Lundbecks turnaround

Barbed tape at a prison

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The medical company lundbeck have been criticised for selling drugs (Nembutal) that have been used to kill people on death row. For a long period Lundbeck management has neglected to take any action either by refusing sales to in states were the drug was used in prisons or by suspending sales all together. This situation have however changed as Lundbeck have crated a clause in the contract with the distributers that they can’t sell the drug to prisons.

When the case started the company came out with a statement that it was not intend of Lundebck that their drugs should be used for anything else than helping people. Stating  ”Our mission is to improve the quality of life for those suffering from psychiatric and neurological disorders.” seemed at the time to be a little hollow. For the public it was not really the fact that their drugs were used but more that the company did nothing in order to prevent them for being used in this way that was the main issue.

I few weeks ago I blogged about on of the major institutional investors Unipension dropped Lundbeck from their portfolio and it sounds like the company is starting to listen to the voice of their stakeholders. In the blog post I wrote about some of the factors, which would influence the company into changing its policy.

1. Lundbeck have until now been one of the model companies in terms of CSR commitment and reporting. This has in its self created a platform from which critical stakeholders can hold the company accountable.

This seem to be exactly what has happened as the company is now perceived as a stepping stone for a much larger debate around capital punishment in the US and if European companies should be involved in practices which is illegal in their home country.

2. The company has in the past been involved in somewhat dubious affairs when it was engaged in the UN food-for-oil-program despite the company had a very explicit anti-corruption policy. For this it the company was heavily criticized together with a number of other companies.

The old skeletons have not been following out of the closet at this time but there is no doubt that this would be a logical next step if the company did not change their ways.

3. The company is involved in the production of drugs, which normally would be associated with improving people’s life not helping life come to a rapid end.

This seem to be the central issue for Lundbeck that in their mind the drug was misused by the US government to means which was not part of the original intend of the drug.

4. Lundbeck is a major player in the anti-depressant drug industry and have a major stake in the US and European market making them highly visible to a lot of consumers. It is estimated that about one in twenty will have a depression at any given time making the decease common place among the majority of the population.

At some point even if one think he or she is right have to make a decision whether or not the benefit of staying in a market will harm the long-term ability of the company to operate. And it could be that this have been one of the major causes why Lundbeck now have take a major turn in relation to marketing their product in the US.

Based on the 9 months of criticism that they company have been subjected to they have appeared to have had second thoughts on their initial strategy and will nor implement changes that will make it more difficult to sell the drug to prisons.

The Company has within the past two to three weeks initiated a thorough investigation of the distribution of Nembutal in the U.S.. The goal was to find a way that ensured that the prison authorities in the U.S. states have a harder time getting hold of the drug.

Anders Schroll, Communications Director at Lundbeck was quoted to say. “We have put a survey of the distribution system in motion, that can identify opportunities to control distribution. The aim is that it’s not from our suppliers or subcontractors, the prison authorities get hold of the substance. That does not mean that we can guarantee that prisons do not get the drug, but we can make it more difficult for them to grab it,”

He stresses however that one should not expect a change in the distribution system here and now.”It requires thorough investigations, for we must not make a system that is so restrictive that hospitals can not get hold of it in emergency situations,”

We often discuss what the real effect of stakeholder engagement is or if companies that have gone down the CSR path can turn back ones their first steps have en taken. I think Lundbeck is a good example that CSR is a ‘double edge sword’ and that it goes beyond mere rhetoric ones first articulated. The company have been know as one of the leader within the CSR field at least in Scandinavia and this engagement have for a long time protected it from criticism. However this seem to have ended with this case and other companies should learn that even though they are communicating passionately about their CSR activities there is a limit to what they can do.


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