Biotechnology & Pharmaceuticals

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Current language: English
The Biotechnology & Pharmaceuticals industry develops, manufactures, and markets a range of brand-name and generic medications. A significant portion of the industry is driven by research and development, a high risk of product failure during clinical trials, and the need to obtain regulatory approval. Concerns over pricing practices and consolidation within the sector have created downward pricing pressures. Demand for the industry’s products is largely driving by population demographics, rates of insurance coverage, disease profiles, and economic conditions.

Relevant Issues (8 of 26)

Why are some issues greyed out? The SASB Standards vary by industry based on the different sustainability-related risks and opportunities within an industry. The issues in grey were not identified during the standard-setting process as the most likely to be useful to investors, so they are not included in the Standard. Over time, as the ISSB continues to receive market feedback, some issues may be added or removed from the Standard. Each company determines which sustainability-related risks and opportunities are relevant to its business. The Standard is designed for the typical company in an industry, but individual companies may choose to report on different sustainability-related risks and opportunities based on their unique business model.
  • Environment
    • GHG Emissions
    • Air Quality
    • Energy Management
    • Water & Wastewater Management
    • Waste & Hazardous Materials Management
    • Ecological Impacts
  • Social Capital
    • Human Rights & Community Relations The category addresses management of the relationship between businesses and the communities in which they operate, including, but not limited to, management of direct and indirect impacts on core human rights and the treatment of indigenous peoples. More specifically, such management may cover socio-economic community impacts, community engagement, environmental justice, cultivation of local workforces, impact on local businesses, license to operate, and environmental/social impact assessments. The category does not include environmental impacts such as air pollution or waste which, although they may impact the health and safety of members of local communities, are addressed in separate categories.
    • Customer Privacy
    • Data Security
    • Access & Affordability The category addresses a company’s ability to ensure broad access to its products and services, specifically in the context of underserved markets and/or population groups. It includes the management of issues related to universal needs, such as the accessibility and affordability of health care, financial services, utilities, education, and telecommunications.
    • Product Quality & Safety The category addresses issues involving unintended characteristics of products sold or services provided that may create health or safety risks to end-users. It addresses a company’s ability to offer manufactured products and/or services that meet customer expectations with respect to their health and safety characteristics. It includes, but is not limited to, issues involving liability, management of recalls and market withdrawals, product testing, and chemicals/content/ingredient management in products.
    • Customer Welfare The category addresses customer welfare concerns over issues including, but not limited to, health and nutrition of foods and beverages, antibiotic use in animal production, and management of controlled substances. The category addresses the company’s ability to provide consumers with manufactured products and services that are aligned with societal expectations. It does not include issues directly related to quality and safety malfunctions of manufactured products and services, but instead addresses qualities inherent to the design and delivery of products and services where customer welfare may be in question. The scope of the category also captures companies’ ability to prevent counterfeit products.
    • Selling Practices & Product Labeling The category addresses social issues that may arise from a failure to manage the transparency, accuracy, and comprehensibility of marketing statements, advertising, and labeling of products and services. It includes, but is not limited to, advertising standards and regulations, ethical and responsible marketing practices, misleading or deceptive labeling, as well as discriminatory or predatory selling and lending practices. This may include deceptive or aggressive selling practices in which incentive structures for employees could encourage the sale of products or services that are not in the best interest of customers or clients.
  • Human Capital
    • Labor Practices
    • Employee Health & Safety
    • Employee Engagement, Diversity & Inclusion The category addresses a company’s ability to ensure that its culture and hiring and promotion practices embrace the building of a diverse and inclusive workforce that reflects the makeup of local talent pools and its customer base. It addresses the issues of discriminatory practices on the bases of race, gender, ethnicity, religion, sexual orientation, and other factors.
  • Business Model and Innovation
    • Product Design & Lifecycle Management
    • Business Model Resilience
    • Supply Chain Management The category addresses management of environmental, social, and governance (ESG) risks within a company’s supply chain. It addresses issues associated with environmental and social externalities created by suppliers through their operational activities. Such issues include, but are not limited to, environmental responsibility, human rights, labor practices, and ethics and corruption. Management may involve screening, selection, monitoring, and engagement with suppliers on their environmental and social impacts. The category does not address the impacts of external factors – such as climate change and other environmental and social factors – on suppliers’ operations and/or on the availability and pricing of key resources, which is covered in a separate category.
    • Materials Sourcing & Efficiency
    • Physical Impacts of Climate Change
  • Leadership and Governance
    • Business Ethics The category addresses the company’s approach to managing risks and opportunities surrounding ethical conduct of business, including fraud, corruption, bribery and facilitation payments, fiduciary responsibilities, and other behavior that may have an ethical component. This includes sensitivity to business norms and standards as they shift over time, jurisdiction, and culture. It addresses the company’s ability to provide services that satisfy the highest professional and ethical standards of the industry, which means to avoid conflicts of interest, misrepresentation, bias, and negligence through training employees adequately and implementing policies and procedures to ensure employees provide services free from bias and error.
    • Competitive Behavior
    • Management of the Legal & Regulatory Environment
    • Critical Incident Risk Management
    • Systemic Risk Management

