P HARMACEUTICAL S ECTOR

In the pharmaceutical sector, the three organizations, Novo Nordisk, Lundbeck and LEO Pharma, all show a response to the discourse on innovation. In the texts I analyzed, all three organizations deal with innovation to some extent with rationalization being the dominant legitimation strategy. In addition, Novo Nordisk is the company which deals the most with innovation.

5.1.1 Novo Nordisk

Novo Nordisk‟s 2010 annual report has five words displayed on its front page: imaginative, focused, ambitious, innovative, and healthy. Innovation can thus be assumed to be a practice with which Novo Nordisk wants itself to be associated. In that sense it serves as a form of normalization as Novo Nordisk communicates innovation as something „normal‟ or „natural‟

to them. Moving on to the actual report, innovation is mentioned in the “letter from the CEO”:

As the global leader in diabetes care, with 51% of the insulin market measured by volume, the success of our core business is linked to innovations and improvements in global diabetes care (Novo Nordisk, 2011: 3).

Here, Novo Nordisk CEO Lars Rebien Sørensen legitimates a focus on innovation by referring to its utility: innovation has given Novo Nordisk the position as a world leader within diabetes care. It is thus a case of rationalization, although some authorization is also present since Lars Rebien Sørensen is referring to the “market” as an authority. Later in the same letter, the management of innovation is mentioned as a requirement for future growth, and he hopes 2011 will be a year “with significant growth and continued innovation for the benefit of all our stakeholders” (Novo Nordisk 2011: 4). These are thus other cases of rationalization: innovation will provide future growth, and innovation is thus legitimated by reference to its purpose. Next follows an entire section with the name “valuing therapeutic innovation” in which Lars Rebien Sørensen explains the value of innovations with phrases such as “The research-based pharmaceutical industry‟s continued efforts to discover new therapeutic offers are intended to benefit patients as well as society.” (Novo Nordisk, 2011:

5), and “In our view, innovations will eventually benefit all people with diabetes.” (Novo Nordisk, 2011: 5). These are also examples of rationalization, where the utility or function of a practice is referred to. As Vaara et al. (2006) describe rationalization, it is when a practice or action is legitimated through reference to the utility of that action or practice by focusing on the benefits, purposes, functions or outcomes of that action or practice. In this case, that therapeutic innovation will benefit all people suffering from diabetes and society as a whole.

Other instances of rationalization in the report are apparent, such as “we continue to invest in the expansion of insulin innovation leadership with research activities aimed at continuous improvements for all types of insulin” (Novo Nordisk, 2011: 18) and the undertaking of an

“innovation culture review in 2009” intended to help Novo Nordisk to “respond to broader challenges in the business environment” (Novo Nordisk, 2011: 20). In the section „The Novo Nordisk Way,‟ it is listed under „The Essentials‟ that “we provide innovation to the benefit of our stakeholders” (Novo Nordisk, 2011: 23), and throughout the report innovation is also linked to specific products or treatments such as “continuous innovation for improved blood glucose control” (Novo Nordisk, 2011: 30) and “we innovate to help patients and to defeat diabetes by finding better methods of diabetes prevention, detection and treatment (Novo Nordisk, 2011: 43). Through most of the annual report, then, innovation is being rationalized through reference to the benefits, purposes, functions or outcomes of innovation, and the overarching legitimation strategy employed in the annual report is thus one of rationalization.

However, even though Novo Nordisk is primarily employing rationalization to legitimate its focus on innovation, some normalization, as mentioned earlier, is also apparent. In a section called „strategic focus areas,‟ it is explained that “Novo Nordisk is at the forefront of innovation in protein expression in yeast” and that Novo Nordisk is a “market-leading incubator for innovation to change diabetes treatment” (Novo Nordisk, 2011: 17-18).

Innovation is thus legitimated as something that Novo Nordisk “is”, thus rendering it normal or natural functioning, even though rationalization is still apparent in these texts.

In sum, in its 2010 annual report Novo Nordisk is constantly legitimating innovation through rationalization by explaining the rationale for focusing on innovation: the development of specific products, to experience future growth, for the benefit of stakeholders, for the benefit of patients and for the benefit of society as a whole. At the same time, some normalization is seen when Novo Nordisk describes itself as being innovative, thus rendering it a natural

behavior. In sum, I found 16 instances of legitimation through rationalization, 4 normalizations and 1 authorization.

On its website, Novo Nordisk does not mention innovation much. Novo Nordisk has an innovation workshop for students called “innovation in action” which can be seen as a normalization strategy, since Novo Nordisk is describing innovation as being natural to the company (Novo Nordisk Website, August 2011).³⁹ The program itself might be legitimated through rationalization, but it conveys innovation as such as something normal or natural to Novo Nordisk. Taking the annual report and the website together, I found rationalization in 16 different texts, normalization in 5 texts, and 1 text with authorization.

