Corporate Responsibility and

Third Party Relationships

GSK and Contract Manufacturers

James Hagan Vice President

Corporate Environment, Health & Safety

GSK and Contract Manufacturing

Overview of GlaxoSmithKline Scope Business/CR/EHS drivers CR / EHS process EHS management and audit EHS data reporting for CM Summary

Overview of GlaxoSmithKline - Who are we?

7% of total global pharmaceutical sales Total company sales: £21.2 bn / $31.8 bn

World leading research-based pharmaceuticalcompany.

GSK’s mission is “to improve the quality of human life by enabling people to do more, feel better and live longer”

GSK - Where are we?

Our International Region covers80% of the world’s population

GSK - Where are we?

100,000 employees worldwide– R&D

16,000 employees at 24 sites in 7 countries

– Manufacturing 42,000 employees at 91 sites in 38 countries

– Sales & Marketing 40,000 employees 191 countries

Our Flagship Products

Our Flagship Products

GlaxoSmithKline develops, manufacturers and markets:– pharmaceuticals, vaccines, over-the-counter

medicines and health related consumer products

Our broad pharmaceutical product line includes:– antibiotic, antidepressant, gastrointestinal,

dermatological, respiratory, cancer and cardiovascular medications

In 4 of the 5 largest therapeutic areas worldwide, we are world leaders:– anti-infectives, CNS, respiratory and metabolic

Our Flagship Products

We supply products to 191 global markets Produce over 1,200 different brands Manufacture 4 billion packs per year Produce over 28,000 different finished packs

per year Supply 6,900 tonnes of bulk active each

year Manage 2,000 new product launches

globally each year

Scope of Contract Manufacturing

GSK has strategic alliances and partnerships with over 400 Contract Manufacturers (many long term)

Across all the products in our portfolio For all the stages of product life cycles: GSK Spends over £800m per annum

Contract Manufacturers are integral to GSK’s supply chain

Business drivers for Contract Manufacturing

GSK has strategic alliances & partnerships with Contract Manufacturers:– To optimise supply chains & costs– To provide a ‘best in class’ supply base– To partner with companies on specialist

processes or technologies

GSK has a regional approach to supply local markets

Corporate Responsibility drivers for Contract Manufacturers

Committed to doing business with integrity Protect our Corporate Reputation Ensure compliance with EHS regulatory

requirements Protect CM employees, local communities, and

the environment Minimise business interruption and ensure

continuity of supply of medicines Minimise risk to GSK Foster sustainability Provide for competitive advantage

How do we manage the EHS / CR component?

Structure our approach within a comprehensive framework of Standards

Integrate EHS/ CR considerations in sourcing decisions and Contract Manufacturer selection

Incorporate EHS / CR requirements in contracts Conduct EHS audits to assess conformance with

GSK requirements and highlight areas for improvement

Monitor progress with audit follow-up

Work in partnership with Contract Manufacturersto prevent adverse events and ensure continuityof product supply:

Policy

Standards

Guidelines

Tools & Best Practices

GSK - EHS Framework

What the Global EHS Standards Do

• Establish a management system approach

• Outline minimum requirements

• Drive towards excellence

• Apply to everyone

• Effective from 2001

CR/EHS Requirements for Contract Manufacturers

Two specific Standards on CM Distilled set of Standards for CM Utilised in selection process Incorporated in contracts Requires

– compliance with laws & regulations– compliance with GSK Standards– report adverse events– report EHS performance

Corporate Responsibility issues beyond EHS

Comply with local employment legislation. Do not discriminate against sex, race,

religion or disability. Do not use child (< 16 years) or bonded

labour

CR requirements are included in contractlanguage and audit teams assess ContractManufacturers to ensure that they:

Scope of the EHS Audit Programme

Conduct over 40 audits per annum globally Selection for audit:

– where there is a significant spend / revenue / gross profit dependency

– serving multiple key markets or essential supply chains or supplying WHO products

– where significant hazards are presented by GSK technologies / products / processes e.g. cytotoxics

Contract Manufacturers have rated from 30% to 86% (out of 100%) on an EHS Audit scheme

Equivalent to ‘Poor’ - ‘Excellent’ on qualitative ratings or bandings

Audit process

Provides a governance review

Provides for working in partnership

Improves EHS performance of Contract Manufacturers through continuous review

Audit process

No progress = 2nd ‘exit’ opportunity

Example - EHS Audit Rating / Banding

6467

56

92

58

50

64

74

53

Overall EHS Audit % ratings by topic

Excellent

Good

Average

Poor

Unacceptable

Audit Experience Summary 2002-2003

Downsides– Some lack of investment / limited resources

(chiefly in the containment of APIs)– Occasionally poor Chemical Agents assessments– Occasional high incidence of EHS adverse events

Positives – Commitment to progress actions rapidly– Willingness to learn from the audit experience – Growing proportion of companies with ISO14001

– Best practices GSK could learn from…...

Annual Report Information

2002: Collected EHS data from key Contract Manufacturers

2003: Verifying the data collection process 2004 and beyond:

– Expand the number of CMs reporting results

– Incorporate collective results as part of GSK’s annual report

– Include Contract Manufacturers as part of GSK EHS footprint

Summary

The emphasis on partnership and continuous improvement

EHS / CR considerations are integrated in the business process

Audit teams conduct EHS audits to assess conformance with GSK requirements

EHS performance is generally good Future annual reporting to include EHS

performance results