Companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their national industry medians, reported Stephanie Overby in her blog on CMO.com. Overby goes on to say that organizations with inclusive cultures were six times more likely to be innovative and agile, eight times more likely to achieve better business outcomes and twice as likely to meet or exceed financial targets. With innovation being such a key factor for success in the pharmaceutical industry, what can companies do to embrace diversity in the pharmaceutical industry?
It starts at the top. Noor and Serilova reported in Pharmaceutical Executive that approximately one-third of the top 50 pharma companies had no women on their boards, and only 8% of board seats were held by ethnically diverse directors. This lags other industries in the Fortune 500 by almost half.
A Russell Reynolds survey found that more than 80% of global executives believe that working for leaders committed to diversity and inclusion brings out their most innovative ideas. Yet there is just one female CEO, Emma Walmsley at GSK, among the top ten pharmaceutical companies by revenue. African Americans, Asians and Latinos are less than 10%, 14% and 11%, respectively of the U.S. pharmaceutical workforce. Even at the clinical trial level, diverse patients account for less than 10% of patients enrolled.
First Steps for Diversity in the Pharmaceutical Industry
In 2018, of the 25 largest publicly traded pharma companies in the U.S. and Europe, 80% had Chief Diversity Officers which was higher than the S&P 500 average of 47%; however, only 42% of surveyed pharma/biotech executives saw their companies emphasizing diversity and inclusion (D&I) as part of their business strategies. Rooting out sources of unconscious/implicit bias have to be identified and actions taken to address them. Supplier diversity and diversity in all activities involving patients can positively impact drug performance, disease awareness and operations.
Action Steps for Diversity in the Pharmaceutical Industry
The Biotechnology Innovation Organization (BIO) adopted principles to foster workforce development, diversity and inclusion throughout the biotech industry. They have a communication campaign as well as a virtual network of diverse, board-ready candidates for CEOs and other board leaders to access to improve the diversity on their boards. In 2019 BIO launched the “Right Mix Matters” campaign which has a D&I toolkit, the aforementioned BIO Boardlist and other programs to encourage and facilitate diversity in the pharmaceutical industry.
Private equity firms, pension funds and money managers recognize the benefits of D&I and are requiring companies they invest in to hire and promote more diverse talent or risk losing financial support. CalPERS, the largest pension fund in the U.S., has threatened to withhold votes from directors at hundreds of companies if they don’t make an effort to diversify their leadership.
Takeda Pharmaceuticals is active in industry groups working to advance women in pharma, biotech and life sciences. They have an internal mentorship program that is playing an increasing role in attracting and retaining top female talent.
Merck Sharp & Dohme (MSD) CEO Kenneth Frazier joined CEO Action for D&I to advance diversity and inclusion within the workplace. MSD was inducted into the Billion Dollar Roundtable which recognizes corporations for spending at least $1 billion with diverse suppliers.
Gilead added inclusion as one of its five core values in 2016. Gilead created employee resource groups which foster networks of employees that help spark innovation and accelerate employee development.Eli Lilly adopted an “extra mile” approach that involves the use of a third party to identify barriers and actively work on ways to improve gender equality.
Diversity in the pharmaceutical industry recognizes the crucial importance of establishing a workforce reflective of its customers and the ultimate end users of their products – patients.