The pharmaceutical industry's ethical reputation has improved during the past year, at least according to pharma professionals and the financial analysts who watch industry stock prices. But most of those gains are lost on the general public, according to the latest research on ethics reputations by Rating Research. RRC, as the company is usually known, says the bad news is confined to just a few companies.
For its part, Johnson & Johnson has shown solid, sustainable support from both executives and analysts, each of which gave the company a fourth-place ranking in ethics reputation. Its strongest performances were for CEO leadership and corporate governance.
The controversies surrounding Merck since late fall of 2004, however, sent the company's ratings plummeting—from first-place, in the opinion of industry executives in 2003, down to ninth-place currently. Financial analysts, on the other hand, maintained Merck's second-place ranking in the RRC ethics scores. But even the analysts' vote of confidence was not sufficient to prevent Merck's overall rating from sliding to E2, from E1.
Meanwhile, Bayer showed a significant drop in the estimations of both groups of respondents, as its ethics ranking dropped to number 17 (out of 19), in the eyes of industry insiders, and to 16, from the viewpoint of financial analysts. As a result, Bayer's ethics reputation rating slid to E3, from E2.
Improving Stakeholder Perceptions In the current media environment, where ethical breaches by corporations and their CEOs are in the news almost daily, it is not surprising to see ethics driving corporate reputations across America. Indeed, RRC's most recent study of reputation in the pharmaceutical industry found that ethics is now the most important driver of reputation, ahead of other key dimensions, such as workforce quality and financial stability. (See "The Rise and Fall of Pharma Reputations," Pharm Exec, February 2005.)