Most questions were consistently worded in all three studies to allow direct comparisons over time. But analysis of the importance
of key groupings of questions changes over time along with industry environment and respondent opinions. Essentially, changes
in the key drivers each year can be seen as a reflection of changes in how the industry sees itself.
Competitiveness. It is notable, for example, that the multivariate analysis in both 2002 and 2003 revealed that competitiveness was the most
critical driver of reputation strength for pharma companies. Amid the negative events and public relations pressures of 2004,
things changed dramatically. Companies' ability to compete continued to be important, but respondents' opinions tended to
focus more on factors relevant to long-term survival in a turbulent industry. In 2004, ethical behavior ranked as the most
important driver, followed by workforce, financial stability, and leadership characteristics. (See "Reputation Drivers.")
Ethical behavior, driven in large part by the negative publicity over drugs' side effects and high costs, has consistently increased in importance
over the past three years, rising from third place to first. Falling within this category are questions relating to a company's
adherence to ethical business practices, its openness and honesty with the public, the transparency of its financial disclosures,
and its ability to be environmentally conscious, among others.
These elements of reputation can serve a company well during times of controversy and differentiate it from its competitors
in the minds of its peers and the financial community. It is not surprising, therefore, that the same three companies that
earned the top three positions in ethical behavior—Genentech, Lilly, and Amgen—also constitute the top three in the overall
reputation ranking. (See "Ethical Behavior Ranking.") Respondents put Bayer in last place on this metric, a position that
contributed to the company's low overall ranking for 2004.
Workforce was the second most important driver of reputation in 2004, rising from fourth in 2002. (It was not specifically listed in
2003.) This metric encompasses elements such as attracting and retaining high performing and diverse employees and treating
them well, paying competitively, and training. Again, Amgen and Genentech rank highly here—numbers one and two, respectively.
Roche's third-place workforce ranking in 2004 helped give the company enough points to bring it to seventh overall in 2004,
up from eleventh in 2003.
Financial stability has been a key metric for pharma companies in each of the last three years. Amid the growing financial uncertainties surrounding
many drug companies last year, this metric rose to third most important in 2004, up from fifth in 2002. Key facets of financial
stability, according to survey respondents, are a company's ability to be well positioned for the future, to survive downturns,
and to generate innovative products. Respondents ranked Novartis in first place for this metric, followed by Pfizer and Amgen,
Leadership, in fourth place in 2004, dropped in importance from third in 2003. Among the key elements for this metric, respondents gave
most credit to companies with effective CEOs, a talented management team, clear strategic direction, and strong corporate
governance. Genentech, Eli Lilly, and Amgen ranked first, second, and third respectively on this metric—the same rankings
that they held for ethical behavior. (See "Leadership Ranking.")
In times of turbulence, the industry can expect this metric to continue to be a key driver of reputation strength. For the
same reason, it is likely that industry insiders and observers alike will continue to place the greatest emphasis on difficult-to-define
but increasingly critical reputation factors such as ethics, trustworthiness, and workforce quality.
ABOUT THE SURVEY
For the third year, Ratings Research LLC (RCC) polled leading industry executives and analysts using a consistent survey methodology
tailored to the pharma industry. This year, researchers conducted 30-minute interviews with 214 executives during the period
of September 9 to December 9, 2004. They used a questionnaire with more than 50 questions designed to test the reputation
strength (on a five-point scale) of 19 leading pharma companies . More than three quarters of the executives polled were CEOs,
CFOs, or other C-suite-level executives from a broad sampling of companies across the pharma industry, including many firms
not analyzed in the study.
RCC also polled a representative sample of 60 financial analysts who specialize in the pharma industry. Each analyst interview
lasted one hour, including questions similar to those posed to executives but tailored to the analytical audience. Because
of the more volatile nature of analysts' responses, they were not included in the Reputation Strength Scores (RSSs). Using
a proprietary model that incorporates respondents' answers, RRC generated a strength score for each company that reflects
both behavioral measures of reputation and relative weighting of key drivers of reputation strength.
Doretta W. Gasorek is principal and rating committee chair, and Jeffrey T. Resnick is chief research officer, for Rating Research LLC. They can be reached at email@example.com