Biotech Company Boardroom Diversity Has a Long Way to Go: Liftstream
A study of 177 biotechnology companies which publicly listed between 2012-2015 shows that women participate on biotech company boards at a current level of 10.9 percent, and to reach gender parity would take 40 years. In 2016, a total 57.2 percent of companies in the study have at least one woman board director, representing an increase over previous studies of the biotech sector, the report notes. Liftstream, the executive search firm who compiled the report, analyzed the gender diversity in the boardrooms of the companies to assess how they take advantage of going public to reconstitute their boards and introduce greater levels of gender diversity.
“This new study of the gender diversity on biotech company boards provides multi-year data on the sector’s progress and brings forward new insights. Our discovery of the link between the corporate governance structure and more diverse boards is an important finding, as is the evidence linking diverse boards to better financial returns.” said Karl Simpson, CEO of Liftstream. “It also illustrates the cultural transformation required in many biotech boardrooms to bring about a fully diverse and inclusive board. After all, it is the board which sets the cultural tone and standards for the entire company.”
Abbie Celniker, Partner at Third Rock Ventures said: “This study by Liftstream confirms the gender diversity problem and highlights the need for active and intentionally disruptive approaches for appointing directors to biotech boards. Venture capital firms and company directors must plan more effectively to increase their opportunity for recruiting directors from outside their customary networks when meeting the changing needs of the company.”
Liftstream collected data from the securities and exchange commission S-1 filings and proxy statements (Form DEF 14A) issued between 2012 and 2016 for 177 public biotech companies listed in theUnited States. The study looks at a cumulative peak of 1297 company directors, including executive, non-executive and VC directors. The report, A Public Reality for Women in Biotech Boardrooms, tracks the number of directors who leave the company’s boards, and those who are newly appointed, providing insight to the boards’ behaviors when appointing directors post-IPO. The results from the analysis is published in a 41-page report.
Wende Hutton, General Partner at Canaan Partners commented: “The Liftstream report shines yet another light on the critical business case for diverse boards in biotech. With these well-researched financial and performance benefits, our industry has no excuse for continuing to lag on gender diversity in biotech boardrooms. We must embrace recruiting women from the entire C-Suite – and not just from the pool of CEOs, of which only 7% are women. I’ve worked with tremendously talented CMOs, Heads of R&D, Heads of Business Development and CFOs in my career. In order to make a change now, that’s where we need to look to recruit diverse boards and improve bottom lines.”
Key findings from the study are:
· Women added to many company boards after IPO but companies have not sustained their board diversity.
· Women chair the board of directors in less than 2% of companies.
· Less than 8% of companies were found to have a woman CEO.
· Company boards have just 4% of women VCs as directors.
· Cumulatively women occupied 10.9% of board positions in 2016.
· The number of company boards with a woman director increased to 57.2%.
· Companies with separate Chairperson and CEO have more diverse boards.
· Men are appointed to boards at twice the rate of women.
· VC directors replaced by non-executive directors improved board diversity.
· Post-IPO share performance of diverse boards shows a 28 percent net gain over companies with all-male boards.
· To reach 30% participation of women on boards would take 20 years, and parity 40 years.
Karl Simpson commented: “I am exceptionally proud that Liftstream has been able to lead on the issue of board diversity in the biotech sector over the past few years. Our view that diverse company boards are better business and offer greater economic potential is supported by this new research. As we continue to engage leaders from across the life science sector on board diversity, this new data will be important evidence to focus that discussion. More importantly, we hope it further highlights the incentives for gender diversity, thereby encouraging industry stakeholders to take the required action towards finding interventional solutions capable of accelerating the pace of change towards equality.”
The study, A Public Reality for Women in Biotech Boardrooms, can be downloaded free at http://www.liftstream.com/women_biotech_boardrooms.html
Liftstream is an executive search recruitment practice focused exclusively on board and executive appointments in the global life sciences sector. Since 2003, Liftstream has been strengthening company boards, executive teams and functional management across international bioscience clusters, improving the leadership and governance standards of its clients. Liftstream is committed to equal opportunities, diversity, and inclusion. For more information about Liftstream, www.liftstream.com.