharm Exec: How much of the public’s perception of the industry comes from a lack of understanding as to how the industry works?

EDWARDS: There is an assumption that a healthcare company should be nonprofit and everything should be charitable. This is about making sure that everyone has healthcare and can get access to medications. Everyone should have those things, but as long as companies are for-profit, we are beholden to shareholders. I think there’s a much more provocative, bigger question out there: should pharma be for-profit? Because as long as it is, money is going to get funded to the things that drive the highest returns to investors.

HALL: At my company, we’re in sourcing products out of human plasma. The main three companies that take human plasma are all not-for-profit. We’re now working intimately with not-for-profit groups, and we’re doing some research and collaborative innovation with them. They’re realizing that they’ve got to quickly set up some side businesses to do for-profit. The mindset of not-for-profit is you just can’t have success that is measurable, because then you lose your status.

The question is, how do you find a medium where there is an opportunity to invest in innovation for-profit? This is a lot like what the academic institutions have tried to do with their tech-transfer offices. They said that they were going to do a little bit of both. They were still an academic institution; they just created a tech-transfer office. And, then, if they created innovation, that innovation pays back to the academic institution. There’s a model there that can get built out for government intervention, I’m just not sure what it looks like.

EDWARDS: It almost has to be a completely new sector that is created. Though, I was listening to a podcast about AI, and they’re having very similar parallel arguments where everyone’s yelling at OpenAI and Sam Altman, the CEO, and saying that he should be putting in protections. His response is that OpenAI is a for-profit company (OpenAI initially launched as a non-profit, but eventually switched to for-profit). He’s doing what he’s supposed to do as a for-profit company CEO. You can’t expect him to just be Mr. Charitable.

Pharm Exec: What about the modern ecosystem of conspiracy theories?

HALL: It’s entirely about figuring out a way to control the narrative. The validation of conspiracy theorists has happened because there is no independent news-cycling. The news cycle is all biased, and news is now about perspective rather than transparency. And what has caused a lot of the issues with this industry is that there’s been no effort to control the narrative.

We need help investing in that narrative, because a bunch of small companies can do some things, but they can’t change the narrative for the entire industry.

Pharm Exec: What impacts do generics have on sustainability?

AITKEN: I think the there’s an angle on environmental sustainability with respect to recognizing that 90% of all drugs are generics. That’s what we’re talking about, not the stuff that makes all the money; it’s the 90% generics and then you quickly get to the API (active pharmaceutical ingredient) and the key source material production, mostly in China and India. The environmental standards and situation there have become a bit of an issue in some of the ESG metrics that require you to go upstream and downstream to measure carbon footprints. I’ve heard that gets complicated very quickly for any company producing generics—to actually measure environmental situations.

We also must recognize that there’s a very concentrated set of companies in China making a very large percentage of the key source materials and supporting many, many companies, and not in an entirely transparent manner. Especially in regard to what’s actually going on there environmentally. And so, there is the question: How much do we really understand about the environmental impact of medicines?