Analyzing understanding and role of sustainability in the pharmaceutical industry : with a contract development and manufacturing organization focus

Abstract

The aim of this study is to gain a comprehensive understanding of sustainability and its role for contract development and manufacturing organizations (CDMOs) operating in the pharmaceutical industry. Sustainability is a multidimensional concept that includes multiple different topics. It has evolved out of the narrower concept of Corporate Social Responsibility (CSR) to be understood as a broader concept that includes multiple different aspects, such as environmental, social, economic, and governance aspects. The significance of this study is highlighted by the growth of the industry in the past 20 years and the expected maintenance of growth in upcoming years. This past and expected growth have been exacerbated by macro-level indicators such as aging populations and an emerging middle class. As the industry has been growing, pharmaceutical companies have started to rely on external partners. Outsourcing has been seen as a means to control costs and expedite development and manufacturing processes. Currently, the main determinants for CDMO partner choice are a good cultural fit, industry reputation, and scientific expertise. The industry has a controversial image, as it must balance profits with developing and manufacturing new, possibly life-altering, drugs. The Covid-19 pandemic raised further into discussion the ethical challenges of the industry such as the unequitable distribution of vaccines. People have not previously demanded green pharmaceuticals, but as general awareness of stakeholders has increased and as investors have started to take into consideration ESG-related matters in their investment decisions, companies in the pharmaceutical industry ought to regard sustainability in their business. Depending on the level of integration of sustainability in business, organizations can use sustainability as a business advantage. Advantages can range from savings from eco-efficiencies to an increase in brand image and brand value. This study is a commissioned work for a Nordic bio-CDMO. It was conducted as a qualitative study incorporating both interviews and content analysis. Interviewees for this study included employees from the commissioning company and representatives from their client companies. Content for the content analysis was from selected CDMO websites and their social media. Sustainability in the pharmaceutical industry has been gaining traction, however, there were no previous studies conducted that concentrate on what the role of sustainability for CDMOs is. Based on the results from the empirical research from interviews and content analysis conducted for this thesis, CDMOs, for the most part, are not currently integrating sustainability in their business and thus, not using it as a business advantage. As CDMO clients prioritize quality and fast market entry, they often overlook sustainability-related matters. As sustainability is overlooked by client companies, and the regulatory sphere is not advocating for a more sustainable field, CDMOs are not incentivized to integrate sustainability any further. This being stated, sustainability-related matters are gaining traction and thus, there are opportunities to be gained from sustainability in business.