Disclosure Topics

What is the relationship between General Issue Category and Disclosure Topics? The General Issue Category is an industry-agnostic version of the Disclosure Topics that appear in each SASB Standard. Disclosure topics represent the industry-specific impacts of General Issue Categories. The industry-specific Disclosure Topics ensure each SASB Standard is tailored to the industry, while the General Issue Categories enable comparability across industries. For example, Health & Nutrition is a disclosure topic in the Non-Alcoholic Beverages industry, representing an industry-specific measure of the general issue of Customer Welfare. The issue of Customer Welfare, however, manifests as the Counterfeit Drugs disclosure topic in the Biotechnology & Pharmaceuticals industry.
General Issue Category
(Industry agnostic)

Disclosure Topics (Industry specific) for: Biotechnology & Pharmaceuticals

Human Rights & Community Relations
  • Safety of Clinical Trial Participants

    Clinical trials are an essential component of the approval process for biotechnology and pharmaceutical products. The safety of clinical trial participants is a critical component of an entity’s ability to successfully bring a product to market. Oversight of these trials is an important factor in the industry due to the number of clinical trials conducted by third party contract research organisations as well as those conducted in emerging markets. Biotechnology and pharmaceuticals entities that effectively manage clinical trials may be positioned to enhance shareholder value through the revenue associated with new products.
Access & Affordability
  • Access to Medicines

    Biotechnology and pharmaceuticals entities play an important role in providing access to the industry’s products around the world. Firms can develop pricing frameworks that account for differing levels of economic development and health care needs across various countries. Further, the industry can target priority diseases in developing countries. Strategic approaches related to access to medicines can yield opportunities for growth, innovation, and unique partnerships, which may enhance shareholder value.
  • Affordability & Pricing

    Stakeholder emphasis on health care cost containment and increased access will likely continue to place downward pricing pressures on the Biotechnology & Pharmaceuticals industry. As a result, entities that have relied on raising drug prices, contractual advantages, and reverse payments to protect profits may be challenged to enhance value by efforts to reduce costs. Firms that prevent stakeholder scrutiny of pricing practices may limit their exposure to issues such as regulatory action, or adverse reputational impacts.
Product Quality & Safety
  • Drug Safety

    Information on product safety can surface after controlled clinical trials and regulatory approval. Subsequently, entities are exposed to the financial implications of recalls and other adverse events. Product safety concerns, manufacturing defects, or inadequate disclosure of product-related risks can lead to significant product liability claims. Biotechnology and pharmaceuticals firms that limit the incidence of recalls, safety concerns, and enforcement actions for manufacturing concerns may be better positioned to protect shareholder value. In addition, concern over the abuse or resale of certain medications has led to mandated take-back programs. Firms that are able to successfully engage in these programs may limit future liabilities.
Customer Welfare
  • Counterfeit Drugs

    The World Health Organization estimates that counterfeit drugs represent more than 10 percent of the pharmaceutical supply chain in low and middle-income countries. The issue of fake or substandard medication also presents a significant risk in developed economies. Biotechnology and pharmaceuticals entities may face added costs as numerous governments and agencies have implemented drug supply chain regulations in an effort to prevent counterfeit, substandard, or mislabeled drugs from entering the pharmaceutical distribution system. Entities that fail to manage this issue effectively may face material risks associated with the potential loss of public confidence and reduced revenue.
Selling Practices & Product Labeling
  • Ethical Marketing

    Biotechnology and pharmaceuticals entities face challenges associated with the marketing of specific products. Direct-to-consumer advertisements for prescription drugs provide opportunities for increasing market share. However, challenges arise from the potential for marketing off-label uses, which can result in significant fines and settlements. Corporate disclosure of legal and regulatory fines and the codes of ethics that govern marketing activities will allow shareholders to better understand performance in this area.
Employee Engagement, Diversity & Inclusion
  • Employee Recruitment, Development & Retention

    Biotechnology and pharmaceuticals entities face intense competition for employees. The industry relies on highly skilled employees to develop new products, conduct clinical trials, manage government regulations, and commercialise new products. Firms that are able to attract and retain employees in light of a constrained talent pool may be better positioned to protect and enhance shareholder value.
Supply Chain Management
  • Supply Chain Management

    For the Biotechnology & Pharmaceuticals industry, supply chain quality is essential to protecting consumer health and corporate value. Biotechnology and pharmaceuticals firms that fail to ensure quality throughout their supply chains are susceptible to lost revenue, supply disruptions, and reputational damage. Disclosure of supply chain audit programs may provide shareholders with an understanding of how entities in this industry are protecting shareholder value.
Business Ethics
  • Business Ethics

    Biotechnology and pharmaceuticals firms are subject to various international, national, and state laws pertaining to health care fraud and abuse. For example, in the U.S., anti-kickback laws and the Foreign Corrupt Practices Act generally prohibit entities from making payments for the purpose of obtaining or retaining business. The ability of entities to ensure compliance throughout their global and domestic operational footprint may have material implications. Corporate disclosure of legal and regulatory fines and the codes of ethics that govern interactions with health professionals may allow shareholders to monitor performance in this area.

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Current Industry: Biotechnology & Pharmaceuticals

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