Big Pharma grappling with Russia boycott push

Earlier this week, pharmaceutical giant Johnson & Johnson joined a growing number of Western companies in announcing a further reduction in operations in Russia.

After already suspending new investments, pulling advertising and halting medical trial enrollments in early March, the company had mocked it for not going far enough in various high-profile campaigns calling for a full-scale boycott of Russia. following his invasion of Ukraine.

In response, Johnson & Johnson noted it would stop supplying its non-essential personal care products – such as Listerine mouthwash and Aveeno skin creams – while reaffirming its “commitment to supplying our medicines and medical devices” to Russia.

This approach reflects the narrow ethical path that the world’s largest pharmaceutical companies attempt to follow in their dealings with Russia – attempting to join the global outrage over Russia’s actions and corresponding corporate exodus without depriving Russian patients sick with life-saving drugs.

“Literally, if our products don’t get to patients in need, people will die or have serious consequences,” Johnson & Johnson executive vice president Joe Wolk told investors in March, defending the decision to sue. drug sales in Russia.

Some of the world’s largest pharmaceutical and health care companies – such as Pfizer, AstraZeneca, Glaxosmithkline, Merck, Sanofi and Novartis – have taken a similar stance by halting new investment, suspending clinical trials and limiting sales of drugs from crucial importance.

In a bid to show they are not profiting from their Russian operations, many have pledged to direct any proceeds from the sale of Russian drugs to charities and relief groups that support Ukrainian refugees and relief efforts.

“Pharmaceutical companies have this particular dilemma,” said Judy Twigg, a professor at Virginia Commonwealth University who specializes in Russia’s healthcare system. “They are very deliberately trying to demonstrate that if they want to continue to provide essential medical support to the Russian population – who they believe are not responsible for the war and should not be punished – then they are making it clear that they Don’t benefit financially from these sales and funnel the profits to Ukraine.

For some, this is not enough. Jeffrey Sonnenfeld, a professor at the Yale School of Management who has led a campaign calling on companies to pull out of the Russian market, says most of the world’s biggest pharmaceutical companies are just “buying time”, saying they have ” delayed planned future investments, development and commercialization, while continuing substantial activities” in the country.

But others who have pushed for a boycott of Russia say Big Pharma has – so far – handled the dilemma as well as it could have.

“We would never take lifesaving medicines out of any country…and the industry has halted new investment and the sale of non-essential products as requested by us,” said Jeremy Levin, the company’s chief executive officer. biotechnology Ovid Therapeutics, author of a open letter of the life sciences industry supporting the “economic disengagement” of Russia.

But since companies such as Johnson & Johnson and Nestlé have discovereda nuanced message of a partial withdrawal from the Russian market for humanitarian reasons is a tough sell to outraged consumers and worried shareholders in the West.

“The cynic in all of us says they say all these things about wanting to keep providing humanitarian medical support to innocent people in Russia, but they really just want to keep making money on the very big Russian market,” Twigg said.

“Increasingly, staying in the Russian market is going to turn into a money-losing proposition…It will be interesting over time to see how much their strategy changes as they can no longer make money from significantly by serving the Russian market.”

Several industry representatives declined to speak with the Moscow Times for this story, instead pointing to the previous company statements on their decisions to scale back operations in Russia and provide financial and medical support to Ukrainian causes.

The companies pointed out that Russia is only a small part of their global footprint. Pfizer and Johnson & Johnson told investors that Russian sales accounted for less than 1% of their global sales. income.

For clinical trials – where Russia is a much larger market, especially for early-stage oncology studies – experts said companies could easily shift recruitment to other markets, in a simple way and inexpensive to demonstrate partial exit.

For Russia, the stakes are potentially much higher. Studies estimate that up to 70% of Russian medicines are directly imported or manufactured in Russia by Western companies. This is despite a decades-long campaign by the Kremlin to boost the country’s domestic biotech industry and make Russia more self-sufficient.

Russia’s health watchdog warned on Wednesday of a booming online black market for drug sales amid pharmacy shortages and reports of panic buying.

Amid calls to nationalize or expropriate the assets of foreign companies leaving the Russian market — and strict capital controls barring many companies from sending income back to their headquarters — Levin said it was up to the Kremlin to ensure that the sale of essential drugs does not become prohibitively expensive or risky for Western companies.

“It would be the Russian government waging war on its own people,” he told the Moscow Times. “It is the Russian government that makes the decision not to buy these drugs for their patients in a way that ensures they get them. This is a Russian government problem, not an industry problem.

As numerous companies that left the Russian market, the pharmaceutical firms positioned their reduction as a suspension or stoppage of operations, rather than a permanent withdrawal. Some commentators see it as an attempt to avoid a backlash from Russian authorities, but the boycott movement fears companies will keep their options open for a return to the Russian market in the future once the public outcry subsides. will be calmed down.

Levin said it would be a dangerous move for his industry and warned his biggest peers against restarting sales of non-essential drugs.

“It would be shameful and would represent fundamental betrayal and cynicism. If companies are willing to betray their values ​​and return to a country that has devastated another country and slaughtered so many people, then shareholders need to ask themselves the question: does the management of this company live up to the values ​​that the board and shareholders really have to wait,” he said.

“I would expect a shareholder revolt over this. How can shareholders trust these companies to behave ethically if they violate their values?”

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