GlaxoSmithKline Analysis - Case Study Example

Executive Summary This paper provides an understanding of four different questions regarding different topics related with GSK, a leading global pharmaceutical company. The report provides an understanding of the ethical lapses in the quality control of GSK’s products as the company fails to maintain and clearly highlight the side effects of some its manufactured drugs with has drawn the company with many litigations. The report than moves to highlight the major reasons of its leadership failure in preventing ethical issues particularly related to integrity problems as it fails to hold on its values to maintain Corporate Social Responsibility and indulging in off-label promotions of its drugs thus failing to maintain transparency. The report than highlights the recent case study of GSK in China for indulging itself in bribery to promote sales of its products which is due to many factors of which the major reason is its lack of ethics and practice of international code of conduct. Finally the report provides various factors that can help the company to prevent its future ethical dilemmas and reputational damage by ensuring better transparency in its workings. The report is than concluded to provide both theoretical and practical understanding of the entire paper under study. Table of Contents 1. Introduction 3 2. Ethical lapses at GSK 4 3. Causes of GSK’s Leadership Failure in Preventing Ethical Issues Particularly Integrity 4 4. GSK’s Recent Bribery and Misconduct Allegations in China (Case Analysis) 5 5. How GSK Can Prevent Future Ethical Dilemmas and Reputational Damage 6 6. Conclusion 6 7. References 7 1. Introduction This report has been prepared to particularly highlight four major questions related to GSK, a leading global pharmaceutical company. The report in its initial part highlights the major ethical lapses in its quality control as the company fails to disclose the correct side effects of its manufactured drugs and engage in off-labels problems. The report than moves to highlights the major reason of leadership failure in preventing ethical issues particularly related to integrity as it fails to stick to values of CSR. The report in its next part highlights a recent case study of bribery allegations which it has faced in China and its major reasons like omission and loopholes in its code of conduct. Finally the report in its last part provides various measures which it can deploy to prevent future ethical dilemmas and reputational damage with a conclusion to provide a deeper meaning to the paper. 2. Ethical Lapses at GSK GSK has been performing brilliantly in terms of its financial earning which has certainly benefitted much of its stakeholders. However, it has failed in preventing various lawsuits against it. Ethical lapses had been one of the major issues for the company which has been much detrimental to the consumers and have significantly impacted its product quality. The impact has been so strong that GSK has to look at ways which will help to ensure that the brand name doesn’t gets affected and the business continues in a similar fashion. Two of the major drugs manufactured and marketed by GSK named Paxil and Avandia had their research trials either falsified or gloss over results. The antidepressant Paxil drug has its own side effects which has been clearly visible by its users and causes side effects such as “birth defects” and “suicidal tendencies” which highlight major ethical lapses affecting the quality control of its products. GSK initially market its Paxil drugs to children who were actually vulnerable to its side effects. However a psychiatrist employed by GSK admitted that she had committed a false research when the product was during its trial run period and lied about psychiatric diagnoses. Avandia another drug of GSK used as a diabetes medicine had its quality compromised as it severely increased the risk of heart attacks as one of its major side effects thus again showing lack of ethical conduct associated with its product quality (Pratley, 2013). The lack of effectiveness to deal with the different ethical issues has multiplied the overall complexities and made it difficult for the organization to be able to control their working style. A third ethical lapse involved a direct physical compromise at the very manufacturing unit of GSK. Drugs that were packed in the manufacturing unit required quality control checks at international level and the same required GSK to ensure bacteria free drugs. However, the company lacked ethical conduct here as the drugs were not at all bacteria free as the same were compromised due to unhygienic practices. Factory workers were found to use bacteria-tainted water and were further found contaminating raw material as employees stick and used bare hands and arms into sterile control tanks. Furthermore, it was seen that employees neglected their regular duty of cleaning machines allowing germs to get medicated and mixed up its manufactured drugs (Teinowitz, 2010). High strength doses were seen to be delivered and backed in bottles which were labeled as low strengths. Thus, clearly indicating and highlighting ethical lapses in its product quality. Not being able to deliver on the quality standards especially when drugs are essential component for humans is an area which needs to be looked at carefully and ways need to be developed which will help to mitigate those risks. GSK has been impacted by various lawsuits against its ethical conducts and product quality which impacted the quality control as the same involved high cost in dealing with those suits and forcing company to attract to more unethical manners than maintaining the standard international code of conduct as required by the pharmaceutical companies all across the globe. This has impacted their brand name and has created doubts in the mind of the consumers. In addition to it the different law suits and people looking towards raising their voice against the manner in which GSK has dealt with the issue raises concerns which needs to be addressed so that other players become careful and doesn’t follow the same stand. 