What Makes Companies Do the Right Thing?

Business executives face no starker test of their leadership than when confronting the choice between capturing profits and saving lives.

Pharmaceutical companies generated billions of dollars in additional revenue from the COVID-19 vaccine, buoyed by bidding wars between wealthy countries as the virus spread across the planet.1 Faced with unparalleled demand, deals were being locked in even before the vaccines were developed. And once distribution started, vaccine hoarding began. Some countries had enough vaccines to vaccinate their populations several times over. As a result, millions of doses passed their use-by date and were thrown away, while people in poorer economies remained unvaccinated.

More than 1 million deaths in lower- and middle-income countries could have been avoided if COVID-19 vaccines had been shared more equitably in the first year they became available, according to retrospective modeling with vaccine distribution data from 2021.2 Whether this figure can be solely attributed to inequitable distribution by vaccine manufacturers or other factors came into play — such as the lack of cold storage and health infrastructure during distribution — is up for debate. However, a significant number of lives were undoubtedly lost because vaccines did not reach people who needed them.

It is easy to blame the aggressive efforts of wealthier nations to ensure their own supply of vaccines for this striking inequity. But our inquiry, conducted as the pandemic unfolded and focused on the vaccine producers, suggests pharma companies could have done a lot more to combat the rush by wealthy countries to vaccinate their own people.3

In fact, we would argue that by not fully engaging with COVAX — the global initiative set up to accelerate vaccine development and ensure equitable access — and by failing to push back when rich countries demanded a higher proportion of available vaccines, some pharmaceutical companies reneged on their responsibilities as corporate citizens.

In this article, we’ll review the rollout of vaccines and companies’ degrees of engagement with COVAX and then explore the role of company leaders, which emerged as a dominant factor in why some companies chose to prioritize profits over global public health.

What Went Wrong?

Pharma companies were certainly the early stars of COVID-19, taking less than 12 months to develop and manufacture vaccines to protect against the virus, a process that in normal circumstances can take 10 to 15 years. This was much to their credit and provided a boost for a sector often criticized for failing to adequately serve society.4

In April 2020, COVAX was established with the remit to accelerate vaccine development and ensure global equitable access. It adopted the World Health Organization’s (WHO) fair allocation framework for proportionally distributing doses to participating countries and targeted groups, with the goal of reducing mortality and protecting countries’ health systems.5 Under this framework, the first recipients of the vaccines should have been health care workers, swiftly followed by the vulnerable and elderly — on a global scale.

As the pandemic unfolded, more than 170 countries — including at least 80 higher-income countries — signed up to the COVAX project pledging their assistance in extending the vaccine rollout across lower- and middle-income countries. By mid-May 2021, 14 vaccine-producing companies had also joined.

To get a better understanding of what motivated pharma companies to engage with COVAX — or not — we conducted research between November 2020 and early May 2021. During this period, we interviewed key representatives from the pharmaceutical industry and major stakeholder groups such as the Coalition for Epidemic Preparedness Innovations, WHO, and the World Bank. We also conducted a systematic media analysis and in-depth study of industry documents.

Our findings revealed the key factors that facilitated or impeded pharmaceutical company engagement with COVAX. (See “Factors Influencing Pharma Companies’ Engagement With COVAX.”) All of the internal factors were mediated to varying degrees by company leadership. Arguably, some of the external factors were too, such as lack of trust toward pharma, a long-standing problem that company leaders could do more to address.

Vaccine developers certainly had strong motivations for joining COVAX. We heard from various stakeholders that there was genuine altruism on the part of some participants. Some companies and their respective leaders wanted to do the right thing. There were also more instrumental considerations. COVAX provided access to extra funding for vaccine development — COVID-19 vaccines were not yet developed when some corporate leaders directed their companies to join — and a route to market through the UNICEF distribution pipeline if the vaccines were successfully developed (and secured WHO emergency use approval). COVAX also offered reduced liability exposure. Another significant factor evident in our media analysis as well as our interview data was the pressure from external stakeholders and company leaders looking to protect their public image as responsible corporate citizens.

However, our research also revealed powerful countervailing factors that constrained companies’ engagement with COVAX, even after they signed up. Liability concerns worked both ways. Some companies sought to engage with COVAX to minimize their liability. Others, however, like Pfizer (which expressed doubts about its product fit in some contexts because the Pfizer-BioNTech vaccine required ultracold chain distribution), thought they could better limit liability by keeping control of vaccine distribution. Collaboration was also hampered by some COVAX member organizations’ lack of trust toward pharma as well as some companies lacking experience in dealing with multilateral organizations.

