Drug companies were given a stark warning yesterday that blocking access to life-saving drugs at affordable prices by poor countries could undermine public confidence in them and damage the value of their shares in the long term.
The unprecedented pressure on the multinationals comes from major City institutions with investments of more than £600bn and backed by well-known names such as Jupiter, Schroders and Legal and General Investment Management.
Investors are worried about the impact on public opinion of the perceived intransigence of the drug companies which have been blocking the Doha trade deal, which could allow poor countries to bypass patents on expensive new medicines and make or buy cheap copycat generic versions.
Yesterday ISIS Asset Management and the Universities Superannuation Scheme (USS) published an investor statement urging the drug companies and governments to improve access to medicines for the poor. They have drawn up a framework of good practice to judge the pharmaceutical companies' commitment to public health in the developing world.
They say setting different prices for rich and poor countries is an example of good practice. So is "sensitivity to local circumstances" when it comes to enforcing patents or giving licences to local generic manufacturers.
Even more radical is the suggestion that companies will be commended for "using influence with governments to address the public health crisis in emerging markets".
This influence will include urging governments in Europe or the US to put money into the Global Health Fund, which gives grants to developing countries to buy the cheapest available medicines for Aids, TB and malaria. It will also include supporting interpretations of trade agreements on patent issues which would help the development of emerging markets in poorer countries.
Olivia Lankester, senior analyst at ISIS, said: "Our main concern is that continuing high-level criticism of the sector will, over time, damage its ability to operate."
She acknowledged that companies had been scapegoated to some extent, but added that the controversy could undermine their legitimate arguments for strong patent protection which enables them to recoup the millions of pounds they spend on the research and development of new drugs in the rich northern countries.
The climate has changed, but the industry has not. The City institutions point to recent pronouncements like that of David Kessler, dean of Yale school of medicine who worked at the food and drug administration under Bill Clinton and who in February said that drug companies must relax their patents in South Africa and elsewhere to make their drugs more affordable.
"I don't expect pharmaceutical executives will do this out of the goodness of their hearts," he said.
"Perhaps they will do it out of self-interest. The companies have much to lose as the international community grows restless.
"At stake is the very patent protection system that allows them to control drug prices. They want to keep the power of pricing their products but they must bend for a true international crisis."
Raj Thamotheram of USS said: "I think many political commentators who are quite balanced and pragmatic are seeing this knock-on effect on the sector's ability to price as it did in the past."
