Corporate Social Responsibility (CSR) and Pharmaceutical Sector in India: Insights from Annual Reports of Selective Pharma Companies

Abstract

Thought or any discussion of Corporate Social Responsibility (CSR) always remains an enigma for businessmen. Some consider it a forced expenditure which brings no value to shareholders even if there is an age old practice of putting money by Indian businesses for social development. The Companies Act, 2013 has made this mandatory for every company having net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year to constitute a CSR Committee and to spend, in every financial year, at least two per cent, of the average net profits of the company made during the three immediately preceding financial years, towards CSR activities. Companies with their eye on getting some publicity, try to put money in activities which in the end neither benefit society nor company. However, the case of CSR activities undertaken by pharmaceutical companies is more interesting on account of nature of their business. Majority of pharmaceutical companies are already spending money on CSR activities mentioned in the legislation and are duly reporting the same, in their annual reports. It is difficult to assess whether these activities are bringing any noticeable value for companies given their lack of direction, relatedness & prioritization in these activities. It becomes essential for pharmaceutical companies to consider it as an opportunity to create strategic advantage for society as well as for business in place of considering it as a financial burden on shareholders. However, pharmaceutical companies need to follow a systematic framework to decide which CSR activities should be undertaken, out of the prescribed ones, to create that competitive & strategic advantage. The present study provides insights on CSR activities of pharmaceutical and allied sector companies. The study covers aspects such as activities undertaken by these leading pharmaceutical companies, their CSR spending, thrust areas of CSR expenditure, geography covered for CSR activities, and the extent of compliance with the provisions of the Companies Act, 2013. A suggestive framework is being provided for pharmaceutical companies for CSR spending so that effort remains directed, related to their core competencies and focus on priority areas out of all CSR activities. This framework will not only help not in creating competitive and strategic advantage for company but also for the society as it will consider aspects such as direction of CSR spend, relatedness of existing CSR activities to their business and prioritization of CSR activities.