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 pharmaceutical company. 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 covers 80% 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

 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 Manufacturers to prevent adverse events and ensure continuity of 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 contract language and audit teams assess Contract Manufacturers 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

Audit Experience Summary  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