Crisis Communication at Glaxo Smith Kline

Crisis Communication at Glaxo Smith Kline Corporate communication constitutes the totality of companys efforts to transmit a favourable image of its internal values onto key audiences. However, businesses best efforts to be perceived in superlatives only are often inhibited by dissemination of contradictory information. Crisis communication management allows the companies to respond to such allegations to diminish their detrimental impact on stakeholder relations. GlaxoSmithKline in communication with key stakeholders attempts to convey the ethos of seeking to improve peoples lives by providing cutting-edge medicines as well as engaging in extensive corporate social responsibility actions. However, communicates projected mainly via the website, mission statement, press releases and direct-to-consumer-advertising seems achieve the goal to an extent. GSKs image is often undermined by allegations of conduct contradicting its internal values. Avandia crisis has been the most prolonged and acknowledged to date. In response to Avandia safety allegations GSK adopted a strategy based on undermining the methodological bases of studies suggesting the drug malfunction, simultaneously downplaying the risk and denying putting peoples lives at danger. This approach has contributed to further losses. Perhaps GSK should consider surveying publics attitude before responding to future crises, and adopt more emphatic approach. Introduction This report investigates the crisis communication management as an element of corporate communication function at GlaxoSmithKline. In order to fulfil the aim assigned, the paper first defines the concept of corporate communication and crisis management, and looks at their importance in the pharmaceutical industry. Next, the report introduces GlaxoSmithKline, its target audiences, core message and communication media used to develop favourable image of the business and assesses whether emitted message achieves its aim. Subsequently, the paper focuses on Avandia crisis as an example of an image crunch and critically analyses GlaxoSmithKlines response. The paper finalises with a set of recommendations towards improvement of crisis communication management in the said company. Corporate communication, crisis management and Big Pharma Corporate communication constitutes the totality of messages issued by the company to its stakeholders to transmit the organisations values and qualities that distinct it from competitors (Gray Balmer, 1998). The function holds responsibility for ensuring integrated coordination of all communication activities undertaken via communication means borderline of public relations and marketing communication (Cornelissen, 2008). The ultimate goal of the function is to develop a positive association between companys identity, and image of it held by the audiences, therefore generating sustained favourable reputation of the business (Cornelissen, 2008). Positive reputation is a source of competitive advantage (Fill Dimopoulou, 1999; Gray Balmer, 1998) and can aid the organization in achievement of strategic goals (Argenti et al., 2005) by supporting it in retaining committed employees and reinforcing positive buyer habits by enhancing perception of the quality of the brands endorsed (Smith, 1994). However, organisations best efforts to develop and maintain positive image in the eyes of contractual and community stakeholders are often eroded by dissemination of information suggesting a conflict between the values the organisation aspires to stand for and its actions, therefore creating and image crisis. Crisis communication management is an important element of corporate communication function enabling the business to respond to such revelations in a manner allowing offsetting their detrimental impact on public perception of companys standards (Fearn-Banks, 2002). Pharmaceutical companies commonly experience such challenges to their reputation, mainly in the form of accusations of malpractice (Pines, 2009) and unethical portrayals in media and culture (Parker, 2007). The presence of Internet allows otherwise marginal societal groups, e.g. NGOs, to gain access to plethora of information beyond organisations control and to exercise substantial pressure on the pharmaceutical companies (Little Grieco, 2010) holding them to account on fulfilment of the assumed moral obligation to provide safe and affordable medicines (Lee Kohler, 2010). Furthermore, Internet fosters for treatment of information as fast-tradable commodity, often leading to rapid image crisis escalation exacerbating damage to profits. Moreover, the consumer stages of the product life cycle of pharmaceutical merchandise are relatively short due to patent durability constraints (Gray Balmer, 1998) leaving the companies little time to recuperate the image in case of a crisis. Consequently, effective crisis management aimed at preventing further reputation deterioration and restoring credibility in the brand name to develop favourable conditions for new product launches (Smith, 1994) is Big Pharmas biggest concern. Corporate communication at GlaxoSmithKline GlaxoSmithKline (GSK) is one of the five top research-based pharmaceutical companies worldwide, capturing 7% of the total market, with US and Europe as the main sales-generating regions. The organisation operates in two dominant sectors: pharmaceutical and health-related products. GlaxoSmithKline is a conglomerate entity with origins in the UK, USA and New Zealand, with the present structure effective of mergers of SmithKline Beecham and GlaxoWellcome in 2000 (GSK, 2010a). Key audiences Due to varied product portfolio including prescription and self-medications as well as healthcare products, the company considers patients as participating consumers rather than end users of the merchandise. This is motivated by the pervasiveness of consumerism in the patient-medical practitioner relationship (DTC Report, 2005) and emergence of consumers actively researching information online on treatment options available (Little Grieco, 2010), rather than relying solely on the medical intermediary. The individual consumer group is particularly influential in the US market due to direct-to-consumer advertising permit. Other audiences recognised by GSK include as key to communication include (GSK, 2010b): Medical