Un­lock­ing ESG strate­gies for growth with Gilead Sci­ences

RBC Cap­i­tal Mar­kets ex­plores what is ma­te­r­i­al in ESG for bio­phar­ma com­pa­nies with the ESG leads at Gilead Sci­ences. Gilead has long fo­cused on sus­tain­abil­i­ty but rec­og­nized a more ro­bust frame­work was need­ed. Based on a ma­te­ri­al­i­ty as­sess­ment, Gilead’s ESG strat­e­gy to­day fo­cus­es first on drug ac­cess and pric­ing, while al­so ad­dress­ing D&I and cli­mate change. Find out why Gilead’s board is “acute­ly aware” of the con­tri­bu­tion that ESG makes to firm’s over­all suc­cess.

Stake­hold­ers dri­ve ESG goals

Com­pa­nies in every in­dus­try are in­creas­ing­ly rec­og­niz­ing that stake­hold­ers have var­ied tar­gets and is­sues when it comes to ESG. At Gilead, the in­vestor com­mu­ni­ty is high­ly im­por­tant, and most of them have an ESG an­a­lyst that comes to meet­ings and wants an out­line of cur­rent and fu­ture goals for the firm. But the em­ploy­ees are the stake­hold­ers that are most com­mit­ted, they want to work at a com­pa­ny that’s do­ing the right thing.

“The stake­hold­ers that en­gage with us most fre­quent­ly on these kinds of goals and ESG is­sues are pri­mar­i­ly em­ploy­ees,” says Brett Pletch­er, Ex­ec­u­tive Vice Pres­i­dent of Cor­po­rate Af­fairs and Gen­er­al Coun­sel at Gilead.

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Ma­te­ri­al­i­ty for bio­phar­mas

For a ma­jor bio­phar­ma firm, ESG looks a lit­tle dif­fer­ent than it does in oth­er in­dus­tries. Af­ter build­ing up­on ini­tia­tives on goals, da­ta col­lec­tion and dis­clo­sure over five years, Gilead de­cid­ed last year to run a full ma­te­ri­al­i­ty as­sess­ment, which came up with five key el­e­ments for its strat­e­gy. These were, in or­der of im­por­tance: (1) drug ac­cess, pric­ing, and af­ford­abil­i­ty; (2) R&D (3); in­clu­sion & di­ver­si­ty; (4) at­tract­ing tal­ent to dri­ve in­no­va­tion; and (5) cli­mate change.

“Drug pric­ing is some­thing that we could spend a lot of time talk­ing about, and ac­cess has a lot of dif­fer­ent pieces to it from the pric­ing set by the drug com­pa­ny to the co­pay re­quire­ments set by the in­sur­ance com­pa­nies,” says Pletch­er.

This isn’t just an is­sue in the de­vel­op­ing world, but in the de­vel­oped world al­so, where Gilead has a num­ber of pro­grams to help pa­tients ac­cess its med­i­cines.

“We nev­er want a pa­tient to be un­able to ac­cess a med­ica­tion be­cause of cost. And so for any pa­tient who is unin­sured or has cer­tain lev­els of in­come, we have a free drug pro­gram where that pa­tient can give us a call and we can pro­vide that drug free of charge,” ex­plains Pletch­er.

“We al­so have co­pay as­sis­tance pro­grams where if pa­tients can’t af­ford to co­pay set by their in­sur­ance com­pa­ny we can as­sist them to some ex­tent. There are some pro­grams that we’re not al­lowed to pro­vide any as­sis­tance with, so there are al­so char­i­ta­ble foun­da­tions out there to which we’ll give mon­ey.”

How cli­mate change af­fects strat­e­gy

While cli­mate doesn’t fig­ure as high up in pri­or­i­ties as in oth­er in­dus­tries, it’s still an im­por­tant piece of ESG strat­e­gy at Gilead. The com­pa­ny has a tar­get to re­duce op­er­a­tional green­house gas emis­sions by 25% from 2016 lev­els by 2025, and it’s well on its way to achiev­ing that al­ready. Gilead has man­aged to make re­duc­tions of 44% so far, de­spite 14% op­er­a­tional growth, par­tial­ly aid­ed by sus­tain­able lab prac­tices.

“[We are] try­ing to dri­ve this no­tion of in­tel­li­gent lab­o­ra­to­ries, where lev­els of au­toma­tion can sig­nif­i­cant­ly im­pact con­sis­ten­cy in the way you use wa­ter and en­er­gy, for ex­am­ple, dur­ing clean­ing regimes etc. So us­ing tech­nol­o­gy and au­toma­tion to dri­ve some de­gree of con­sis­ten­cy in en­er­gy and re­source us­age is a huge part of our fo­cus,” says Joy­deep Gan­gu­ly, SVP of Cor­po­rate Op­er­a­tions.

ESG makes sense

Com­pa­nies and in­vestors are more aware to­day that ESG makes a tan­gi­ble dif­fer­ence to their bot­tom line. ESG in­vest­ments out­per­formed over 2020 and com­pa­nies that em­brace sus­tain­able strate­gies have al­so re­port­ed ma­te­r­i­al gains. For Gilead, it’s about be­ing thought­ful in its strat­e­gy.

“Our board is acute­ly aware of the con­tri­bu­tion that ESG makes to Gilead’s over­all suc­cess. And ac­tu­al­ly, it’s a point I can’t make strong­ly enough, we see this as a cer­tain de­gree of causal­i­ty that com­pa­nies that do in­vest in ESG are ac­tu­al­ly com­pa­nies that do well, and from our per­spec­tive we do see a very strong link be­tween our ESG ethos and our re­sults,” says Gan­gu­ly.

“That said, we are very thought­ful about the in­vest­ments we make. We be­lieve they need to be di­rect­ly cor­re­lat­ed to things like cli­mate change and in line with our strat­e­gy. But we don’t see this as be­ing you know mu­tu­al­ly ex­clu­sive… It’s a com­bi­na­tion of be­ing thought­ful, be­ing very strate­gic, and in­vest­ing heav­i­ly in plan­ning.”


Gain per­spec­tive to help you lead to­day and de­fine to­mor­row with Pathfind­ers, RBC’s new pod­cast for com­pa­nies and in­vestors in bio­phar­ma. Learn more.

AUTHOR

Brian Abrahams

Co-Head of Biotechnology Equity Research