Based on turnover, net worth or profit criteria, pharmaceutical companies comply with the requirements of Section 135 of the Companies Act along with the Companies (Corporate Social Responsibility) Rules, 2014, and spend a certain amount of profits on CSR activities. CSR Committee or CSR & ESG Committee of respective companies is entrusted with the mandate to achieve the objectives. The CSR Policy and programs focus on the areas covered under Schedule VII of the Companies Act, 2013 and the CSR Committee on the behalf of a given company strives to create maximum impact by leveraging a company’s financial and human resources, networks and expertise. Pharmaceutical companies are actively performing CSR activities on their own or these companies engage Self-help Groups (SHGs), Non-governmental Organizations (NGOs), and their own Foundations to carry out their CSR Policy.
Most of these top pharmaceutical companies have created their own foundations/trusts/Section 8 companies to implement CSR Policy. For example, Sun Pharma has Foundation for Disease Elimination and Control of India (FDEC), Divi’s Labs has Divi’s Foundation for Gifted Children, Cipla has Cipla Foundation, the Torrent Group has the UNM Foundation, Mankind Pharma has J. C. Juneja Foundation, to name a few. Some of these organizations have created multiple foundations too to lay emphasis on specific areas, e.g., Shantilal Shanghvi Foundation and Sun Pharma Science Foundation belongs to Sun Pharma.
In addition to their own foundations/trusts, these pharmaceutical companies also collaborate with many NGOs, foundations, trusts, or societies besides supporting government-backed initiatives. For example, Dr. Reddy’s Laboratories has Dr. Reddy’s Foundation as Implementing Agency for multiple CSR projects in the areas of Livelihood and Environment. At the same time, NICE Foundation is the Implementing Agency for Health-related projects – Community Health Intervention Programme (CHIP).
CSR activities are being carried out by these pharma companies in those countries too where these companies have operations. For example, Lupin Limited partnered with Mark Cuban Cost Plus Drug Company and the COPD Foundation to improve access to affordable medications for Chronic Obstructive Pulmonary Disease (COPD) patients in the U.S. In the same way, pharma MNCs having operations in India are carrying out CSR initiatives in India too when their turnover, net worth or profits exceed the prescribed limit.
Just like other Companies, pharmaceutical companies too get Impact Assessment of the CSR Projects done from Independent Agencies, e.g., Soulace, an independent agency carried out Impact Assessment for Zydus Foundation. The Company shared the brief details on the findings of Impact Assessment. Findings indicated that the services provided by Zydus Foundation were comparable to those of top corporate hospitals, and there was no compromise on quality despite being offered free of charge. It was also reported that findings were based on interviews of patients, and Impact Assessment study had revealed a high level of satisfaction amongst patients regarding various aspects such as hospital ambience, affordability and accessibility of services, doctors, and nursing staff. Independent Assessment by a third party helps in enhancing trust in activities pursued.
Pharmaceutical companies differ in their approach to CSR in terms of ‘what aspects’, as well as ‘how aspects’. Provisions have been laid down in the Companies Act regarding CSR activities but pharmaceutical companies focus on specific areas of their interest too through their own foundation. ‘How aspect’ is also important, i.e., to understand whether these pharmaceutical companies are deploying resources through their related entity or through outside bodies such as NGOs, or SHGs.
During FY24, Sun Pharma spent ₹46.03 Crores on CSR activities including amount spent in administrative overheads, and amount spent on Impact Assessment. Business Responsibility and Sustainability Report (BRSR) cited that the company is engaging with NGOs to facilitate the streamlining of the CSR activities which are undertaken in partnership. Main areas of interest for NGO include employee volunteering, and agile management process. Sun Pharma formed Foundation for Disease Elimination and Control of India (FDEC), a wholly owned subsidiary on September 21, 2016, as a Section 8 Company. This subsidiary is dedicated to CSR initiative of the company.
Divi’s Labs had a CSR commitment of ₹57.97 Crores and benefited about 12,28,000 beneficiaries during FY2024. Divi’s Foundation for Gifted Children is the trust in which contribution for CSR project implementation is made by the company.
