Is the Pharma Industry Developing Cultural Intelligence?

Successful diversity and inclusion (D&I) strategies have been correlated with greater company performance. When combined with the application of cultural understanding to external relationships, D&I programs can provide significant competitive advantage through valuation of employees, suppliers, and customers. Such cultural intelligence drives greater innovation and enhanced decision-making. Unfortunately, many pharma and biotech companies have yet to recognize that their future success will in part hinge on their ability to build a diverse, inclusive, and culturally intelligent workplace.


The Business Case for Diversity and Inclusion

Diversity and inclusion in the workplace − purposefully hiring employees with different ethnic, cultural, and experiential backgrounds and providing a welcoming environment where everyone is valued − has been shown to have a measurable positive impact on the bottom line.1

Companies in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above their national industry medians, while those in the top quartile for gender diversity are 15% more likely to see greater financial returns. In addition, companies with above-average diversity had both 19% higher innovation revenues and 9% higher EBIT margins, while 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.1,2

It’s becoming clear that better decision-making that is facilitated by an organization’s diversity.2 Team members in diverse groups bring a wide range of perspectives and approaches to a problem, enabling identification of truly optimal solutions. Companies with diverse leadership also tend to have greater employee retention, because everyone believes they have opportunity for advancement. Employees also benefit from mentors and sponsors that share commonalties, and the company benefits from being able to mentor and sponsor a broader and more diverse group of professionals.

Just like creative and energetic cities − international melting pots with considerable immigrant populations − businesses that bring people with diverse experiences, backgrounds, and beliefs tend to be more innovative.3 At biotech companies with inclusive work environments, research and development is more efficient because people feel comfortable speaking up and because talent − and knowledge − are retained.

In a study by the Boston Consulting Group, companies with more diverse management teams were found to have 19% higher revenues due to innovation. In a separate survey (D&I Pulse), Russell Reynolds Associated found that more than 80% of global executives believe that working for leaders committed to diversity and inclusion brings out their most innovative ideas.4 Millennials, who will comprise 75% of the global workforce by 2025, believe strongly that organizations with inclusive cultures are move innovative.3

Just focusing on the gender gap, a PIIE Report found that increasing the presence of women in corporate leadership teams by 30% would lead to a 15% increase in profitability, while a Credit Suisse study revealed that companies with women in leadership positions report 19% higher return on equity (ROE) and 9% higher dividend payments.5,6 It has been estimated that achieving gender parity in leadership would add $28 trillion (a 26% increase) to the value of the global economy by 2025: not just women, but their companies and the communities in which they are based will benefit significantly.3 It is also worth noting that, in a 2017 survey, 46% of women in the biosciences said they are less likely to join companies that have all-male boards, executive teams, and hiring managers.6

The State of Diversity in the Pharma Industry PA_Q120_Diversity_Sidebar2

Unfortunately, the pharmaceutical and healthcare industries have a long way to go before they can be considered truly diverse and inclusive. Although people with diverse racial and ethnic backgrounds make up a growing percentage of the population in the Unites States, African Americans, Asians, and Latinos comprise less than 10%, 14%, and 11%, respectively, of the U.S. pharmaceutical workforce.7 In addition, diverse patients account for less than 10% of patients enrolled in clinical trials, according to the National Institutes of Health.

In 2016, the pharma industry was shown to feature less gender and ethnic diversity than other industries in the Fortune 500.8 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, compared with 14% for the Fortune 500 overall. The numbers are even lower for executive committees (ExCos), with 19 of the top 50 companies having no women on their ExCos.

Another view of the gender gap can be seen by comparing the percentage of women in the healthcare workforce — 65%, which is larger than in tech (26%) and financial services (46%) — to the percentage on leadership teams at just 25%. There is also just one female CEO (Emma Walmsley, GlaxoSmithKline) among the top 10 pharmaceutical companies by revenue.5

In 2018, of the 25 largest publicly traded pharma companies in the United States and Europe, 80% had chief diversity officers (CDOs) or equivalent roles, which was higher than the S&P 500 average of 47%.4 However, only 42% of surveyed pharma/biotech executives saw their companies emphasizing D&I as part of their business strategies, and just 59% felt their companies brought out their most innovative ideas.

