What Does It Take To Be The World's Top Performing CEO?

By Rob Wright, Chief Editor, Life Science Leader
Follow Me On Twitter @RfwrightLSL

In November 2015, the Harvard Business Review (HBR) announced the top 100 CEOs in the world. Though the list included household names like Starbucks (12), Nike (21), and Amazon (87), what is even more interesting than the fact that Novo Nordisk’s Lars Rebien Sørensen was ranked number one, was the healthcare industry as a whole had 13 CEOs in the top 100 — tying it for first with financial service (see Table 1). But if you dig even deeper, prepare for another surprise.  

Of the 13 healthcare companies listed by HBR as having CEOs in the top 100 for 2015, if you segment further, you will find that the biopharmaceutical sector had the most CEOs (6) of all of  healthcare industry sub sectors (see Table 2).

Table 2

What Healthcare Industry Had The Most Top 100 CEOs?

This year, HBR’s comprehensive ranking of 907 CEOs included financial metrics (weighted at 80 percent) as well as nonfinancial (i.e., environmental, social, and governance [ESG]) performance measures (weighted at 20 percent). And though the publication notes Novo Nordisk’s CEO landing the top spot partly due to the company’s, “(darkly) fortuitous decision years ago to focus almost exclusively on diabetes treatment,” his standing also reflects Novo’s deep engagement on social environmental issues, which are now factored into the calculations. “Corporate social responsibility is nothing but maximizing the value of your company over a long period,” Sørensen said. “In the long term, social and environmental issues become financial issues.” This seems especially true for leaders of biopharmaceutical companies.  

Does Leadership With A Conscience Go Hand-In-Hand With Biopharma?

Corporate social responsibility (CSR), a subject we recently covered in-depth via Merck, has been a U.S. best practice since the 1950s. Unlike companies which sell coffee or books, it seems that for biopharmaceutical companies, developing life-saving drugs and CSR seem to go hand-in-hand, especially when compared to most other industries. Though I find it odd that the author of the HBR Top 100 CEO article makes a point of referring to Novo Nordisk’s success as being “(darkly) fortuitous,” the reality is that biopharmaceutical companies strive to invent, develop, manufacture, and commercialize important medicines for patients suffering from serious and terrible diseases — profitably. Does anyone begrudge Delta or BMW for trying to be profitable? (Well, I am sure some do, but that is a topic for another day). That being said, prior to 2015, the HBR rankings were strictly based on stock market numbers. Though Wall Street may primarily judge performance on profit, when assessing leadership, HBR’s inclusion of CSR measures (i.e., ESG) seems very worthwhile. Interestingly, when comparing HBR’s Top CEO Rankings from 2015 to 2014, healthcare only decreased by one company (i.e., 14 to 13). And while biopharma had eight companies in the top 100 for 2014, two of those companies, Allergan and Actavis (ranked 4 and 31 respectively) merged that same year. Further, of the biopharmaceutical companies ranking in the Top 100 for the last two years (see Table 3), two moved up, and one moved down. Despite the 2015 list seeing the loss of Allergan/Actavis, Valeant, Perrigo, and Actelion, it gained three other companies (i.e., Shire, BMS, and Regeneron).  

Table 3

Biopharmaceutical Top 100 CEOs

Last year, outside of Martin Shkreli, former CEO of Turing Pharmaceuticals, perhaps the other two companies most under the “high-priced drug” magnifying glass have been Valeant and Gilead. Although the inclusion of ESG may have negatively impacted both company rankings, Gilead’s CEO John Martin was still squarely in the top 50. This tells us that drug pricing will continue to remain a very hot topic for years to come. And though I have to wait seven more months to see HBR’s 2016 results, I am curious to see if current presidential candidate high-priced drug pandering will have an impact beyond that of further sharpening the public’s negatively held opinion of the biopharmaceutical industry. What if a biopharma, or Novo Nordisk, the subject of Life Science Leader magazine’s February cover feature, again claims the top spot? Might this indicate that the business of biopharma is a bit more than just business — but requiring a conscience?