Economic performance and compliance

GRI 201
Economic performance

GRI 3-3
Management of material topics

As Switzerland’s leading fully integrated healthcare provider, Galenica makes an important contribution to the Swiss economy, as an employer and taxpayer. Galenica firmly believes that the Group can achieve long-term economic success only if it bears social responsibility and uses natural resources efficiently and respectfully. Economic performance thus forms the basis for long-term and sustainable business development.

Galenica strategy

Galenica is the leading fully integrated healthcare provider in Switzerland and plays a key role in the Swiss healthcare market. Galenica intends to expand its market position and services sustainably and successfully and further develop its core areas of expertise. Vision, values and customer promises describe what drives Galenica, how it works and what it offers. The strategic programmes define what the Galenica Group aims to achieve and how. You can find the entire Galenica strategy here.

Sustainability principles

The Sustainability principles reflect Galenica’s belief that it can only achieve long-term economic success if it bears responsibility both for society and for the environment.

Corporate governance

Good, transparent corporate governance is crucial to managing the Galenica Group effectively and efficiently. Further information on the corporate governance of the Galenica Group can be found in the Corporate Governance Report.

Evaluation of the management approach and measures

• Board of Directors: the Board of Directors is responsible for the topic of sustainability. The Board of Directors approves the sustainability targets proposed by the Executive Committee and monitors their implementation.
• Audit and Risk Committee: the Audit and Risk Committee supports the Board of Directors in fulfilling its duties with regard to accounting, financial reporting, risk management, compliance and internal and external auditing.
• Audits: Internal Audit carries out audits of operational and strategic risk management and the internal control system (ICS) in accordance with the audit plan determined by the Audit and Risk Committee. In addition, the external auditor audits the consolidated financial statements of Galenica Ltd. and its subsidiaries on an annual basis.
• Strategy Committee: the Strategy Committee of the Board of Directors monitors the implementation of the Galenica strategy.
• Ratings: the Galenica Group is regularly assessed by external rating agencies for its environmental, social and economic (ESG) performance. Galenica has received a credit rating of BBB (investment grade) from ZKB and CS.

GRI 201-1
Direct economic value generated and distributed

Galenica discloses information on direct economic value generated and distributed in the Financial Report. The economic value is generated in Switzerland and is mainly distributed in Switzerland. Exceptions are employees who are cross-border commuters and certain investors, partners and suppliers abroad.

GRI 419: Socioeconomic compliance, GRI 205: Anti-corruption, GRI 206: Anti-competitive behaviour Compliance

GRI 3-3
Management of material topics

Galenica attaches great importance to conducting its business activities in an ethical and legal manner. All business activities are carried out in accordance with the applicable legislation. Compliance refers to compliance with legislation, standards (such as ISO 14001 or good distribution practice – GDP) as well as in-house and industry codes. For Galenica, this means, for example, compliance with its own Code of Conduct, therapeutic products, health insurance, employment, antitrust, tax and criminal law as well as respect for human rights in all business activities. As Switzerland’s leading fully integrated healthcare provider, combating corruption and anti-competitive behaviour are key topics for Galenica. Furthermore, Galenica ensures that its business partners and suppliers also comply with international and national laws and standards as well as human rights. Respect for human rights and other legislation is central to sustainable development, peace, security and prosperity.

Responsibilities

The Legal Department of the Galenica Group supports the Service Units and companies in interpreting and applying the legislation correctly. It also ensures that new statutory provisions are implemented in the company. Current challenges for Galenica relate to the implementation of the new provisions of the revised Therapeutic Products Act (TPA) and the forthcoming amendment to the Swiss Data Protection Act (nFADP).

Code of Conduct of the Galenica Group

In addition to the statutory provisions, the Code of Conduct of the Galenica Group sets out the ethical rules and standards that all employees must adhere to. Among other things, the Code includes provisions on conflicts of interest, insider dealing or corruption, as well as on environmental protection. The Code also contains clear commitments to human rights, such as fair working conditions, the exclusion of child or forced labour, discrimination, and the health and safety of employees. Managers are responsible for addressing and dealing with specific conflict situations in day-to-day business.

The Service Unit Pharmacies also has its own specific Code of Conduct. As a binding internal operating procedure, it serves to ensure that pharmacists have pharmaceutical independence at all times and therefore always give priority to the health and wishes of patients. The Code also sets out how employees must behave towards third parties and which advertising measures are permissible.

Supplier Code of Conduct

Galenica ensures that not only the Group and its companies, but also its business partners comply with international and national laws and norms, as well as industry-specific standards, good practices and human rights. The Code of Conduct applies to suppliers, service providers and consultants of the Galenica Group. It covers issues relating to ethics, employment law, health, safety, quality and the environment. Purchasing department employees receive training covering the content of the Code of Conduct. In addition, the Legal Department is always involved in important Group-wide contracts. It also regularly reviews the contract templates of the Galenica Group to check for compliance risks.