In Cipla Limited, their employees regularly volunteer or participate in crowdfunding campaigns. Over 100,000 hours of volunteering was reported for FY24. Cipla Foundation is the philanthropic arm of Cipla Limited and all CSR activities within the company are undertaken directly by the company or through its Foundation. It is the Cipla Foundation that identifies CSR projects as per the CSR Policy of the company and proposes to the CSR Committee. Implementation and monitoring of the projects is also entrusted to the foundation. The Foundation collaborates with various institutions, NGOs, and government agencies to enhance the outreach of CSR initiatives of the company. Besides Cipla Foundation, there are two other key entities namely Chest Research Foundation (formerly known as Hamied Foundation) and Cipla Cancer & AIDS Foundation.
The Torrent Group runs a not-for profit organization formed as a Section 8 Company, the UNM Foundation which is named after the founder – U. N. Mehta. The UNM Foundation is involved in many initiatives across the areas such as Healthcare, Education, Ecology, Arts, Culture, and social well-being. CSR and social donations for FY24 stood at ₹44.0 Crore.
Mankind Pharma spent ₹35.90 Crore in FY24 as CSR Expenditure due to which more than 1,60,000 lives were positively impacted. Range of CSR activities can be observed from diverse NGOs, SHGs, Foundations or organizations supported through CSR initiatives of the company. A Holistic Development Approach in 10 villages of District – Sirmour through partner AT India for sustainable and resilient mountain communities, prevention and empowerment of Leprosy and Lymphatic Filariasis Patients through Lepra Society, prevention and strengthening of primary healthcare service through Mamta HIMC at Sirmour districts of Himachal Pradesh are just few notable initiatives.
The Lupin Human Welfare and Research Foundation was established in 1988 by Lupin Founder – Dr. Desh Bandhu Gupta. This was set up to promote good health and foster economic growth through sustainable livelihood in India’s most marginalized regions. Lupin Foundation set up by Lupin Limited served over 1,405 villages across eight states in FY24. Lupin Limited could not set-up a state-of-the-art Hospital in Mumbai so the company had decided to de-register Lupin Foundation.
Zydus Lifesciences has set up Zydus Foundation, a Section 8 wholly owned subsidiary of the company and has CSR and ESG Committee in place. The Company has also established Zydus Red Cross Experiential Centre in collaboration with Red Cross Society with an objective to create awareness for blood donation. For FY24, the company spent ₹13.31 Crore on CSR activities. Through Zydus Medical College and Hospital (ZMCH), about 4.50 Lakh persons benefited from CSR projects.
Aurobindo Pharma reported that 8.59 Lakh lives have been impacted through CSR interventions in FY24 itself. In FY24, ₹37.3 Crore investment has been made in CSR initiatives. Aurobindo Pharma Foundation, India as a Section 8 Company was formed in July 2020 as a wholly owned company, and is philanthropic arm of the company.
Pharma MNCs which operate in India include Abbott India, GlaxoSmithKline, Pfizer and AstraZeneca among top 25 listed pharmaceutical companies. These companies are also actively engaging NGOs and SHGs. During FY24, Abbott India spent at ₹24.37 Crores on various CSR programs. The company contributed to Self Employed Women’s Association (SEWA) for quality and affordable healthcare delivery program. It also promoted STEM education and healthy living among children ─ with Smile Foundation.
To summarise, it can be said that pharmaceutical companies are pursuing their CSR activities through their own foundation which is in the form of a Trust or a Foundation registered as a Section 8 Company set up as non-profit organization. Alternatively, these pharma companies rope in those NGOs, or SHGs which have active involvement in areas of interest relevant for specific pharmaceutical company.
Dr. Anil Kumar Angrish- Associate Professor (Finance and Accounting), Department of Pharmaceutical Management, NIPER S.A.S. Nagar (Mohali), Punjab
Disclaimer: Views are personal and do not represent the views of the Institute.