3. Causes of GSK’s Leadership Failure in Preventing Ethical Issues Particularly Integrity GlaxoSmithKline is one of the global leaders in pharmaceutical industry. The company’s success indeed not just depends on its products but equally on the leadership traits which its managers possess. Failure of leadership shall definitely lead to failure in preventing ethical issues, maintenance of Corporate Social Responsibility, failure in the maintenance of integrity and many other important issues and factors in the running of the organization. One of the major reason or cause for the failure of GSK leadership in preventing ethical issues particularly related to integrity failures is its inability to hold and stick to its principles and values which governs the Corporate Social Responsibility of the organization. The company has been severely involved in various lawsuits and varied allegations against them, which might be one of the critical factors that directed or led the leaders of GSK to adopt and practice to unethical acts and behaviors. The company is currently facing intense allegations of “off-label” promotion of its many drugs which could indeed be very detrimental to its end users which are the consumers (Thomas, 2013). An example of such an activity can be that a drug used for antidepressant which is clinically prescribed to a patient for weight loss could potentially lead the consumer to misuse the medication. Further there are many other reasons apart from the leadership inability to follow integrity in maintenance of ethical norms which has been discussed as under. GSK as a global pharmaceutical organization faces the problem of being managed and operated by dual corporate cultures which leads to cultural differences among its leaders, managers, top officials and lower level employees and which further lead to integrity problems. Employees on a closer view were seen to receive two different perspectives when faced with any ethical dilemma which in turn instead of solving the ethical dilemmas increased the ethical dilemmas and left the employees uninterrupted and helpless (Shobert, 2013). Leadership was found be much casual in their approach of maintaining ethical norms in the organization. Further, it can be concluded that leaders indeed did not make ethics their priority. Leadership was actually more concerned in dealing issues and problems relating to the bottom line than concentrating on the reputation or goodwill of the company, its employees, health and satisfaction of its end users and its clients. Leadership lacked integrity problems as employees who took some initiative to bring forth ethical or unsafe issues were either completely ignored or suppressed by managers by threats of job insecurity. Employees who brought up issues related to ethical norms and integrity issues were either dismissed or downsized. Thus, we see there were number of reasons which caused GSK’s leadership to fail in preventing ethical issues related to integrity failures. This requires the development of a proper code of conduct which governs every employee within the organization. This will thereby help to foster a culture where people act in a responsible manner and carry out the different responsibilities diligently. This will also be a case where the employees will understand the role through which they will be monitored and will thereby help to reduce such malpractices from taking place. The overall impact from it will be positive and will lead towards an environment where the different factors contribute towards brand building and strengthen the overall process through which work is being carried out. 4. GSK’s Recent Bribery and Misconduct Allegations in China (Case Analysis) Chinese government has recently launched investigations into foreign multinational companies facilitating bribery and other unethical practices in China. The most prominent MNC being caught up so far is GSK. This issue has been reported on a global scale cover various aspects such as compliance cost, economic pressure, aging patents on production and other important factors in emerging economies. This are aspect which needs to be considered so that GSK is able to ensure proper reporting and abides with the different legal requirements which will help to bring a complete change in the drugs manufactured by GSK. It is to be noted that one of the major reason for such a bribery and misconduct allegations on GSK by China is due to weaknesses or omissions in the code of conduct of GSK. GSK had developed its code on conduct based on international standards for pharmaceutical industry which covers various aspects such as conflicting interest, maintenance of proper books of records, avoiding corrupt practices and bribery, preventing fraud and many others. However in reality the practice of same has been violated in many cases which have contributed for such a situation occurring for GSK. A proper code of conduct which is applicable for all employees and makes them work under the same umbrella will help to bring a halt to activities which are doubtful. This would create an environment through which business progress and activities will be better monitored and will help to frame a process through which different areas will be monitored. Leadership abilities fail to maintain integrity issues in the organization. Further, the company in the past had failed to maintain transparency and goodwill as many allegations and lawsuits had already been filed against the company on matters relating to product quality, misconduct, ethical norms etc (Holland, 2013). The very concept of whistleblowers is not prominently present in its code of conduct and to add to the same it has been found that leaders use downsizing and dismissal techniques on employees who come up with any such unethical norms practiced by the company. GSK had received a report from anonymous internal whistleblower about its potential bribery of doctors in China. However, the company denied the fact by suggesting that there investigation showed no evidence of any such corruption. Thus we can say that even though the code of conduct of GSK has been suitably designed the company lacks in proper implementation of the same. Many critics suggest that China has been too harsh or whether it is really serious in its steps taken to tackle corruption and further it has become very difficult to business in China without intervening the UK Bribery Act. However, the same just remains a point on debate for critics. The mere fact that GSK was involved in bribery act is an act of offence and has clearly violated its own code of conduct which provides guidelines for bribery related issues. 