Comprehensive quality management

All Galenica Group companies have an extensive quality management system (QMS) in place. Alloga, Medifilm, Mediservice, UFD and HCI Solutions are certified to ISO 9001 (quality management system). Verfora, Bichsel and HCI Solutions are certified to ISO 13485 (quality management systems of medical device manufacturers). The Bichsel Group's QMS is also structured in accordance with the ICH-Q10 standard (pharmaceutical quality assurance system) of the European Medicines Agency. The manufacture of sterile, biological medicinal products filled in an aseptic environment places the highest demands on the implementation and maintenance of a QMS. Due to the critical relevance of the manufactured products, Bichsel generally carries out a major review of compliance with ISO 13485 and the statutory good manufacturing practice (GMP) and GDP requirements every two years.

The process management systems of Galexis and the companies in the Service Unit Pharmacies also meet the requirements of the ISO 9001 standard. However, they are not currently certified. Alloga, Galexis, G-Pharma, Mediservice and Verfora are periodically inspected by the regional therapeutic products inspectorates as part of GDP reviews.

The Amavita, Sun Store and Coop Vitality pharmacies maintain a QMS that covers all the key processes of a public pharmacy as well as environmental factors. Compliance with internal and external standards is monitored by means of regular quality audits, inspections by cantonal pharmacists and test purchases. The QMS at the specialty pharmacy Mediservice fulfils a broad scope of requirements because of the pharmacy's wide range of tasks.

Anti-Corruption Policy and Whistleblower Reporting Office

The Anti-Corruption Policy sets out the principles and guidelines for combating corruption and regulates their implementation by the employees and business partners of the Galenica Group. Any form of corrupt conduct towards or bribery of public officials and private individuals, whether directly or via third parties, is prohibited. Galenica has a zero-tolerance approach to corruption and bribery on the part of employees, partners, suppliers and representatives of third parties. The policy supplements the Group Code of Conduct and the Supplier Code of Conduct and applies to all employees.

Galenica also has an external Whistleblower Reporting Office. This offers all employees and business partners the opportunity to anonymously report suspected breaches of the rules.

Compliance programme

The Galenica Group compliance programme includes a clear commitment to comply with legislation and guidelines and to behave with integrity. The programme describes the Galenica Group's approach to compliance within the three areas of prevention, discovery and reaction and acts as a framework for all central compliance measures and processes.

Regular training

Galenica employees receive regular training on key compliance topics such as anti-corruption measures, the Code of Conduct and antitrust law. A web-based tool is one of the methods used for this.

Evaluation of the management approach and measures

• Reporting: suspected breaches of the rules by employees indicate potential for improvement and possible misconduct. All reports are investigated.
• Audit and Risk Committee: the Audit and Risk Committee of the Board of Directors reviews the company’s compliance and risk management process.
• ISO audits: the ISO-certified companies of the Group are regularly audited.

GRI 419-1
Non-compliance with laws and regulations in the social and economic area

All Galenica Group companies continued to operate in compliance with the law in 2022. There were no fines or monetary sanctions resulting from non-compliance with legislation and/or regulations.

GRI 205-3
Confirmed incidents of corruption and actions taken

The Galenica Group was not aware of any incidents of corruption in the reporting year and there were therefore no confirmed incidents of corruption.

GRI 206-1
Legal actions for anti-competitive behaviour, anti-trust and monopoly practices

COMCO fine referred with appeals

On 20 March 2017, the Swiss Competition Commission (COMCO) issued a ruling against HCI Solutions imposing a fine of CHF 4.5 million. This relates to an investigation carried out in 2012 in which the main allegations could not be substantiated. Of the six allegations investigated, only two subordinate issues remained open. Galenica and HCI Solutions regard the ruling issued by COMCO in relation to these remaining issues as legally and factually incorrect. HCI Solutions therefore referred the decision to the Federal Administrative Court on 4 May 2017. In a decision issued in February 2022, the Federal Administrative Court reduced the fine to just under CHF 3.8 million and granted HCI Solutions reduced party costs. HCI Solutions filed a complaint with the Federal Supreme Court in March 2022.

In 2006, the Competition Commission opened an investigation against three manufacturers of impotence treatments as well as against e-mediat AG, (currently: HCI Solutions Ltd.), Galexis AG and Unione Farmaceutica Distribuzione SA among others. In the first instance, the manufacturers were sanctioned with fines for vertical price agreements based on the price recommendations they issued. Although no sanctions were imposed on the legal entities of the Galenica Group, HCI Solutions Ltd., Galexis Ltd. and Unione Farmaceutica Distribuzione SA referred the decision to the Federal Administrative Court because they were found to have aided and abetted the unlawful competition agreements without providing any further justification. In its decision of 8 December 2021, the Federal Supreme Court ruled in favour of the Galenica Group companies. The decision of the COMCO was overturned in the final instance insofar as it affected HCI Solutions Ltd., Galexis Ltd. and Unione Farmaceutica Distribuzione Ltd.