practitioners Government and regulatory bodies Stockholders and prospective investors NGOs Employe Communication objectives We have a challenging and inspiring mission to improve the quality of human life by enabling people to do more, feel better and live longer. (GSK, 2010c) The end objective of GlaxoSmithKlines communication is to transmit the information on companys identity conveyed in the mission statement and Spirit of GSK values of respect for people, patient focus, integrity, and transparency (GSK, 2010c) to create and maintain positive image of the business counterbalancing common unfavourable perceptions of the company. Simultaneous communication goals include generating product awareness, informing the stakeholders on companys financial tenure, and developing brand and corporate image to generate sales (Smith, 1991). Considering the nature of GSKs business and heavy regulatory burden significant part of the product communication is devoted to the informative imperative. Organisation of corporate communication function To communicate the values constituting the centre of companys identity to key audiences in distinctive manner, however maintaining overall integrity of the communicate (Argenti et al., 2005) GlaxoSmithKline divides the function into operational units overseen by the Board, reflecting key stakeholder groups (GSK, 2010b): employees (internal communication) media NGOs investors The media unit is responsible for crisis management. Additionally, the company devotes one division to managing dissemination of information on CSR activities, which suggests companys realisation of the social responsibilitys potential to add value to the businesss reputation (Adams Zutshi2004). Key communication means Website Prominence of consumers actively searching information online on products and ethical standards of their providers enables GSK to use the website to disseminate favourable message in a fully controlled environment (Sones et al., 2009). GSKs website serves the threefold purpose of: informing and educating the consumer by providing product info boosting companys image by addressing transparency imperative through online trial database and financial reports availability airing companys efforts to bring the mission statement to life via CSR The website constitutes the most all-embracing communication tool in transmitting companys identity onto the public by developing trust in external stakeholders, as well as fostering for increased commitment and loyalty on employees part (Morsing, 2006). Mission statement and Spirit of GSK projecting companys persona in the aspects of strategy, philosophy, values and behaviours in reference to broad, objective and culturally un-constrained values of diminishing social costs and emphasizing transparency and integrity. Directed at both external and internal stakeholders to contradict the negative conception of GSK, and foster for publics affinity, and frame employee behaviour (Hackley, 1998). CSR reporting constitutes the axis of GSKs website (Sones et al., 2009). The company provides extensive data on its actions towards offsetting social costs, aiding struggle against life-threatening diseases, as well as investments in society, maintaining strong bond with the essence of the mission statement, simultaneously extending it to preserving peoples habitat Press releases are applied to communicate with media journalists and investors, serving the purpose of quick dissemination of vital positive information, or rapid response to issues and crises arising (see GSK press releases) Direct-to-consumer advertising GSK extensively applies direct-to-consumer advertising within the US market, taking the lead among Big Pharma in marketing expenditure. The company targets consumers in the American market by newspaper and magazine adverts featuring experts and members of independent bodies emphasising product credibility (FiercePharma, 2008). Similar technique is applied to OTC medicines and healthcare products, e.g. Sensodyne toothpaste campaign featuring dentists, as direct-to-consumer advertising is prohibited within EU. Communication effectiveness: corporate image maintenance GlaxoSmithKline is currently ranked 108 in the most-trusted companies classification (Reputation Institutue, 2009). Remaining ahead of some of its competitors, which suggests effectiveness of the identity dissemination, GSK attracts contradictory publicity effectively equalising its reputation to the industry average. The most widely acknowledged image crises experienced by GSK include: Accusations of animal testing Profiteering from sales of overpriced patent-protected HIV/AIDS medication Safety concerns: Seroxat/Paxil, Avandia Failure to adhere to production quality standards Avandia safety crisis is the most prominent and long-lasting issue experienced by GSK to date. Avandia crisis The case In May 2007 an article in medical journal revealed that GSKs blockbuster drug, Avandia, originally devised to lower blood sugar levels and reduce the risks of diabetic patients developing a secondary heart problem severely increases the risk of heart failure and attack. The negative side effects have been linked to deaths among the patients on the medication. Nevertheless, the drug remained on the market until conclusive data be gathered on the basis of longitudinal RECORD study; nevertheless additional usage constrains were issued by the regulators. In 2009 RECORD study and leaked staff e-mails suggested that GSK knew of potentially lethal side effects of Avandia, and might have knowingly bias pre-approval study results to conceal the dangers. This gave rise to second revision of the safety profile of the drug. In 2010, the crisis reached the third peak with US Senate Commission investigation, EU drug regulatory body withdrawing Avandia from marketing, and BBC Panorama broadcast reviving the issue in European media. However, Avandia remains on US market, again with restrictions towards its use. (Lofstedt, 2010) GlaxoSmithKlines response To manage the crisis GSK employed an integrated strategy based on distancing itself from the accusations by undermining the methodologies and statistical significance of the study findings suggesting Avandias side effects. The complexity of the disease, challenge it creates in treatment and economic savings to the public health system, as well