The pharmaceutical industry is undergoing critical structural changes led by the high rate of patent expiration. This report makes the case for greater diversity within corporate governance—Executive Leaders and Board Members—within the pharmaceutical industry. Specifically, it examines the current literature on corporate governance and the business case for diversity with respect to current structural trends occurring across the pharmaceutical industry. It concludes with a case for diverse corporate governance.
To do so, this report assesses the current diversity of corporate governance within the top-performing 25 pharmaceutical companies. These companies were identified through the Pharmaceutical Executive Report, which ranked them according to overall 2014 sales. Then, using a Census-based biographical approach, we conducted an analysis of diversity within corporate governance, measuring the Board Members and Executive Officers that identify as People of Color and/or as Women per company. We have developed the Diversity and Inclusion Ranking to establish a benchmark by which to measure corporate governance diversity, and to examine a company’s progress yearly.
We reveal three major findings: The first is that there is a strong correlation between financial performance of pharmaceutical companies and the recognition they have received for their diversity practice, including CEO commitment. The second finding is that when measured in terms of gender, corporate governance diversity is higher than when measured in terms of race and ethnicity. This has led us to maintain two company rankings: one regards to gender (GDIR) and the second with regards to race and ethnicity (PDIR). The last finding is that the top-performing pharmaceutical companies did not prove to be competitive in the area of corporate governance diversity. While white male constituents across corporate diversity are as high as 70%, Women of Color constituents are as low as 2%.
Thus, this report contends that multinational pharmaceutical companies necessitate diverse corporate governance, in order to lead in innovative strategic thinking, meet customer demands for social responsibility, and to build distinguished patient care that sets them apart from emergent industry competition.
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