Two of the most significant drivers negatively impacting companies’ engagement were the desire to maximize profits and the pressure from powerful countries seeking special deals. Here, company leadership should have been front and center.

The way that COVAX was set up, as well as delays to COVAX funding, left openings for secret bilateral agreements between countries and vaccine manufacturers. Information on how much was being paid for the vaccines was extremely limited. What wasn’t expected was the extent to which industry would take up this option and the pressure that was exerted at the highest levels.

For instance, Pfizer CEO Albert Bourla praised Israeli Prime Minister Benjamin Netanyahu’s “obsessive” efforts to secure a coronavirus vaccine deal for his country. “He called me 30 times,” Bourla said of Netanyahu. This exchange reveals the desperation of country leaders to secure as many vaccines as possible for their populations and the consequent pressure on the vaccine producers, yet also the producers’ power in this situation.

Our research clearly shows the importance of having company leaders’ active support for working with COVAX. One interviewee working with the global health effort told us, “There were times when engagement [with COVAX] only happened when CEOs of manufacturers got involved with their own team and said, ‘Make this damn thing happen.’” By contrast, one of our interviewees said some manufacturers “have been really, really hard to work with.” The obstacles to COVAX collaboration would have been less evident or considerably easier to overcome if company leaders had pushed harder for it.

The leaders of pharma companies took up their responsibility to create equitable access via COVAX to a varying and, in some cases, extremely modest extent. By the end of May 2021, 369 million doses of the Pfizer-BioNTech vaccine had been administered, but the company had committed only 40 million doses to COVAX. At that time, 49 million doses of the AstraZeneca vaccine had been administered, while the company had pledged 170 million doses directly to COVAX together with another 550 million through the Serum Institute of India. As for Moderna, 150 million doses of its vaccine had been administered, and the company had pledged 500 million to COVAX.

Global distribution of the vaccine was highly inequitable at this point, and by January 2022, it wasn’t much better: While 63% of the world population, or 4.82 billion people, had received at least one dose of a COVID-19 vaccine, 78% of them were in high- and upper-middle-income countries and only 11% in low-income countries.

Our data suggests that the leaders of vaccine-producing companies had considerable power relative to country governments. They could have used this power to speak out against vaccine nationalism and more actively encourage state actors to give greater support to COVAX, instead of focusing on bilateral deals with rich nations.

The Demands of Ethical Leadership

The heart of the problem is the tension that exists when for-profit companies are serving a pressing public need. In the case of COVID-19, leaders were faced with the opportunity for massive profit maximization that was accompanied by pressure from high-income nations demanding more vaccines at any cost.

It can be challenging for CEOs to look beyond their own companies or their imperative to increase shareholder value. But strong business leaders sometimes need to take an industry perspective, which often serves their own company’s interests as well as those of the broader industry. Certainly, in times of grand challenges — such as a global pandemic — they need to become responsible captains of their industry.

Some leaders and executive teams were able to take a broader view that kept the global public health crisis in the foreground. AstraZeneca and its CEO, Pascal Soriot, are a case in point. Its vaccine, the result of a collaboration with Oxford University scientists and produced on a not-for-profit basis during the pandemic, accounted for 90% of the billion or so doses distributed by COVAX. It was reported to have saved more lives than any other — an estimated 6 million — and at a far lower cost than Pfizer, the next closest contender. Our research shows that AstraZeneca certainly had multiple motives beyond altruism that explain its actions during the pandemic — and there were also many missteps, often reflective of its lack of vaccine experience — but altruism and keeping profit-seeking in check were key motivators.

What traits enable leaders to navigate the kinds of pressures faced by pharma CEOs during the pandemic and continue to steer based on fundamental values such as the preservation of human life? They are what we call the three V’s of ethical leadership: having a values orientation, giving voice, and providing vision.

Having a values orientation. When it comes to decisions that go beyond maximizing financial value, business leaders may not always have the inclination — or developed capability — to draw on moral values. Questions that demand thinking through an ethical choice can stymie leaders who are most comfortable relying on hard data and numbers. These decisions can be hard indeed when they concern balancing financial constraints and opportunities against a pressing human need or danger. As one of our interviewees put it, vaccine manufacturers were dealing with a trade-off between “commercial opportunity versus contribution to public health.”

Yet business leaders in touch with their values can find in them a source of inspiration and courage and act accordingly. Those leaders (and not just the CEOs) who championed access to medicines, both in general and specifically during the pandemic, based their actions on a human response to the suffering of those succumbing to disease and their families. This was evident in our research findings. According to The Economist, Soriot has always insisted that the decision to make the vaccine was fundamentally altruistic rather than commercial, saying that his children would have killed him if he did not take the chance.

