Pharmaceutical giant GlaxoSmithKline has responded to pressure from socially responsible investment managers and reduced the costs of essential medicines and drugs for developing countries.
GSK will start offering all under developed countries – particularly the sub-Saharan African countries where the need is rife – “preferential prices” for HIV/AIDS and anti-malarial drugs.
Henderson Global Investors' head of SRI strategy, Rob Lake, said the fund manager had been in talks with the pharmaceutical industry to ensure affordable access to HIV and AIDS drugs for developing countries.
GSK – one of the domestic market leaders in these drugs and medicines – is of particular importance to fund managers as they collectively have significant shareholder weighting in the firm.
GSK’s new policy follows a round table meeting that took place in March of the SRI teams from Morley Fund Management, Jupiter Asset Management, Friends Ivory & Sime and Henderson Global Investors.
The managers worked together to compare their strategies on petitioning GSK, after fears over negative media coverage of the pharmaceutical company’s pricing policies.
Friends Ivory & Sime senior analyst Olivia Lancaster said: “The main concern from the shareholder point of view is the 'reputational risk', it could be the Brent Spar for the pharmaceutical sector.”
Lancaster added: “In the long term there is a concern that through these issues that the whole credibility of global patent law will come under threat.”
Lake agreed and said: “There is a political risk that pressure could build up from developing countries to review international agreements on patent protections which are of course very important for drug companies.”
SRI managers are planning a follow-up meeting next week.Morley Fund Management company analyst Joanna Johnston said: “There is very much a feeling that the SRI community should be working more closely together on cases like this, the Glaxo case particularly shows the effectiveness of this.”
A number of SRI managers indicated that they would consider the impact of institutional investment on human rights in countries such as Burma and also the affects of climate change.
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