As Matthew D’Ancona and colleagues at Tortoise say (#TheArmsRace Campaign Update 12): “After the disappointment of President Biden’s vaccine summit last week, it is more evident than ever that scrutiny of national governments, NGOs, and pharmaceutical companies, and of their performance in the great race to share doses, is going to have to be carried out by independent organisations.”

This could include pension funds with members who are concerned about profiting from the approach taken by pharma companies. This is an account of an imaginary meeting between an important asset owner and a major fund manager…

Dramatis personae

Jacintha Messina, widely respected CEO of Healthcare Workers International, the global co-ordinating body for pension funds for nurses and doctors in many countries. This is one of the top 20 pension funds in our world.

Cyrus Juckley, high-profile president and CEO of Blackguard Global Investors, their main investment partner.

—

MESSINA: Thank you so much for meeting me, Cy…

JUCKLEY: Well, of course. It’s been a long time – since INSEAD, I mean.

MESSINA: (Looking down at plate, a little embarrassed) Yes, well… Let’s just stick to business, shall we? You know why I … we wanted to meet up, don’t you?

JUCKLEY: Fine by me. Yup, you don’t get to be president of one of the world’s top three fund managers without having a pretty good sense of why people want to meet up. Even people as elusive as you are, Jacki. By the way, did you order anything to drink?

MESSINA ignores this.

MESSINA:  I just wanted us to get together before the meeting of our members which you very kindly offered to co-chair…

JUCKLEY:  Fine then, you shoot!

MESSINA:  Here’s the point, Cy. Given your firm owns between 5 and 10 per cent of the vaccine manufacturers, my members are really wanting to know what we – and you – are doing about this crisis. You get that, don’t you?

JUCKLEY:  Sure, I totally get their concern. But this isn’t a crisis created by ‘big bad pharma’ – they understand that, don’t they?

MESSINA:  Of course they do.

JUCKLEY:  These companies have worked day and night to get the vaccines out in record time. We both know governments have screwed up big time by not funding COVAX quickly enough and now by not sharing out the vaccines that are available in a fair way. I know its easy to  raise the spectre of ‘greedy pharma’, but that’s diverting attention from who’s really responsible. And by the way, these stocks are really performing for your portfolio which is what you want, right?

JUCKLEY smiles and winks with self-satisfaction.

MESSINA:  Listen, Cy. You remember the HIV/anti retroviral case study we learnt at INSEAD? Do you remember how pharma companies fought tooth and nail to prevent generics? Some 10 million Africans died because of that. This time around, the immediate answer may not be patents – although this won’t be the last pandemic. What I’m talking about the fundamental mindset that puts shareholder value above millions of lives, many more millions affected, economies disrupted and countries destabilised.

JUCKLEY:  I love your big picture worldview, Jacki – always have. But you and I have businesses to run. We have fiduciary responsibilities. We can’t make up for failing governments, my friend!

MESSINA smiles with familiar irritation.

JUCKLEY:  I apologise. I know you think I’m being patronising.

MESSINA:  I must be used to it by now. Let me try something else. Speaking of big picture, I’m reading that experts consider that we won’t be able to  vaccinate the world till 2023 or possibly later. Let’s leave aside the delivery schedules and assume this is correct. What impact do your macro team think this will have on global economic prospects compared to 70 per cent vaccination – herd immunity levels – by mid 2022? You know what the World Health Organisation wants?

JUCKLEY:  Well, I don’t know, Jacki. I haven’t seen that kind of scenario analysis – but let me make a note to ask our macro team.

MESSINA:  Fine, thanks. What I’d also like to know is whether they or other specialists have modelled the economic impacts of a ‘doomsday’ variant – one that isn’t responsive to current vaccines?

JUCKLEY:  I don’t know. My guess is that’s going to be impossible to quantify. Perhaps it’s one I’d put in the ‘existential risks’ bucket. Like, we also don’t model the impact of meteors hitting the earth…

MESSINA breathes deeply and consciously, then looks at her watch.

JUCKLEY:  Aw, now come on, Jacki. It can’t be time to go yet. We’ve hardly begun, and you haven’t even eaten yet…

MESSINA pulls herself together, smiles and looks him firmly in the eye.

MESSINA:  Funny you should mention existential risks, Cyrus. When I was looking at our files for Blackguard, I found a note of a meeting between my predecessor and yours, where he said much the same when he dismissed investor ‘response-ability’ about the climate crisis. But now your firm takes a very different approach, much more proactive, which we are very pleased about. Why do you think that changed? Because unlike a meteor, a vaccine resistant variant is a very likely outcome of our collective acceptance of not vaccinating the world quickly, right?

JUCKLEY:  That’s it, Jac. I’ve missed our debates. Yes, we were slow off the mark about GHGs and the energy transition. And yes, the losses we picked up on coal were huge. But pharma aren’t fossil fuel stocks!

MESSINA:  Not yet, Cy. Not yet. In a world where uncertainty means discontinuous change, perhaps we might want to add ‘yet’ to that sentence? Look, we and you are fully aligned on wanting to make sure big pharma doesn’t end up being like tobacco or big oil or big tech. The sector’s reputation was resuscitated by the R&D success, but it could so easily be wasted – if doctors and the public come to see pharma companies as being roadblocks to global health in a pandemic of the kind we haven’t seen since 1918.

JUCKLEY (just beginning the process of losing his cool):  Jacky! So what do you want me to do? Sell the pharma stocks in your portfolio?”

MESSINA:  Oh, don’t be silly, Cyrus! On the contrary, we think there’s a good case for our managers to be over-weight in this sector, given public health needs – even without a pandemic. And this won’t be the last. What we wan…

She corrects herself.

.. are hoping for is a really assertive, well-informed stewardship by you and the other major investors in the sector.

JUCKLEY (grinning and teasing):  You mean I’ve got to relearn the words to Kumbaya.

MESSINA:  Actually Cy, we were thinking about something like CA100+. You and the other big US managers were slow to join. So this time, we hope you’ll play a founding role!

JUCKLEY:  Ouch, Jacki!

MESSINA:  Speaking of which, we thought of a name for this initiative: Pharma Responsible Investment Campaign. Or you might prefer Coalition? You know, as in ‘It’s just a little PRIC’!”

JUCKLEY:  I love it!  So what do you hope we could do?”

MESSINA:  Well, in the first instance, we hope you’d look at how investors – collectively – contribute to this situation. Given the KPIs that pharma CEOs have, it isn’t really surprising that manufacturers focused on first supplying rich countries and now are focusing on boosters. It isn’t greed – it’s the predictable consequences of incentives. Since investors approve these incentive plans, logically we and you share responsibility for the vaccine inequity we see today. So how could investors change the KPIs and compensation metrics so pharma execs really focused on vaccinating the world?”

JUCKLEY stops eating, his fork half way to his mouth.

MESSINA:  If vaccine manufacturers were more transparent about vaccine supply challenge then governments, investors, other corporate players, the WHO, foundations could help overcome these bottle-necks. So are your pharma analysts really happy with the reasons given by vaccine producers for not making this information more public?

JUCKLEY:  OK, OK, I get it!

MESSINA:  Most important – do your pharma team buy the reasons given by pharma execs for not sharing technology knowhow? Why have these manufacturers turned down requests from Samsung, Teva, Celltrion & Bavarian Nordic? All are serious vaccine players in their own right and they are willing to pay license fees.

JUCKLEY:  OK, honey – I don’t say I agree with you, but I accept these are important questions. Now, shall we order another bottle?

*****

We hope this will be continued. That depends on you, the reader, contacting your pension fund – as one NGO says about the climate crisis, to “make my money matter”.