ACCT19083 – Corporate Governance and Ethics

Assessment Item 3 – Written Assessment

cutive Summary
GlaxoSmithKline produce some of the world’s most well-known drugs and pride themselves on being a company focussed on improvement of to ‘the quality of human life by enabling people to do more, feel better and live longer’ (GlaxoSmithKline Australia Pty Ltd, 2011, p. 1). GlaxoSmithKline operate offices in over 100 countries and put billions of dollars into research, testing and manufacturing of their products, in order to help people suffering from disease all the way down to headache medication. In Australia alone they offer 1700 skilled jobs and in 2012 GlaxoSmithKline invested $54million in local research and development (GlaxoSmithKline Australia Pty Ltd, 2011). Since 1886, GlaxoSmithKline has helped Australian’s by offering products that advance their wellbeing.
GlaxoSmithKline, as with any large corporation, has attracted large amounts of attention over the years through different ethical, social responsibility and quality issues. Being in the pharmaceutical industry there can be life threatening consequences if complete and advanced research, development and testing isn’t undertaken when producing their products and the customers are the ones that have to live with the life-long consequences. Moreover, the consequences can be lead to a positive outcome in that the medication may lead to cure of disease, reduction of symptoms and a better quality of life. GlaxoSmithKline have been in the industry for many years and are a very profitable company with profit at the 31 December 2012 being ₤4,744,000,000 (GlaxoSmithKline, 2012, p. 142).

Contents

Executive Summary 2

Introduction 4

Discussion 5

Conclusion 6

References 7

Introduction
GlaxoSmithKline’s (GSK)Chief Executive Officer, Andrew Witty, states that his highest priority in running one of the most powerful and influential pharmaceutical companies in the world is ‘the value-based conduct of our employees and our company’ and goes onto add that GSK ‘must live our values of transparency, respect for people, integrity and patient focus’ (GlaxoSmithKline PLC, 2012, p. 3). The development of an ethical culture and transparency in a large corporation is probably one of the most important factors in gaining trust from all stakeholders. Larger corporations, such as GSK are at risk of becoming too distanced from their customers, meaning the focus of the corporation changes from customer-based motivation to profit-based motivation. This is an issue that many corporations have which leads to quality issues, where the company tries to cut cost to make more money, moreover leading into legal issues when law suits is taken out against them and compensation is requested from patients. Despite being a multi-national and multi-billion dollar company, this will not shut down reputation ruining law suits or accusations. This over the years has cost GSK millions and millions of dollars.
Discussion
PART A
1. Identify ethical lapses that may have impacted product quality at GSK.
GlaxoSmithKline (GSK) is a multi-billion dollar company, with high expectations in the sense of ethical behaviour, patient focus and the values that employees are expected to uphold as read in the Code of Conduct (GlaxoSmithKline PLC, 2012). However, despite these high expectations and ethical standards, GSK has still produced a host of ethical lapses over the years. Particularly in it’s release of Paxil, Wellbutrin and Avandia. Moreover GSK had another lawsuit involving quality control in their manufacturing site in Cidra, Puerto Rico (Ferrell, Fraedrich & Ferrell, 2013).
Paxil is an antidepressant not approved for patients under 18 years old (Sifferlin, 2012). Despite this the drug was illegally targeted at the teen and children market with direct offers to doctors and sales representatives for ‘kickbacks’ when they were prescribing the drug. According to Sifferlin,