The 'best-performing' CEO in the world is a pharma chief
It's that time of the year again: The Harvard Business Review has released its yearly list of the "Best-Performing CEOs" in the world. And this time around, the number one spot went to a name that will be all too familiar to biopharma professionals: Lars Rebien Sørensen, chief of the Copenhagen-based pharma giant and diabetes behemoth Novo Nordisk.
The Business Review shook up its ranking methodology this year, which explains why many of the big names from last year's list didn't make the cut this time around and why there's such big fluctuations in certain companies' relative rankings (particularly for biopharma and healthcare).
Instead of focusing solely on hard stats such as shareholder return and market cap changes, HBR has "added to the mix a measurement of each company’s environmental, social, and governance (ESG) performance," weighting that metric at 20% versus 80% for financials. This year's rankings also includes CEOs who have led their companies since before 1995. As always, HBR's metrics cannot capture certain intangible-yet-critical leadership metrics such as "strategic vision," so the list is by no means definitive.
But HBR's interview with Sørensen is worth reading in full, providing some valuable insight into what makes a great CEO in general and for the life sciences in particular. He directly addresses Novo's strategy of focusing heavily on a single therapeutic area rather than trying to swim into riskier (and uncertain) waters or snapping up other companies' meds in an effort to hedge the company's pharmaceutical bets.
"Outsiders sometimes come in and say, “You’re dependent on diabetes for 80% of your revenue—you should diversify,”" Sørensen told the Business Review. "But I’ve always believed that you should do things that you know something about, that you’re good at. We’ve tried a lot of diversification strategies in the past, but we’ve failed because of the inherent scientific and commercial uncertainty and our own naïveté. So our expansion has been completely organic."
The explosion of diabetes on a global scale explains a large part of Novo's success, and Sørensen goes on to explain strategic mistakes he's made at the company, the specter of a diabetes cure, Novo's focus on environmental and social responsibilities, and much more in his interview.
As for the rest of the list: What's notable is the healthcare CEOs that dropped off from 2014, and how far other biopharmas plummeted in the rankings now that financial returns alone don't ensure a top spot.
For instance, the CEOs of Allergan, Valeant, Actavis, DaVita, Perrigo, Edwards Lifescience, and Actelion were all on the top 100 list last time around but no longer are this year; Novo, Biogen, Coloplast, Gilead, McKesson, and Express Scripts are holdovers from 2014 (although their rankings have changed significantly); and Bristol-Myers, Shire, Regeneron, and CVS Health's chief executives are the new healthcare and biopharma CEOs on 2015's list.
Here are the top 11 biotech, pharma, and healthcare CEOs on Harvard Business Review's new list, as well as their relative rankings out of all 100 companies. Check out the full list here.