Enough of the Bad News. How About Some Good News About Business?

Pharmaceuticals have, by their nature, a social mission. The companies in this field make products which fight diseases, save lives, prolong life. Employees who help to develop and sell these products take great pride in this mission. Tension arises, of course, from the need to build a profit-making business from this science. When this need overwhelms the health aspects, the company is asking for trouble.

A physician, Daniel Vasella, has done one of the best jobs I know of in marrying these two purposes. Vasella presides over Novartis, the sixth largest drug company in the world. In the fall of 2003 I traveled to the Basel headquarters of this Swiss company to interview employees and Dr. Vasella.

Novartis was founded in 1996 when two old-line Swiss companies dating back to the 18th century – Ciba-Geigy and Sandoz – merged. Vasella, who had been working for Sandoz, was named CEO. He was then 42 years old. He’s the only CEO Novartis has ever had.

Vasella has transformed a hidebound Swiss culture into an adventurous, socially conscious enterprise. Fueling the growth are some blockbuster drugs – two effective cancer-fighting drugs, Gleevec and Zometa, and the anti-hypertensive agent Diovan. Novartis has also become the second largest producer of generic drugs.

On the social front, where the previous companies had a checkered past, Vasella moved quickly to establish Novartis as a leader. He signed up Novartis as a member of the United Nations Global Compact, joined with six other companies to launch another UN program, the Business Leaders’ Initiative on Human Rights, and he sat down with NGOs such as Amnesty International to get their views. The company’s position on human rights is quite clear: “Under no circumstances does our company accept practices in which profit is knowingly gained from the human rights abuses of others.”

Vasella has also made Norvartis a model of transparency. Results are reported in the format of the Global Reporting Initiative, and if you want to see the depth of detail, check out the current Novartis annual report, packed with such tidbits as the following:

· In 2005 Novartis made available drugs worth $696 million to 6.5 million patients. The company partners with the World Health Organization to provide free treatments to any leprosy patient.

· Novartis promises to pay a living wage to every employee in the world. This is defined as “the minimum pay sufficient to enable employees and their families to meet their basic material needs.” As a result, 93 employees are receiving pay hikes this year.

· A new program turned up 442 reports of misconduct; 142 were substantiated; result: 78 employees were separated.

Even more astounding was Dr. Vasella’s performance at this year’s World Economic Forum in Davos, Switzerland. In a video-conference dialogue with Secretary of State Condoleezza Rice, the Novartis CEO put some tough questions to her, asking, for example, whether the United States was “playing into the hands of enemies” through its tactics in fighting terror. In a follow-up interview in the New York Times, William J. Holstein, editor-in-chief of Chief Executive magazine, got Dr. Vasella to expand on his views, declaring that CEOs should speak up about poverty and other social issues. “If we want an open society and want to have the freedom to express ourselves, we have the responsibility to do so. Many think that politics have supremacy over business, but does this also imply that business is just a tool of government? On this, history teaches us some interesting lessons.”

Indeed, a week after this interview appeared, a 2,400-page report detailed how Germany’s Dresdner Bank had helped to finance the construction of the Auschwitz death camp in Poland during World War II.