Corporate responsibility

Responsibility in pharmaceuticals

There are few sectors that can have so positive an impact on society as pharmaceuticals. Our ability to treat, prevent and cure disease gives us enormous power for good, but this brings with it an enormous responsibility. So much so, in fact, that the whole concept of 'responsibility' is inextricable linked to the day-to-day running of a pharmaceuticals business like Shire.

This is one of the reasons why we have now decided to move away from using the phrase 'corporate social responsibility', in favor of the much broader term 'corporate responsibility' (CR). Talking only about corporate social responsibility can suggest that the external impact of the business is limited to social issues, to the exclusion of wider environmental and ethical concerns; and it can also imply that this area is the preserve of specialists, rather than being the responsibility of everyone who works for Shire.

This will be reflected in Shires dedicated 2005 CR report, which will concentrate on the key issues that we face as a specialist pharmaceuticals business.

The areas of focus in the 2005 CR report are:

Drug safety

This will cover our policies and practices in relation to clinical trials, drug testing and quality procedures, and our commitment to publish research data. It also includes the ongoing monitoring of our products.

Responsible marketing

This will address our approach to marketing pharmaceutical products, how we train and manage our sales-force to ensure that we comply with local regulations, the highest ethical standards and codes of practice. It also explains our Medical Legal Review process, which strives to ensure effective and accurate communication as part of the production of our educational and promotional materials.

Managing our products

This section will explore how we address any specific issues that occur in relation to our drugs. Two examples from 2005 are the withdrawal of ADDERALL XR in Canada, where we successfully addressed questions raised by Health Canada, and REMINYL in the UK, where a multi-faceted campaign from the medical community, patients, politicians and members of the public may help to retain National Health Service (NHS) funding for treatment for Alzheimer's Disease.

Running Shire in a responsible way

CR also extends to the way Shire operates as an organization. Our CR Report will review:

our environmental performance;
health and safety;
the supply chain;
the way we engage with our people; and
our role in the community.

Environmental performance

We established a new environmental management system in 2005, which was developed with input from both Deloitte and the International Safety Council. We have new environmental performance targets for 2006, covering matters such as management of waste, reduction of CO₂ emissions, disposal of hazardous materials, water and energy conservation and reduction of use of volatile organic chemicals or VOCs.

Health and safety

We carried out a global Environment, Health and Safety assessment in 2004, and will be repeating this exercise in 2006. We have a comprehensive system for identifying and addressing possible workplace risks, with the aim of reducing reportable incidents by 50%.

The supply chain

We made particular progress in this area in 2005. Our new global procurement services group is now implementing a Company-wide procurement process across all suppliers. This will allow us to manage our relationships more effectively as well as to introduce social and environmental criteria for suppliers, and conduct compliance audits.

Engaging with our people

Our business relies on the enthusiasm, commitment and motivation of its people and the feedback we received from employees during 2005 was particularly encouraging. Acquiring TKT was a major event for Shire in 2005 and like any acquisition it had to be managed in human as well as commercial terms. We quickly renamed the business (Shire HGT) but made few other changes. We wanted our new colleagues to feel part of Shire as quickly as possible, and this involved an intensive program of communication and integration, including a number of high-profile activities in the area of Cambridge, Massachusetts where the main office and manufacturing site is located. As a result, retention of these employees has been very high (over 90%).

Our role in the community

We have an extensive community program, ranging from our support of employee volunteers to making corporate donations to organizations working in our own therapeutic areas. We were particularly proud of the efforts our people made to support the victims of the tsunami in South-East Asia and Hurricane Katrina in 2005 - $166,103 was raised around the world, which was matched by the Company.

Principles, policies and practices

Accountability

The Company attaches great importance to social and environmental issues and to ethical business practices. Accordingly, ultimate responsibility for them is taken at the highest levels. The Board reviews the Company's general approach to CR. Shire's CR strategy is implemented by our CR Committee. This Committee is chaired by our Chief Financial Officer, who also takes responsibility at Board level for CR. We made a number of changes to enchance the composition of the Committee this year, and now have a good balance of senior managers and function heads whose roles have particular relevance to CR. Members of the CR Committee include Caroline West, our new Chief Compliance Officer, Eliseo Salinas, Chief Scientific Officer, and David Pendergast, who is the General Manager of our new Shire HGT business.

Objectives

Shire sets corporate objectives annually. Achieving our CR objectives is key to our overall performance targets. Functional and individual objectives are aligned with overall corporate objectives. In this way our CR objectives permeate right through the business, from the Board to every member of staff.

Our CR objectives are formulated and agreed by the CR Committee, and monitored at Board level. They cover all the commercial aspects of our business, as well as the way in which we operate as an organization, and include, for example, objectives relating to clinical trials, product safety, patient education, ethical selling, procurement, and environmental performance, as well as people-related issues such as diversity and work-life balance. These objectives can be viewed in our CR report or on our website.

Risk management

We undertook a full CR risk assessment in 2004, and this was reviewed in depth and re-affirmed during 2005. Our CR Committee members are responsible for ensuring the CR risks are assessed and revised as necessary on a periodic basis. Shire engages in an enterprise-wide risk assessment process of which this CR assessment is a part. Identified risks are reviewed twice-yearly by the Executive Committee, the Audit Committee and the Board.

Training and assessment

In keeping with our belief that CR is an integral part of our business, we seek to raise awareness of CR-related issues in our business-related training. Specific training is given on Shire's code of conduct and for those working in areas such as sales and marketing, environmental legislation, and corporate governance.

CR issues are included in performance appraisals for all senior managers, as well as line managers with functional responsibilities, and those where CR issues have a direct impact on their role.

Stakeholder engagement

We put considerable emphasis on maintaining productive relationships with all our key stakeholders, and the feedback we receive from them is taken into account in developing our CR policy, CR strategy, and CR performance targets. Stakeholder dialogue ranges from meetings with institutional shareholders conducted by our Chief Executive Officer and Chief Financial Officer, to regular interaction with regulators and health providers such as the FDA, the Medicines and Healthcare Products Regulatory Agency and National Institute for Clinical Excellence (NICE), to the relationships we have with specialist physicians and patient groups, such as Children and Adults with Attention Deficit Disorder (CHADD), the Mucopolysaccharide (MPS) Society, the Alzheimer's Society and the National Osteoperosis Society.

We also welcome feedback from anyone else with an interest in our business, and if you have views or comments you can send them to cr@shire.com

We were joint sponsors of the MPS Awareness Day and took part in a ceremony to ring the bell at NASDAQ.

New targets in 2006 for water and energy conservation.

Feedback from employees in 2005 was particularly encouraging.

Shire plc