Save lives. This is the motto of pharmaceutical companies. They develop and produce drugs to cure diseases. They engage in years-long research to find the new combination of molecules that is going to enhance the population’s health. Still, the environmental impact of the industry must also be considered. Indeed, don’t we ever hear how big this industry’s impact is on our planet? Don’t we sometimes read in the media that some pharmaceutical-producing company was not able to control its water effluents and released some strongly-polluting substance? Don’t we often have unused medications in our cupboards that we could recycle? Given this contradiction, Greenfish has been willing to understand the efforts of these companies, using two indicators:

  1. First, the sustainability efforts of these companies: as they do seem to be high-risk actors for our environment, what actions do they put in place in order to be as sustainable as possible?
  2. Second, their transparency: how well and how much do they communicate about their sustainable activities?

To get these answers, Greenfish developed the Sustainable Value Assessment (SVA, former Green Improvement Index).

The SVA was presented to all the pharmaceutical companies that have a production site in Belgium (36 firms). Of these, 6 (17%) agreed to be freely benchmarked on transparency and sustainability efforts, by answering a questionnaire. Amongst them, Sanofi and Catalent. The other selected companies mostly lacked time and interest for the benchmarking or for sustainability matters.

In this white paper, Greenfish wants to shed light on the sustainability-related challenges of this crucial industry for the Belgium economy, and on the main trends that are moving the sectors towards a healthier planet.

The pharmaceutical industry in the Belgian and European landscape

In Belgium, the pharmaceutical industry is known as being very well developed compared to other sectors: it has the highest added-value per person employed, its ratio “R&D Investments / Net Sales” is the highest with 40% private investments in R&D [1], it employs over 30 000  people in Belgium [2], and created 552 new direct jobs in the country in 2016.

On a European level, Belgium develops the highest number of drugs per million inhabitants [3]. Its pharmaceutical industry researches more than other countries [4] and has one of the best trade balances thanks to the high value of exports [1], representing more than 10% of the country’s total exports [2][4] (Figure 1).

Largest trade balances and exports of the Pharmaceutical Industry in EuropeFigure 1 – Largest Trade Balances and Exports of the Pharmaceutical Industry in Europe (15 first countries)

How come large pharmaceutical companies decide to set up in a small country like Belgium for production? There is indeed the famous port of Antwerp, that facilitates the logistics and export of products. But besides this, there are numerous investment sources available specifically to the industry, either private (around 280 business angels), or public (FIT, AWEX, Brussels Invest and Export, federal grants). Moreover, knowledge sharing, innovation support and governance lobbying are facilitated thanks to local organizations like Essenscia (800 members), Flanders Bio (Ghent cluster), BioWin (260 members) or Brussels Lifetech. Finally, tax incentives and a strong collaboration between pharmaceutical companies and the Belgian government encourage the development of the industry in Belgium [2].

At Greenfish, we think that leaders should walk the talk when it comes to change. Therefore, the pharmaceutical industry should also take part in the sustainable transition.

Sustainable challenges and opportunities

Despite the industry’s strong position in today’s Belgian economy, and despite the willingness of pharmaceutical industries to save lives, challenges are clear and real when regarding environmental aspects. One of the industry players, Catalent, states the following:

The primary environmental issues areas for CDMOs/pharmaceuticals include green house gasses (GHG), especially linked to energy consumption; waste generation; water use and the quality of water (presence of Active Pharmaceutical Ingredient (API)) when we release it into public areas/systems [5].

This is aligned with the results of a study of the United Nations Global Impact and KPMG [6]. The latter also identifies energy, waste, water. Great sustainable improvements can also be triggered by resource efficiency (not only water), efficient buildings and production plants, greener production and logistics processes or renewable and reusable materials (also for packaging). These entail opportunities for the evolution of the pharmaceutical industry.

On the other hand, the pharmaceutical industry is also recognized as being highly regulated, as it deals with public health. This means that there can be some barriers to improvement. Take the long development time of a new drug (8-10 years) for example, caused by the many safety measures that need to be taken. To suppress the time needed for cleaning and cleaning validation, and thus to reduce costs, they usually put in place batch processes with single-use systems [7]. One outcome is a substantial amount of waste, which illustrates the potential contradictions between health regulations and environmental progress.

To summarize, both barriers and challenges need to be thoroughly considered by pharmaceutical companies, in order to surf the wave of the sustainable transition. In the next section, let us be more factual by deriving the trends of the industry from the answers of the first batch of firms to the SVA questionnaire.

SVA discoveries

The participating companies are compared according to their sustainability and transparency efforts, as presented in the figures below. For the content of the scores, please refer to our Greenfish’s news.

Figure 2 shows that whereas there is some discrepancy in the sustainability score, the participants score more homogenously on transparency. Or to put it differently, Figure 3 shows that participants score an average of 71/100 on sustainability and of 64/100 on transparency, but with a larger difference between the maximal and minimal values of the sustainability score.

Benchmarking on sustainability and transparencyFigure 2 – Benchmarking on sustainability and transparency

 

Average sustainability and transparency scoresFigure 3 – Average sustainability and transparency scores

 

The inexistent link between firms’ profit and the sustainability score is also notable, as depicted in Figure 4. It means that both small and large pharmaceutical companies can score high on sustainability. Regarding the link between the firms’ transparency score and profit, the tendency is unclear. Overall, more data is needed to draw more robust conclusions.