Such a values orientation can resonate with employees, who feel proud that they are working for a company that cares and makes a difference. Altruistic motivations can be particularly important to the researchers pharmaceutical companies rely on for their innovations.

While CEOs may draw on their own moral values for both the impetus and scope to act, they can also draw on and, by their actions, amplify their organizations’ own professed values, purpose, and mission statements.

Consider Johnson & Johnson, whose efforts were praised by our interviewees. Its vaccine proved less successful than those of AstraZeneca, Pfizer, and Moderna, but the company framed the challenge as one of public health. It developed a one-shot vaccine better suited to the developing world than the two-shot standard and employed a nonprofit pricing strategy. In their decision-making process, its leaders could readily draw on the deeply embedded value of patient-centricity in the Johnson & Johnson Credo.6

Giving voice. It’s not enough for leaders to locate their values and use them to inform decisions; leaders must also speak to them — “giving voice to values,” as scholar Mary Gentile put it — and be seen acting on them, to enable others to act on their values as well.7

This was manifest in simple ways during the pharma industry’s engagement with COVAX, according to our interviews. There was a stark contrast between pharma companies whose employees “put one barrier after the next in front of actually deploying vaccines” through the global health initiative and others who sought to find solutions and move forward. The latter were characterized as having a can-do attitude that reflected company as well as personal values and, in some cases, was clearly coming from leadership’s articulation that these values were important in the context of the pandemic.

In a specific example, we heard how Astra-Zeneca’s executives jumped in when their team’s negotiations with COVAX hit an impasse, and they helped directly to foster deals with COVAX. These leaders spoke up when they were needed.

At Johnson & Johnson, then-CEO Alex Gorsky was known for giving voice to his belief that business has a duty to stakeholders beyond just shareholders. His values-forward approach permeated his team: The vice chairman of the company’s executive committee called the decision to forego profit on the vaccine a no-brainer in an interview with the Financial Times, adding, “We didn’t want to make a dime out of this.”

AstraZeneca’s Soriot also publicly voiced his values on behalf of the pharma industry early in the pandemic. In May 2020, he told CNN that the industry was not in a commercial race to bring COVID-19 vaccines to market: “We’re competing against the virus, not one another. We need several vaccines.” He also explained that AstraZeneca is “doing this for no profit. I’m sure other manufacturers will do the same.” As it happened, his faith in peer companies was misplaced, an indication that the values animating AstraZeneca and Johnson & Johnson were not held as firmly across the sector.

Providing vision. Ethical leadership requires that values and voice be directed; this demands a vision of the future, a sense of where we want to be. This vision encompasses a leader’s own company and, for the most influential, extends to their entire industry.

Nature provides inspiration: Pelicans, at critical points in their lives, suppress their innate rivalry and share nesting materials with competitors to safeguard their own survival and the future of their breed. Collective action is taken in the interests of all, a form of behavior that is relevant to business and has been described by Wharton School professors Thomas Donaldson and Paul Schoemaker as pelican gambits.8

Sometimes, captains of an industry need to engage in pelican gambits, where business leaders put short-term interests aside to address longer-term, often systemic, industry risks. This is where values-oriented vision can come into play. Such a vision would seem especially relevant to industries such as pharma that have taken numerous reputational hits for being seen as profiteering and failing to adequately and broadly address the health needs of society. Pharma in particular faces an ever-present threat that regulators may limit, for the public good, the intellectual property rights that enable it to consistently be one of the most profitable industries. A similar situation has played out in social media, where the industry’s failure to self-regulate — and the failure of any industry leaders to step up and call for change — is resulting in increasingly more stringent regulation that threatens the industry business model.

For pharma CEOs, providing vision means personally taking a leadership role that goes beyond their individual company, similar to Soriot’s vision of a collective of vaccine makers eschewing profits to tame the pandemic.

Truly ethical leaders engage in initiatives that not only heighten social responsibility in their own company’s vision and values but also seek to change the culture of their industry to do more good and less harm. There is ample opportunity for such leaders in sectors such as social media and AI, whose net benefits to society are often overshadowed by well-publicized harms.

That opportunity remains in pharma, where the actions of companies that chose excess profits over excess lives lost hardly served to bolster public trust or shifted perceptions for the industry to be seen as a “force for good.” We can hope that ethical leaders in the industry will promote a clear vision of patient-centricity and binding guidelines that will make companies provide fair access to vaccines that might save millions of lives in the event of another pandemic.

“The MIT Sloan Management Review is a research-based magazine and digital platform for business executives published at the MIT Sloan School of Management.”