Corporate Responsibility and Third Party Relationships GSK and Contract Manufacturers

1. Corporate Responsibility and Third Party RelationshipsGSK and Contract Manufacturers James Hagan Vice President Corporate Environment, Health & Safety

2. GSK and Contract Manufacturing • Overview of GlaxoSmithKline • Scope • Business/CR/EHS drivers • CR / EHS process • EHS management and audit • EHS data reporting for CM • Summary

3. Overview of GlaxoSmithKline - Who are we? World leading research-based pharmaceutical company. • 7% of total global pharmaceutical sales • Total company sales: £21.2 bn / $31.8 bn GSK’s mission is “to improve the quality of human life by enabling people to do more, feel better and live longer”

4. GSK - Where are we? Our International Region covers 80% of the world’s population

5. GSK - Where are we? • 100,000 employees worldwide • R&D • 16,000 employees • at 24 sites • in 7 countries • Manufacturing • 42,000 employees • at 91 sites • in 38 countries • Sales & Marketing • 40,000 employees • 191 countries

6. Our Flagship Products

7. Our Flagship Products • GlaxoSmithKline develops, manufacturers and markets: • pharmaceuticals, vaccines, over-the-counter medicines and health related consumer products • Our broad pharmaceutical product line includes: • antibiotic, antidepressant, gastrointestinal, dermatological, respiratory, cancer and cardiovascular medications • In 4 of the 5 largest therapeutic areas worldwide, we are world leaders: • anti-infectives, CNS, respiratory and metabolic

8. Our Flagship Products • We supply products to 191 global markets • Produce over 1,200 different brands • Manufacture 4 billion packs per year • Produce over 28,000 different finished packs per year • Supply 6,900 tonnes of bulk active each year • Manage 2,000 new product launches globally each year

9. Scope of Contract Manufacturing GSK has strategic alliances and partnerships with over 400 Contract Manufacturers (many long term) Across all the products in our portfolio For all the stages of product life cycles: GSK Spends over £800m per annum Contract Manufacturers are integral to GSK’s supply chain

10. Business drivers for Contract Manufacturing GSK has strategic alliances & partnerships with Contract Manufacturers: To optimise supply chains & costs To provide a ‘best in class’ supply base To partner with companies on specialist processes or technologies GSK has a regional approach to supply local markets

11. Corporate Responsibility drivers for Contract Manufacturers Committed to doing business with integrity Protect our Corporate Reputation Ensure compliance with EHS regulatory requirements Protect CM employees, local communities, and the environment Minimise business interruption and ensure continuity of supply of medicines Minimise risk to GSK Foster sustainability Provide for competitive advantage

12. How do we manage the EHS / CR component? Work in partnership with Contract Manufacturers to prevent adverse events and ensure continuity of product supply: • Structure our approach within a comprehensive framework of Standards • Integrate EHS/ CR considerations in sourcing decisions and Contract Manufacturer selection • Incorporate EHS / CR requirements in contracts • Conduct EHS audits to assess conformance with GSK requirements and highlight areas for improvement • Monitor progress with audit follow-up

13. Policy Standards Guidelines Tools& Best Practices GSK - EHS Framework

14. What the Global EHS Standards Do • Establish a management system approach • Outline minimum requirements • Drive towards excellence • Apply to everyone • Effective from 2001

15. CR/EHS Requirements for Contract Manufacturers • Two specific Standards on CM • Distilled set of Standards for CM • Utilised in selection process • Incorporated in contracts • Requires • compliance with laws & regulations • compliance with GSK Standards • report adverse events • report EHS performance

16. Corporate Responsibility issues beyond EHS Comply with local employment legislation. Do not discriminate against sex, race, religion or disability. Do not use child (< 16 years) or bonded labour CR requirements are included in contract language and audit teams assess Contract Manufacturers to ensure that they:

17. Scope of the EHS Audit Programme • Conduct over 40 audits per annum globally • Selection for audit: • where there is a significant spend / revenue / gross profit dependency • serving multiple key markets or essential supply chains or supplying WHO products • where significant hazards are presented by GSK technologies / products / processes e.g. cytotoxics • Contract Manufacturers have rated from 30% to 86% (out of 100%) on an EHS Audit scheme • Equivalent to ‘Poor’ - ‘Excellent’ on qualitative ratings or bandings

18. Audit process • Provides a governance review • Provides for working in partnership • Improves EHS performance of Contract Manufacturers through continuous review

19. Audit process No progress = 2nd ‘exit’ opportunity

20. Example - EHS Audit Rating / Banding

21. Audit Experience Summary 2002-2003 • Downsides • Some lack of investment / limited resources (chiefly in the containment of APIs) • Occasionally poor Chemical Agents assessments • Occasional high incidence of EHS adverse events • Positives • Commitment to progress actions rapidly • Willingness to learn from the audit experience • Growing proportion of companies with ISO14001 • Best practices GSK could learn from…...

22. Annual Report Information 2002: Collected EHS data from key Contract Manufacturers 2003: Verifying the data collection process 2004 and beyond: Expand the number of CMs reporting results Incorporate collective results as part of GSK’s annual report Include Contract Manufacturers as part of GSK EHS footprint

23. Summary • The emphasis on partnership and continuous improvement • EHS / CR considerations are integrated in the business process • Audit teams conduct EHS audits to assess conformance with GSK requirements • EHS performance is generally good • Future annual reporting to include EHS performance results