as comparability of alleged Avandia risks to other diabetes drugs were attended to throughout. GSK also challenged the impartiality of medical periodicals publicising unfavourable results. To date GSK consequently opposes to agree with the notion of its own error and deceptive practices, repeatedly referring to studies depicting favourable results (see GSK press releases). In its appeals to investors and media through press releases largely constituting responses to allegations or pre-emptive statements, GSK emphasized compliance with regulatory requirements, openness in communication and data disclosure, as well as focus on patients safety as the priority, therefore reassuring the stakeholders on the appropriateness of a chosen course of action and lack of error (see GSK press releases). Appeals to patients and members of general public where handled through the website, with Avandia resource centre section aimed at providing information on the drug. Additionally, at the wake of the crisis the company has issued a printed letter-styled advertising copy in the newspapers, with message from the chief medical officer reassuring the public on Avandias safety and encouraging patients not to withdraw the treatment without prior consultation (TargetMarketNews, 2007). However, the attempt to pre-empt negative response and ensure consumer trust by recalling expert authority of GSK was limited to US market only, due to prohibition of direct-to-consumer advertising in Europe. Within EU the company has used the website to appeal to practitioners, only addressing the patients following Avandia recall via video message from the Chief Medical Officer (GSK Europe, 2010) Effectiveness of adopted approach In its crisis management approach, GSK failed to appreciate the context of the crisis and misjudged certain stakeholder groups perceptions of responsibility and blame, consequently adopting inappropriate response strategy (Cornelissen, 2008). This evoked consequences in the form of (Lofstedt et al., , 2009): 8% share price drop following the crisis outbreak 60% prescription rate decrease in the first 6 months following the accusatory article 50% of diabetes patients failing to switch from Avandia to any other drug following the public anxiety outbreak in the US Potential compensation expenses of 1.6$ billion extending beyond patent expiry in 2012 GSK failed to account for the publics distrust towards the Big Pharma and regulators following the infamous Vioxx case in 2004, where the drug has been voluntarily recalled by the manufacturer following comparable safety concerns. The regulatory crisis transferred trust mandate to independent researchers, therefore assigning credibility to Dr Nissens research on Avandia (Lofstedt, 2010). Additionally GSKs public image has not yet recuperated from the detrimental impacts of concerns surrounding Seroxat linking the drug to increased tendencies in teenagers to self-harm and have suicidal thoughts (BBC, 2002). Given such circumstances, the response based on reference to GSKs expert authority and credibility failed due to the public perceiving the company as the one to blame (Cornelissen, 2008). GSK seems to have erred in noticing a strong emotional baggage associated with raised concerns. Public is vigilant to allegations on medicines possibly causing death and health damage, as this puts peoples lives at stake, and life is a value to the public (Parker, 2007). Concern for peoples safety combined with factors identified before, inhibited the recovery potential of GSKs assertions that patient wellbeing is their prime concern, consequently leading to loss of patient affinity. In similar vein, GSK erred in its crisis communication approach with medical practitioners, which is projected in significant slump in Avandia prescription rates shortly after the crisis outbreak. This suggests that medical practitioners made up their mind regardless of GSK consequently reinforcing message on Avandia safety. GSK has also failed to notice an important stakeholder to the crisis management relationship: consumer groups. Following the allegations a number of websites such as avandiarecallnews.com emerged projecting ex-patients and family members testimonials on Avandia, as well as reporting mounting lawsuits and providing support in filing a case (Avandiarecallnews, 2010). This significantly offset GSKs attempts to marginalise the scale of issue and its severity. Recommendations It is justifiable to assume that the current and future profit losses and still non-quantified detriment to the brand name, could have been mitigated had the company tap into stakeholders needs with the crisis response. Given the commonness of image crises in Big Pharma, it is permissible to say that accusations of conduct contradictory to the mission statement recur. Provided similarity of contextual factors, GSK should consider the following as improvements to crisis communication management: Consider surveying key stakeholder groups perceptions of the responsibility for a given crisis matter before giving a statement that is difficult to withdraw. This allows devising complimentary communication strategy, reducing the potential of public defiance. Consequently, should the public blame the company perhaps admit the error and apologise (Cornelissen, 2008). Consider JohnsonJohnsons response to Tylenol crisis as an example. Perhaps rely more on video messages from board members to address the stakeholders. This allows for more personal approach and permits to transmit strong message on companys involvement and effort to solve the issue. Consider Toyota crisis as an example. Accordingly, increase spokespeoples presence on the media. This fosters for the publics perception of the company as adopting open and frank communication approach (Fearn-Banks, 2002). Address other stakeholder groups more forcefully. Possibly intensify communication efforts with medical practitioners through symposia and representatives visits to reassure favourable relationship (Pines, 2009). Issue press releases aimed at informing NGOs on actions taken to resolve the issue and recall CSR efforts to gain publics favourable attention, thereof reducing the crisis to a single mishap in a series of positive actions (Parker, 2007). Reference section Adams, C., and Zutshi,A. 2004. 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