Market Influence & Compliance

How the companies perform

Scores remain generally low, but there has been considerable movement between companies. Companies’ systems for ensuring compliance with codes of conduct, laws and regulations continue to fail, even when they are comprehensive and supported by detailed enforcement processes. Only four companies were not found during the period of analysis to have been the subject of settlements related to corruption or unethical marketing. All settlements found by the Index in a country in scope took place in China.

Fourteen companies have risen or fallen by four or more positions since 2014. The largest driver in ranking changes comes from breaches: where a company is judged, during the period of analysis, to have breached a law, regulation or code of conduct relating to corruption or marketing. Company transparency regarding lobbying and marketing is generally low. There is continuing cause for concern regarding companies’ apparently weak enforcement of compliance with laws and codes of conduct. This concern is particularly relevant where companies are expanding into countries with weak regulatory frameworks and prosecutorial systems.

Four leaders with strong compliance systems

The leading group comprises four companies: Gilead, Novo Nordisk, Eisai and Roche. These companies have all strong enforcement processes that also apply to their third parties. None of the top three companies were found, during the period of analysis, to have been the subject of settlements for breaches of criminal or civil laws or regulations relating to corruption or unethical marketing anywhere in the world. For Gilead and Novo Nordisk, this is the second time they have met this expectation.

Gilead once again ranks 1st, extending its lead. It provided evidence of having a high-quality system for ensuring employees comply with laws, regulations and codes of conduct. This system includes compliance training for third-party contractors. Gilead has also taken the innovative step of developing a dedicated compliance pocket guide for business partners. It also performs strongly in other areas: notably it publishes its policy positions related to access, in particular those related to the responsible use of intellectual property, and trade issues. However, like most other companies, it is not transparent about its marketing activities in countries in scope.

Gilead is followed once again by Novo Nordisk, which is among the leaders across all areas of measurement, with the exception of innovation. Eisai has climbed to 3rd place, due to its strong performance in compliance and the poorer performance of peers. Roche climbs eight positions to join the leading group in 2016. Although it was found to have breached one code of conduct (for a case of unethical marketing), it has a comparatively strong compliance system, which includes a clear approach to managing conflicts of interest.

Movement in the middle ranks

The leaders are followed by a large group of seven companies (ranked 5th to 11th), all tightly clustered: Sanofi, Johnson & Johnson, Merck & Co., Inc., AbbVie, GSK, AstraZeneca and Merck KGaA, in that order. Sanofi, ranked 5th, has risen the furthest (13 positions). This is mainly due to significant improvements in its compliance system: it conducts annual audits in its priority markets and rotational audits in other countries sensitive to risk. GSK was found to have breached civil laws for corruption or unethical marketing twice, once in China, and to have breached codes of conduct elsewhere, in cases of unethical marketing. Johnson & Johnson was also found to have breached both civil laws and codes of conduct during the period of analysis.

Merck & Co., Inc. is another big riser, from 16th to 7th. Although it was found to have breached civil laws and codes of conduct, it leads for the transparency of its marketing activities in countries in scope: it is the only company that publishes the financial support given to patients’ organisations and medical societies in countries in scope. AbbVie follows in 8th place. Although it was not found to have acted unethically, this is counter-balanced by below-average transparency regarding lobbying and marketing activities.

Generally, these seven companies have been found to have acted unethically one or two times. In lobbying and marketing, they generally do not go beyond minimal legal requirements when asked to disclose payments made to political parties or to healthcare professionals.

More breaches, less transparency

This pack is followed by another tightly ranked group, of six companies: Eli Lilly, Takeda, Bayer, Daiichi Sankyo, Novartis and Bristol-Myers Squibb, in that order. Most were the subject of civil or criminal settlements for cases of corruption or unethical marketing during the period of analysis. The exceptions here are Eli Lilly and Bayer, who were found to have breached codes of conduct. They are not transparent about their lobbying or marketing activities. Novartis was found to have breached civil laws for corruption or unethical marketing three times, once in China, and to have breached codes of conduct four times (for cases of unethical marketing).

Bristol-Myers Squibb is the biggest faller in this Technical Area: falling from 3rd to 17th place. It was found to have breached civil law in China for corruption. It also demonstrates no transparency across several areas of measurement.

Serious misconduct and lack of transparency

The three laggards, Astellas, Boehringer Ingelheim and Pfizer, have all been subject to civil or criminal settlements during the period of analysis for corruption or unethical marketing. They are not transparent about their ethical marketing or lobbying practices, nor do they disclose details of their compliance systems. Pfizer occupies 20th place. It was found to have breached laws or codes for corruption and unethical marketing more times than other companies, including in China.

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