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RATING RESEARCH’S ‘03 PHARMACEUTICAL REPUTATION STUDY SURFACES CHANGING FOCUS OF C-SUITE EXECUTIVES

Macro Environment Impacts Shift to Fundamentals

Bedminster, N.J. (25 June 2003) — Pharmaceutical corporate-suite executives appear to be defining reputation leadership in their industry differently than last year, emphasizing management quality and financial stability far more today than they did in 2002, according to Rating Research LLC (RRC), the leading reputation rating agency. Earlier this month the agency released its second annual Reputation Strength Study of the Pharmaceutical Industry, including interviews with approximately 260 industry executives, 81% of them representing the c-suite level.

Leadership components, such as “led by a highly talented management team”, emerged as more critical in 2003. Executive respondents weighted the leadership abilities of the CEO, one of 35+ reputation components they were queried about, as highly important as well. Coupled with this change was the increased importance of being a “financially secure company”, the most highly weighted reputation component in this year’s study, and being able to “survive downturns in its industry”.

“These findings appear to reflect the macro environment in which we see an increasing trend towards developing strategic alliances and buying up smaller, innovative pharmaceutical or biotechnology companies,” said Dory Gasorek, RRC’s Rating Committee Chair. “These needs put a premium on sound management and solid financials.”

Ms. Gasorek acknowledged that these changes contributed to Pfizer’s stronger performance this year that resulted in its upgrade to a AAA Reputation Rating, the highest RRC assigns. “Pfizer is clearly an impressive company with strong financials and a CEO who is perceived positively by both senior industry executives and financial analysts, also surveyed as part of our research,” said Ms. Gasorek.

At the same, however, longer range strategic missions such as “successfully differentiates itself from competitors” and “continually innovates work processes” declined in importance in driving a company’s overall reputation. “This suggests that these longer-term initiatives are viewed by executives as less effective in defining future success,” offered Ms. Gasorek.

RRC interviewed senior executives and financial analysts in the first quarter of this year, creating over 1,000 company profiles. This data, coupled with the industry expertise of the agency’s Rating Committee and other information streams, form the basis for the assigned Reputation Strength Ratings.

Avoiding Controversy Remains Essential

The importance of organizational and ethical issues remained high in the ’03 study. Components such as “adhering to ethical business practices” and being “customer-focused” remain well within the most important characteristics of reputation leadership in this industry, and being considered a “trustworthy company” ranked near the top. Treatment of employees became more dominant, moving into the top half of weighted components in importance.

“This makes sense given events both in the pharmaceutical industry and across industries,” said Ms. Gasorek. “Companies cannot afford the set back that a controversy and negative press coverage brings them. A company like Bristol-Myers Squibb unfortunately fell prey to issues of both financial and ethical lapses, thus, explaining its reputation downgrade this year to a BBB from an A rating last year.” As one financial analyst described the company, “Bristol-Myers Squibb has fallen from grace and lost prestige and standing among its competitors and the financial community.”

Other Changes in the Industry

In addition to the reputation rating changes assigned to Pfizer and Bristol-Myers Squibb, Bayer also was downgraded from AA to A. Bayer’s reputation suffers from its changing commitment to its pharmaceutical operation over the past two years ranging from potentially selling off the division to its most recent reorganization into a healthcare unit. “This lack of clear strategic direction has left it weak across many of those components that have increased in importance in our research this year,” said Ms. Gasorek.

Four new companies were added to RRC’s study this year – Amgen, Alcon, Allergan, and Forest Laboratories. “Amgen receives a high-quality reputation rating of AA, which is a stellar position given the larger, more diversified peers included in the analysis,” said Ms. Gasorek. The company received outstanding support from both industry executives and financial analysts alike. One executive stated, “Amgen is a wonderful, smart, flexible and responsive company.” Alcon and Allergan each received a BBB reputation rating, while Forest Laboratories garnered a BB rating.

RRC, a joint venture between The Ratrix Group and Opinion Research Corporation (NASDAQ: ORCI), assigns Reputation Ratings to leading companies and publishes those rating opinions as a public service.

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For more information on RRC and its upcoming Reputation Strength Study of the Pharmaceutical Industry contact Jane Barr.