5. How GSK Can Prevent Future Ethical Dilemmas and Reputational Damage GSK in order to maintain its reputation and goodwill along with loyal and faithful employees, stakeholders and consumers certainly needs to make serious changes in its organizational operative system. Currently the company operates under an Apathetic cultural environment where individuals instead of showing concern, excitement, motivation and passion for work are negatively related with such factors. Future ethical dilemmas and reputational damage can be prevented to considerable extent once the company tries to switch its working organizational environment from Apathetic culture to an Integrative Culture. GSK has been facing continuous problem in maintaining control over its product quality. The company currently faces many allegations and lawsuits filed against it products which hampers the growth of the company and provides a desired direction to its staffs to indulge themselves in unethical practices and attract reputational damage to the company. The company in order to eliminate or lower the same needs to institute checks and balances system under its day to day operations to ensure better control of its product quality. Code of conduct and corporate social responsibilities are other two factors which need to be considered minutely to ensure proactive planning for prevention of future ethical dilemmas and reputational damages. It needs to further ensure that amendment of code of conduct shall in no way prove fruitful to the organization until the same are brought into practice. A true and transparent system of working environment along with strict norms for violation of the same shall help the company to follow a more severe code of conduct for the betterment of the organization (Hensley, 2010). Company had already stated that they have a non retaliation policy for whistleblowers however, the same has not been enforced which clearly indicates signs of potential misconduct which are more likely to take place. GSK has always been known as one of the global leaders in the pharmaceutical industry with huge profits and growth. The company in order to ensure prevention of future ethical dilemmas and reputational damage should look towards a more transparent system of communication of information to its large public audience about its medications. Transparency in work shall not just help in prevention of future reputational damage but will provide a platform to enhance reputation and goodwill of the company in the longer run. A proper code of conduct which is applicable for all employees and makes them work under the same umbrella will help to bring a halt to activities which are doubtful. This would create an environment through which business progress and activities will be better monitored and will help to frame a process through which different areas will be monitored. Finally, apart from the aforesaid points mentioned, GSK should look and strive to follow strict governmental rules and policies along with a commitment to ensure no bribery system in its working pattern to boost up sales. It should look towards maintaining integrity in its organization and set examples and benchmarks for others to follow. Encouragement of feedbacks, forums and discussions shall ensure internal control checks in its daily operations. Further the company should look to create an ethical business culture for its employees and all stakeholders associated with the company. 6. Conclusion This report provides an understanding of assessment of GSK and its related case studies. The report highlights that the company has failed to properly disclose the risk and side effects on some its drugs which indicates lack of transparency in its working which is necessary in an ethical corporation. The report also provides an understanding of failure of leadership in preventing its ethical issues and integrity since the company fails to hold its values of Corporate Social Responsibility. The reports than moves to show the omissions in its code of conduct particularly lack of security for whistleblowers which was one of the major reasons for which the company paid a $3 billion settlement to meet its allegations of bribery in China. Finally the report provides ways through which the company can prevent its future dilemmas and reputation and emerge as a benchmark in the pharmaceutical industry. 7. References Hensley, S. 2010. Glaxo to Pay $750 million and plead guilty in drug quality case. Retrieved on Jan 28, 2013 from http://www.npr.org/blogs/health/2010/10/26/130838281/we-sort-of-saw-this-glaxosmithkline-settlement-coming-but-it-s-still-a-big-deal-when-any-company-shells-out-750-million-to Holland, T. 2013. Nothing uniquely Chinese about Glaxo bribery case. Retrieved on Jan 28, 2013 from http://www.scmp.com/business/companies/article/1293460/nothing-uniquely-chinese-about-glaxo-bribery-case?page=all Pratley, N. 2013. GlaxoSmithKline should have seen the warning signs in China. Retrieved on Jan 28, 2013 from http://www.theguardian.com/business/blog/2013/jul/24/glaxosmithkline-china-andrew-witty-corruption Shobert, B. 2013. Why Glaxo China’s scandal needed to happen. Retrieved on Jan 28, 2013 from http://www.cnbc.com/id/100923253 Teinowitz, I. 2010. GlaxoSmithKline admits problems with its drug. Retrieved on Jan 28, 2013 from http://www.dailyfinance.com/2010/10/27/glaxosmithkline-admits-problems-with-its-drugs/ Thomas, K. 2013. Drug Research in China falls under cloud. Retrieved on Jan 28, 2013 from http://www.cnbc.com/id/100905874 Read More