Public Equities

ESG in Pharma: Has the ‘S’ Reached a Turning Point?

April 2022 – 7 min read

Increased regulation and heightened competition are transforming the pharma industry’s behavior when it comes to the pricing and availability of medicine.

Like all industries, the pharmaceutical industry faces both challenges and opportunities across the full spectrum of environmental, social and governance (ESG) considerations. On the environmental side, challenges typically relate to the supply chain, transport logistics and the disposal of pharmaceutical products and propellants. While many companies are making strides, challenges remain, even if the industry scores well when it comes to water and energy usage. Governance challenges also exist, connected with factors ranging from the heavy regulation of disease-treating therapeutics, to product quality and safety. But again, progress is being made.

Social issues continue to be an area rife with controversy. Most recently, this has stemmed from the pricing and availability of Covid vaccines, with pharma being painted as both a savior and a villain. However, what some investors may not realize is that following years of societal pressures and government regulations, the ‘S’ may also be the area where pharma companies have the greatest potential for progress and meaningful change. There will certainly be winners and losers as part of this transition, with ESG-forward companies focused on R&D and innovation likely to come out on top.

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Alexandra Hillier

Head of Global Health Care Research—Equities

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