There is also a lack of diversity in the healthcare sector. Only 9% of CEO positions at hospitals and health systems are held by minorities, the second-lowest percentage of all C-suite positions. While women make up 80% of the workforce, only 4% of healthcare companies are run by women, and few women hold other executive positions.9

One of the key problems facing the industry is the fact that most CEOs and board chairs tend to select from their established professional networks — generally white men — when hiring for top positions. Some companies even make it a policy to only appoint new directors that are already known by current members of the board. The result: large numbers of highly talented and skilled people that could help improve company performance — women, minorities, and LGBT executives — are overlooked.10

Pharma Workforce Trends

This limited view of leadership must be considered in the context of the changing workforce. Baby boomers make up a significant portion of the current workforce today, but many are reaching retirement age, and millions are expected to leave their jobs over the next 10 years.

Simultaneously, there are growing numbers of small, emerging biotech companies competing for skilled and talented people to take on leadership roles — companies that are now competing with established pharma firms.

As a result, companies are changing the way they source talent, seeking people that are flexible and agile with respect to managing and responding to changing requirements within the marketplace.11 They are considering people outside of pharma with expertise in digital, big data, artificial intelligence, and machine learning and looking more at people with diverse backgrounds, ranging from international work experience to different cultures, ethnicities, and sexual orientations.


Beyond Diversity to Cultural Intelligence

An organization should not develop a diverse and inclusive work environment merely to check off a box on a list of requirements for successful companies. Pharmaceutical companies, in particular, should recognize the crucial importance of establishing a workforce reflective of its customers and the ultimate end users of their products — patients. The industry is global, and patients come from every culture, race, nation, and socio-economic level and represent every type of religion, sexual orientation, and political group.

Having a diverse and inclusive workforce enables pharmaceutical companies to better understand the needs of different patient populations, which is more important than ever as the industry increasingly focuses on personalized medicines. It also enables disruptive innovation. Cultural intelligence — a higher level of understanding — is key to success.

Cultural intelligence includes understanding the value of diversity, which provides the ability to attract top talent. It includes an understanding of different working styles in other cultures, as well as in the entire supply chain and distribution network, leading to increased tolerance, trust, and understanding. Greater cultural intelligence can lead to closer integration of company operations across the globe and encourage individuals to improve their own skills. In addition, culturally sensitive leaders make better managers and culturally sensitive employees are better collaborators. Cross-culturally trained employees are better prepared to take on international positions. Finally, culture intelligence enhances the ability of pharma companies to more effectively market their products to diverse groups of people.12

Keys to Success

To become a culturally intelligent company, it is first necessary to recognize the value of diversity and inclusion and the importance of gaining a true understanding of the diverse needs of all stakeholders.4 Next, it is important to establish a clear link between D&I activities and innovation goals and establish top-down commitment for incorporating D&I into the overall business strategy. The head of the diversity effort — and all employees — must be empowered to take action. The company must also be prepared for the challenge always presented by bringing change to organizations.

More specifically, it is important to take a structured approach by establishing a clear D&I strategy and roadmap for implementation.7,8 Sources of unconscious/implicit bias (individual behaviors, systems, and processes) should be identified and measures must be undertaken to address them. Ensuring supplier diversity can help companies have a wider impact on their communities. Efforts also need to be made to ensure diversity in all activities involving patients, from trial recruitment and patient advocacy to disease awareness and marketing operations. A mechanism for measuring progress should be devised that will require the development of more sophisticated metrics than traditionally used by human resource departments.

BIO Takes Action

One industry group that is tackling the issue of diversity and inclusion head on is the Biotechnology Innovation Organization (BIO). In 2017, it adopted principles on workforce development, diversity, and inclusion (WDDI) for the biotechnology industry and established a board-level WDDI Committee charged with working to foster workforce development, diversity, and inclusion at BIO and throughout the biotech industry.13

Initiatives of the Committee include a communication campaign to promote the business case for diversity, along with the creation of a virtual network of diverse, board-ready candidates accessible to CEOs and board leaders who are interested in diversifying their leadership perspective.10 Each person in the database is nominated by a BIO member, with the goal of making it easier to find women and other candidates with specific expertise or experience.

In 2019, BIO launched the “Right Mix Matters” campaign, which includes the Diversity and Inclusion (D&I) Toolkit, BIO Boardlist, and other components.14 This more recent program is designed to improve gender, racial, ethnic, and LGBTQ diversity on boards of directors, executive suites, and functional leadership positions in the biopharma industry. The “Diversity & Inclusion Dashboard” provides graphical means for presenting D&I data and also provides statistics to support the value of D&I. The program also provides information on family care solutions, maternity and paternity leave, how to develop mentoring programs, and case studies.

