Roche is a healthcare company that operates in two major divisions—pharmaceuticals and diagnostics. Within the pharmaceutical division, which comprises over 75% of sales, Roche specializes in oncology, immunology and infectious diseases.
According to the World Health Organization, nearly a third of the world’s population lacks access to the most basic essential medicines; in the poorest parts of Africa and Asia this figure rises to over 50%1. In addition, the failure of the public sector in low-income countries to provide affordable medicine exacerbates the problem by creating high out-of-pocket expenses2 . Pharmaceutical companies can improve access to medicine through strategic partnerships, outreach, education and training, and differential pricing schemes.
Roche has developed programs around the world to address health concerns and access to medicine. In China, cancer is the second largest cause of death and the leading cause of death in urban areas, yet only 6% of the Chinese population has health insurance that covers the cost of cancer treatment. Roche has partnered with ten local insurance companies, including the three largest, to help educate insurers and develop policies that will cover cancer treatment and care. Roche also offers differential and non-profit pricing methods for middle- and low-income markets.
Pharmaceuticals enter the environment in a variety of ways including emissions from manufacturing sites, disposal of unused medicines, and patient excretion. A 2013 study published in the Journal of Environmental Pollution analyzed effluent samples from 50 large wastewater plants in the United States. The samples contained 56 active pharmaceutical ingredients, with hydrochlorothiazide found in every sample and three other ingredients found in over 90% of the samples3. Pharmaceutical companies can decrease the impact of pharmaceuticals in the environment by conducting full life-cycle analyses of pharmaceuticals and encouraging take-back programs.
Roche conducts life-cycle analyses in an effort to reduce the volume of pharmaceuticals entering the environment. For example, the company is working to redevelop some of its pharmaceutical formulations to reduce solvent use while simultaneously increasing the recoverability and recyclability of its chemical inputs. In addition, Roche’s manufacturing facilities have been fitted with technologies to destroy potentially hazardous active pharmaceutical ingredients residuals from entering the environment, such as wastewater pretreatment systems that use high energy ultraviolet radiation.
Pharmaceutical manufacturing is highly energy and water intensive. In 2005 the U.S. pharmaceutical industry consumed $1 billion in energy4. During the same year pharmaceuticals consumed 36.68 million tons of oil equivalents in the European Union5. According to the World Health Organization, “water is the most widely used substance, raw material or starting material in the production, processing and formulation of pharmaceutical products.” Pharmaceutical companies must find ways to increase production to meet rising demand while decreasing energy related emissions and water requirements.
Roche aims to “use energy as efficiently as possible reducing energy consumption where possible and increasing the use of sustainable energy.” The company is working to decrease energy intensity in gigajoules per employee by 20% by 2020 (from 2010 levels) and by 50% by 2050 (from a 2005 baseline). The company currently consumes 9.8% of its energy from renewable sources, and aims to increase the proportion of renewable energy used to 20% of total energy consumed by 2020. Roche manages water supply and consumption locally. Sites are working to implement programs that reduce water consumption and recycle or reuse water.
The company’s diagnostic products division demonstrates leadership by producing only one version of each device for sale worldwide, thereby complying with the European Union’s Restriction of Hazardous Substances directive on a global basis. The company has established take-back programs for its electronic equipment in the European Union—as mandated by the Waste Electrical and Electronic Equipment directive—however, take-back programs in other countries, such as the United States, are an area for improvement.
To the best of our knowledge the above information is accurate and was obtained from sources we believe to be reliable. Neither the information presented above nor any opinion expressed shall be construed as an offer to sell or a solicitation to buy the security. The views expressed are those of portfolio management as of 7/31/14 and may not reflect current opinions or subsequent events.