The pharmaceutical industry faces significant sustainability challenges today. As one of the world’s least sustainable industries, it has a mountain to climb if it is to meet international targets. Clarasys consultant, Adam Said, investigates pharma’s current ESG efforts and looks to the future.
Following the COVID-19 pandemic, the pharmaceutical industry faced a rapid rise in demand. For any industry, a spike in demand brings huge challenges, but for an industry already behind the curve in environmental and social sustainability efforts, it has been an enormous test.
Pharma supply chain and procurement processes are notoriously energy intensive and inefficient, producing 55% more greenhouse gas emissions than the automotive industry (1), and using more than 23% of the world’s water supplies (2). As it stands, around 100kg of waste is generated per 1kg of drug produced (3), making the drug development process both harmful to the environment and cost inefficient. Socially, pharma also lags behind many other industries, with less than 10% of all CEO and leadership positions being held by women (4).
End-to-end, pharma’s drug discovery and development lifecycle can be broken down into five key stages, each of which carries its own unique set of ESG challenges (Table 1).
Table 1. The five key stages of the pharmaceutical supply chain and their most significant ESG challenges.
| Stage | Description | Significant ESG challenges |
| Research and development (R&D) | Sourcing raw materials for drug development (APIs and excipients). | Over 52 megatonnes of greenhouse gas emissions produced primarily by long-distance transport of R&D materials – 90% of the world’s APIs are sourced globally from China and India (4). The cold chain transport of pharmaceutical products costs around $10.6B per annum (5). |
| Clinical development | Manufacturing (processing, testing, and packaging) | Rigorous regulations govern the microbial contamination and safety of medicinal products. This largely restricts material use to non-recyclable plastics and foils. Consequently, ~100,000 tonnes of plastic packaging are produced for medicines globally per annum (6). |
| Manufacturing and supply chain | Distribution (wholesale distributors, labelling, serialisation, and tracing) | Many pharmaceutical products must be stored under strict Room Temperature and Pressure (RTP) conditions, making distribution and storage an energy-intensive process. Over $1B is spent on energy consumption in the pharma industry annually (7). |
| Commercial | Delivery (batch processing and delivery across retail pharmacies, hospitals, and clinics) | |
| Post-market surveillance and patient support | Ensuring safety and efficacy of patient therapy | <20% of all FDA-approved drugs produced between 2014-2021 had sufficient clinical trial data to accurately report benefits and side effects for black patients due to the lack of diversity at clinical trial stages (8). This combined with the lower accessibility of medicinal products in low-income countries due to patents contributes to the global health equity crisis (9). |
The pharmaceutical industry has struggled to keep up with other industries in the sustainability stakes. As international bodies such as the UN introduce new initiatives and targets, the pressure mounts for pharma companies to invest in more sustainable, yet cost-efficient ways of operating.
By 2028, pharma companies will be required to report the carbon footprint of every product on the market (10). This is a significant development in waste management law and a sign of future sustainability initiatives to come. Recently, we have seen big players shifting towards ESG investments; most notably, AstraZeneca is working towards 100% use of renewable energy by 2025 (11). Larger companies have a wealth of resources to help them meet new targets. However, for many smaller companies in the market, this is a problem.
To accelerate sustainability efforts, we believe the industry needs to do more work in the following areas:
In our experience, these are a few of the areas that we have considered when building roadmaps and investment cases for sustainable development within the pharmaceutical industry:
For organisations to achieve this, they need to:
With the rising public interest and subsequent investments in sustainability across industries, the pharma industry lags behind. Being an industry built on innovation and purpose, we know through our own experience there is an ambition amongst business leaders in this sector to address ESG challenges. To catch up, industry leaders should consider these first steps:
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