Investment Funds Driving Change

The mounting evidence for the benefits of diversity and inclusion in the workforce have not gone unnoticed by investment funds. These firms are helping to drive real change in many industries, including the pharma sector. Several private equity firms, pension funds, and money managers are now requiring companies they invest in to hire and promote more diverse talent or risk losing financial support.10

Examples include State Street Global Advisors, which is expecting its 3,500 portfolio companies to increase the representation of women at the board level; CalPERS, the largest pension fund in the United States, which has threatened to withhold votes from directors at hundreds of companies if they don’t take efforts to diversify their leadership; and BlackRock, which changed its proxy voting guidelines — the firm now expects its portfolio companies to have at least two women on the board.


Some Companies Are Committed

Many large pharmaceutical companies are also taking action. Takeda Pharmaceuticals, for instance, is active in industry groups working to advance women in pharma, biotech, and life sciences,
including Women’s Unlimited Program and the Healthcare Women’s Business Association.6 The company has also established an internal mentorship program that has played an increasing role in attracting and retaining top female talent.

Takeda’s U.S. D&I Council advocates for all employees, and its members provide insight into their parts of the organization as they develop and promote inclusive programs and policies. Other specific programs include cross-cultural awareness training, resources and community outreach, and supplier diversity programs. The company also supports BIO’s WDDI principles.15

At MSD (Merck Sharp & Dohme Corp., a subsidiary of Merck & Co.), CEO Kenneth C. Frazier has joined CEO Action for Diversity & Inclusion, the largest CEO-driven business commitment to advance diversity and inclusion within the workplace, and signed a pledge to reach diversity goals.16 MSD was also inducted into the Billion Dollar Roundtable, which recognizes and celebrates corporations who spend at least $1 billion with diverse suppliers.

Vertex Pharmaceuticals is ranked fifth on the to Forbes 2019 Best Employers for Diversity List.17 Gilead, which also appears on the list, added inclusion as one of its five core values in 2016.18 Like many other companies committed to D&I, Gilead has created employee resource groups (ERGs), which it believes foster networks of its employees that help spark innovation, accelerate employee development, and make a difference at Gilead and in communities.

Affinity-based ERGs are groups of individuals with shared characteristics and life experiences, as well as their advocates and allies, that provide a mechanism for them to find one another, avoid feeling isolated, and increase engagement. Examples at Gilead include the Gilead Asian Interest Network (GAIN), Gilead Leadership Organization of Black Employees (GLOBE), Women at Gilead, the LGBT Alliance, Gileados, and Gilead’s Veterans Engagement Team (GVET).18

Eli Lilly, meanwhile, has 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. According to Chief Diversity Office Joy Fitzgerald, the program has led to a 3% global increase of women leaders within the company in just one year and an 8% increase in revenue.5


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  3. Eswaran, Vijay. “The business case for diversity in the workplace is now overwhelming.” Weforum. 29 Apr. 2019. Web.

  4. Dineen, Sean and Cissy Young. “9 Ways Big Pharma Can Hire A Chief Diversity Officer – Pharmaceutical Executive.” Minority Commerce Weekly. 6 Apr. 2019. Web.

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  7. Domingo-Snyder, Eloiza. “Taking Diversity & Inclusion to the next level at Astellas.” The Astellas Way. 26 Jun. 2019. Web.

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  9. “The State of Diversity & Inclusion in the HealthcareIndustry: Part 1: Industry Overview.” Diversity Best Practices. n.d. Web.

  10.  Torley, Helen. “Diversity in the biopharma industry makes dollars and sense.” STAT News. 23 May 2018. Web.

  11. Lepsinger, Rick. “The Top Talent Trends in the Pharma Industry.” On Point Consulting. 28 Nov. 2018. Web.

  12. Bryant, Sue. “10 reasons why more cultural intelligence is needed in the pharmaceuticals industry.” TMA World. 12 Jul. 2019. Web.

  13. BIO Adopts Principles on Workplace Development, Diversity, and Inclusion; Launches Board WDDI Committee. BIO. 19 Jun. 2017. Web.

  14. Terry, Mark. “BIO Promotes Diversity as a Key to Success in Biopharma.” Biospace. 30 Apr. 2019. Web.

  15. “Takeda’s Diversity & Inclusion Council and Employee Resource Groups.” Takeda. n.d. Web.

  16. Warren, Celeste. “Diversity and Inclusion: Good for Business.” n.d. Web.

  17.  Valet, Vicky. “The Best Employers For Diversity 2019.” Forbes. 15 Jan. 2019. Web.

  18. “Diversity and Inclusion.” Gilead. n.d. Web.

Cynthia A. Challener, Ph.D.

Dr. Challener is an established industry editor and technical writing expert in the areas of chemistry and pharmaceuticals. She writes for various corporations and associations, as well as marketing agencies and research organizations, including That’s Nice and Nice Insight.