SVA scores relation to profit levelsFigure 4 – SVA scores’ relation to profit levels

 

Regarding transparency, while companies were always willing to provide all the information related to the SVA questionnaire, the amount of public information has been evaluated at 28% on average. This means that pharmaceutical companies can put greater effort into the disclosure of their sustainability-related activities, as many sustainable actions have already been implemented. Therefore, it was recommended to some (companies) to detail actions in terms of employees sustainable commuting or related to energy efficiency practices for instance.

Regarding sustainability, Figure 3 shows an improvement capacity of close to 30%. To understand this score, let us divide it into the corresponding category scores (Figure 5).

Average score per SVA categoryFigure 5 – Average score per SVA category (in %)

 

Figure 6 – Standard deviation per SVA category (in %)
The standard deviation is the dispersion of all the companies’ scores from the mean score, per category

 

Given the many regulations in the industry, it is not a surprise that pharmaceutical companies that participated to the SVA place the focus on the safety of their production site, no matter their size, revenue or number of employees. This is visible in Figure 5 and Figure 6 that show that the average score in that category is high and that the standard deviation is low. This means that pharmaceutical companies usually have appropriate safety measures, provide employees with trainings to minimize accidents or organize periodic machines review. On site, there are also many pictograms and hazard symbols that promote safety.

Pharmaceutical firms also score high on average in “Innovation & Partnerships” or “Management” (Figure 5 and 6) but their standard deviation is higher, meaning that the volatility between corresponding company scores is important.

Given their results, the participants freely received a set of recommendations generated by Greenfish’s ecosystem (consultants, partners, experts, solutions, start-ups…). Amongst these, some recommendations on transparency, supply chain and energy were given, such as alternatives to dry ice used during transportation, analysis of renewable energy sources potential, or ideas for reducing heat loses coming from industrial processes. In particular, Greenfish suggested a 2-steps pathway to minimize heat loss [9][10]:

  1. Insulate heat solution tanks (double skin or pre-insulation) or their surface (floating insulation sections) if applicable.
  2. Recover the lost heat. Therefore, Greenfish advanced its partnership with QPinch that has developed a heat pump technology that collects industrial residual heat at the end of a heat-requiring process and sends it back at the beginning of the process. The system saves between 25% and 50% of energy, depending on the temperature and quantity of the residual heat available. The actual benefit is twofold given that it also reduces the cooling duty for the heat that has not been recovered. The scheme below shows how this technology works.
Qpinch heat recovery systemFigure 7 – Qpinch heat recovery system

In summary, the SVA has shown that the size of a pharmaceutical company does not determine the efforts that it can put into sustainability and transparency matters. Without great surprise, pharmaceutical companies already focus strongly on the safety of their production site. Yet, there are opportunities for pharmaceutical companies to become more sustainable, especially in the areas of mobility, energy, environment, and supply chain. Greenfish commits to helping companies in these areas: we have developed an integrated approach and user-friendly tool to transition towards a sustainable mobility, as well as a structured approach leading to innovative energy solutions for instance. Nonetheless, more data across the industry would allow concluding on these aspects in a more robust way.

 

Are you part of a company that wants to evaluate where it stands on sustainability and transparency? Do you want to compare your efforts to the ones in your industry? Do you want to be part of the transition towards a more sustainable world? Please get in contact with green_index@greenfish.eu.

 

Delphine Struyf – Project Assistant, Green Solutions at Greenfish

 

[1] EFPIA, “The Pharmaceutical Industry in Figures” 2017.

[2] Belgian Federal Government, „Pharmaceutical Industry,” 2018. [Online]. Available: https://www.business.belgium.be/en/investing_in_belgium/key_sectors/pharmaceuticals. [Geopend 26 09 2018].

[3] F. Bries en S. Albert, “Belgian Biotechnology” Belgian Foreign Trade Agency, 2011.

[4] Pharma.be, “Pharma Figures 2016 – Belgium, a growing pharmaceutical hub” Catherine Rutten, Brussels, 2016.

[5] Catalent, “Corporate Responsibility” Catalent, 2018. [Online]. Available: https://www.catalent.com/index.php/about-us/Corporate-Responsibility/Environment. [Geopend 26 09 2018].

[6] United Nations Global Impact & KPMG, “SDG INDUSTRY MATRIX – INDUSTRIAL MANUFACTURING”, 2016.

[7] S. Haigney, “Integrating Single-Use Systems in Pharma Manufacturing” Pharmaceutical Technology , vol. 40 , nr. 6, 2016.

[8] EE Metal, “Reducing heating losses from process solutions in the surface treatment industries” 2016. [Online]. Available: https://www.ee-metal.com/techniques/reducing-heating-losses-from-process-solutions-in-the-surface-treatment-industries/. [Geopend October 9 2018].

[9] International Trade Administration, “2016 Top Markets Report Pharmaceuticals” U.S. Department of Commerce, 2016.

[10] Trucost & BrownFlynn, “What Matters and Where: Managing sustainability in the heathcare sector”, 2015.