January 29, 2006 — Novartis AG, Pfizer Inc., and GlaxoSmithKline plc have won top honors in the first-ever study of the corporate reputation strength of major pharmaceutical companies in Europe, released today by Rating Research LLC (RRC), the leading provider of ratings and research on corporate reputation.

Among the eight major pharmaceutical firms studied by RRC, the lowest rankings went to American drug majors Merck and Co., Inc. (not related to Merck KGaA of Germany) and Johnson & Johnson. Others ranked in the study were Roche Holdings, Eli Lilly & Co., and Sanofi Group.

Corporate image has recently become a key issue for the pharmaceutical industry. Following a series of scandals on product safety and aggressive marketing, its reputation has come to an all time low in the course of 2005. The discrepancy between the self-portrayal and the public perception of major pharmaceutical companies has reached a critical limit. This loss in trust is looming for the pharmaceutical industry. Hardly any other industry is more dependent on social trust and targets such a large number of different stakeholder groups.

The RRC study is based on in-depth interviews with a representative sampling including 209 senior executives in the European pharmaceutical industry located in Germany, France, Switzerland, and the United Kingdom, along with 34 financial analysts who follow the industry across Europe.

RRC applied many of the methodologies and practices used by the public financial rating business and its own proprietary model to assign a Reputation Strength Score to each firm and to assess the relative importance of drivers (such as Ethics) of reputation strength for the European drug majors.

Much as the US public rating agencies expanded their rating to the Euro-markets in the 1980’s, RRC developed their pilot European Pharmaceutical study in response the increased demand for greater transparency of corporate ethics and other intangibles.

Doretta Gasorek, the RRC Principal who headed up the study, explains that the three top-ranked firms achieved those rankings mainly because of their superior performance in the two most important drivers of reputation in Europe’s pharmaceutical industry: “Market Leadership” and “Future Strength.”

Among other key dimensions of reputation strength in Europe, RRC identified (in order of relative importance) firms’ reputation for “Community Outreach,” “Strategy,” “Workforce,” “Business Practices,” “Loyal Customer Base,” and “Marketing Effectiveness.” While these are not seen as a most critical drivers of reputation for the industry overall, they can have a strong impact on the ranking of individual drug companies.

“ By the same token,” says Gasorek, “perceived weakness in any of the dimensions can help managements to identify opportunities for important improvements in their reputation strength among key constituencies.”

Founded in 2000, Rating Research LLC has completed studies on the relative reputation strength of major firms in a variety of industries operating in the United States. RRC defines corporate reputation strength as “a powerful weapon with which to achieve objectives in strategic diversification, competitive positioning, and overall business expansion.” Companies with strong reputations “may also enjoy extraordinary support in times of controversy.”