5.1.2 Lundbeck

Moving on to Lundbeck and its 2010 annual report, we here see a much slighter focus on innovation per se. However, there is a great focus on research and development in the report, something I assume is communicated to give the picture of a leading-edge, innovative company. And even though the term „innovation‟ is not used very much in itself, it is often mentioned in relation to research and development. Such as in the phrase: “Approx. 20% of the revenue is reinvested in research and development of new and innovative pharmaceuticals for the treatment of brain disorders” (Lundbeck, 2011). Research and development will thus provide innovative pharmaceuticals with the purpose of treating brain disorders. Or in other words, research and development will provide innovative products that have a specific purpose: treating brain disorders. Both research and development and innovation are thus rationalized by providing the utility of it. These examples are present throughout the annual report: “In 2010 Lundbeck, implemented a new research strategy in which disease biology is the basis of the development of new and innovative pharmaceuticals” (Lundbeck 2010: 1),

“our value creation is driven by our ability to invent, develop, and insure the dissemination of innovative pharmaceuticals” (Lundbeck, 2011: 3), “in 2010 we implemented a new research strategy which will enable us, also going forward, to deliver innovative pharmaceuticals for the treatment of people suffering from brain disorders” (Lundbeck, 2011: 6), and “the purpose of the strategy is to develop innovative products that will lead to improved treatments for people with brain disorders whilst also securing continued growth for Lundbeck” (Lundbeck, 2011: 15). In the section called „Lundbeck‟s development portfolio‟ it says that “[Lu

39 http://www.novonordisk.com/careers/student/innovation-in-action.asp

AA24493] represents an innovative approach to obtaining proof of principle, as biomarkers are to provide early indications of therapeutic efficacy” (Lundbeck, 2011: 21). I thus, throughout the annual report, find several mentions of the term innovation even though innovation as such is not the focus of attention. It is the research and development that will lead to „innovative‟ products that in turn have a specific purpose, benefit, outcome or function: treating diseases or securing future growth for Lundbeck. Throughout the annual report, this focus on „innovative pharmaceuticals‟ is then being legitimated by reference to its utility. That is, legitimation through rationalization. I found seven such legitimations.

On Lundbeck‟s website, in a text on its corporate culture, the headline says “innovation is what drives us forward,” and below that:

We want our innovations to help improve the quality of life for people all over the world who suffer from psychiatric and neurological disorders. Our focused innovation reinforces a culture of motivated and highly qualified employees (Lundbeck website, August 2011).⁴⁰

This text is the only one that mentions or deals with innovation on Lundbecks website. On its website too, then, Lundbeck rationalizes a focus on innovation. In sum I found nine texts dealing with innovation in Lundbeck‟s annual report and website, all of them rationalizing a focus on innovation or innovative products.

5.1.3 LEO Pharma

LEO Pharma‟s 2010 annual report does not have one single mention of the word „innovation,‟

and only one reference to innovative products, services or practices: an energy-saving activity where waste heat are used for water cooling through an „innovative process‟ (LEO Pharma, 2011: 16). It is in relation to CSR practices, however, and there is thus no mention of LEO Pharma as an innovative company or to any innovative practices in the annual report. On its website, however, it is explained on the front page that LEO Pharma improves lives through

„innovation,‟ and a link to a video presentation about the organization is provided in which it is explained that innovation is at „the heart‟ of LEO Pharma (LEO Pharma website, August

40 http://www.lundbeck.com/careers/working_with_us/corporate_culture/default.asp

2011).⁴¹ The website thus rationalizes a focus on innovation by providing the utility of it (it improves lives) and normalizes it by referencing to normal functioning (innovation is at the heart of LEO Pharma). In LEO Pharma‟s annual report and on its website I thus found one text containing rationalization and one containing normalization.

In sum, the pharmaceutical industry, here represented by Novo Nordisk, Lundbeck and LEO Pharma, through texts disseminated to external stakeholders, primarily legitimates its focus on innovation through rationalization where the organizations explicitly provide the utility or function of innovation, innovative practices or innovative products. To a lesser extent, but still apparent, normalization is employed by describing innovation as almost a given practice in the respective organizations. It is also apparent that all organizations to some extent share the societal discourse on innovation, with Novo Nordisk and Lundbeck having adopted the discourse or trend more than LEO Pharma. The results from the pharmaceutical industry are as follows:

Table 2:

Pharmaceutical Sector Novo Nordisk Lundbeck LEO Pharma

Rationalization: 16 9 1

Normalization: 5 0 1

Authorization: 1 0 0

Narrativization: 0 0 0