Are Some Degrees Better than Others for Big Pharma Leaders?


Xconomy Seattle — 

Biopharmaceutical companies are under a great deal of financial pressure these days, and many are tinkering with long established business models. There can be no doubt that the industry is in flux as a result of pricing pressures from insurance companies, changing patent regulations and expirations, healthcare reform, and an increased focus on proving significant clinical benefits. Sadly, this is all taking place at a time when the largest biopharma companies have developed a black eye as a result of a seemingly endless series of ethical transgressions, including off-label drug promotions, hidden clinical trial outcomes, bribes and kickbacks for writing prescriptions, manufacturing breakdowns, and lawsuits tied to numerous medicines pulled off the market.

Have things really changed since the good old days in the industry? One notion that I heard voiced recently by industry consultant Bernard Munos is that some of pharma’s recent missteps (specifically, a decline in innovation) result in part from the fact that scientists are no longer leading these organizations. According to Munos, the old model was to turn scientists loose to follow their wide-ranging passions and interests, and innovative discoveries would come rolling out. This model was replaced about the mid 1990s by one where a culture of process was introduced by new leaders that focused company scientists in directions where innovation was desired, but where the science at the time was not necessarily up to the challenge.

One must be careful in interpreting how the term “leadership” is used; some use it to denote the person holding the CEO position, whereas others use it to mean any job where a person actually influences a company’s approach and decision-making. In addition, added complexity results when one attempts to compare traditional Big Pharma companies with biotechs, which I think are more likely than their much larger brethren to be run by PhD or MD scientists. David Shaywitz weighed in on this subject and suggested that company size may be a more important determinant of success in this industry than a CEO’s background, although he has identified a number of caveats as well. One of these is that luck can be mistaken for competency, at least in the short term, no matter what the CEO’s background is.

Neither of the thought pieces cited above included any significant data as to the backgrounds of past and present Big Pharma CEOs. This got me wondering if having a scientist leading a Big Pharma company really correlated with success in years past? Has the percentage of scientists who headed up these companies decreased in recent years, and if so, is this associated with pharma’s recent struggles? I set about answering these questions by looking up the biographies of the titans who ran this industry during a period when it was the envy of Wall Street, as well as more recent years when it has labored to find its footing. Let me share with you what my efforts revealed.

I decided to look back over a period of 30 years, since that should cover periods of huge profitability (80s and 90s) as well as more recent challenging times when these companies were merely highly profitable. CEO tenures vary widely, so I simply focused on identifying the CEOs that were heading these companies at the start of each decade. It wasn’t easy digging out their names and especially their academic degrees (if Google only covered the pre-Internet era in the same detail as more recent years!) It took time, but I was able to collect some background information on a reasonable sample size of these men (and they were all male) and assembled it into the table below. It shows who the CEOs were as well as their highest degree(s) achieved and the institutions that awarded them. Science and medicine degrees are highlighted in bold.

MerckJohn Horan, JD, ColumbiaJohn Horan, JD, ColumbiaRay Gilmartin, MBA, HarvardRichard Clark, MBA, American U.
RocheIrwin Lerner, MBA RutgersIrwin Lerner, MBA, RutgersFranz Humer, MBA, Innsbruck Dr. of Law, InseadSeverin Schwan, Dr. of Law, Innsbruck
GlaxoSmithKlineAustin Bide, BS, Chemistry, London UniversityCharles Sanders, MD, Southwestern Medical CollegeJP Garnier, PhD, pharmacology, Louis Pasteur University. MBA StanfordAndrew Witty, BA, economics
Novartispre-merger Ciba-Geigy Sandozpre-merger Ciba-Geigy SandozDaniel Vasella, MD, University of BernJoe Jimenez, MBA, University of California-Berkeley
Bristol-Myers SquibbRichard Gelb, MBA, HarvardRichard Gelb, MBA, HarvardJames Cornelius, MBA, Michigan State UniversityLamberto Andreotti, masters in engineering, MIT
AstraZenecaUlf Widengren, AstraHakan Mogren, Astra, ScD in applied biochemistry, Royal Institute of Technology, Stockholm. PhD in technology, Royal InstituteTom McKillop, PhD in chemistry, Glasgow UniversityDavid Brennan, BA in business administration, Gettysburg College
Amgen (not Big Pharma, a control)George Rathmann, PhD in chemistry, PrincetonGordon Binder, MBA, HarvardKevin Sharer, MBA, PittsburghKevin Sharer, MBA, Pittsburgh
PfizerEd Pratt, Jr., MBA, WhartonWilliam Steere, Jr. BS in biology, StanfordHenry McKinnell, MBA, PhD business administration, StanfordIan Read, BS in chemical engineering, Imperial College London
Eli LillyRichard Wood, MBA, WhartonRichard Wood, MBA, WhartonSidney Taurel, MBA, ColumbiaJohn Lechleiter, PhD, organic chemistry, Harvard
Johnson & JohnsonJames Burke, MBA, HarvardRalph Larsen, BA in business administration, HofstraRalph Larsen, BA in business administration, HofstraWilliam Weldon, BA in biology, Quinnipiac University
SanofiJean-Francois Dehecq, engineering graduate of Ecole Nationale des Arts et MetiersJean-Francois Dehecq, engineering graduate of Ecole Nationale des Arts et MetiersJean-Francois Dehecq, engineering graduate of Ecole Nationale des Arts et MetiersChris Viehbacher, commerce graduate of Queens U (Ontario, Canada), and a CPA.
Abbott LaboratoriesRobert Schollhorn, BS in chemistry, Philadelphia College of Textiles and ScienceDuane Burnham, BS in accounting, University of MinnesotaMiles White, MBA, StanfordMiles White, MBA, Stanford
Novo NordiskKnud Hallas-Moller, doctorate in pharmacy, University of CopenhagenMads Ovlisen, lawyer and MBA, StanfordLars Rebien Sorensen, MSc in forestry, Royal Veterinary and Agricultural University, DenmarkLars Rebien Sorensen, MSc in forestry, Royal Veterinary and Agricultural University, Denmark


My overall impression: I see no evidence of a trend towards the replacement of CEO scientists with MBAs and lawyers over the past 30 years. There were plenty of law and business degrees held by CEOs in the 80s, 90s, and 2000s. One issue I was not able to fully resolve was the exact subject of the engineering and technology degrees held by a number of these CEOs. These are clearly science degrees, but one might view the relevance (in the context described above) of a degree in chemical or bioengineering as distinctly different from one in mechanical or civil engineering. Non-scientists have always held a majority of the top leadership jobs in pharma in years past, just as they do now.

Perhaps the pharma companies that were acquired during this timeframe were more innovative and were headed by scientists, thereby leading to their acquisitions? This idea didn’t hold water either. I looked up other 1990 CEOs and found lawyers [American Home Products’s John Stafford, JD, George Washington U.; Schering Plough’s Robert Luciano, JD, U. Michigan], another business degree [American Cyanamid’s George Sella, MBA, Harvard], as well as pharmacists [Warner Lambert’s Joseph Williams, BS Pharmacy, U. Nebraska); Syntex’s Paul Frieman, BS Pharmacy, Fordham] and a chemist [Upjohn’s John Zabriskie, PhD Organic Chemistry, U. Rochester]. A mixed group once again.

Considering that this industry is focused on treating human diseases, at first glance it appears striking that there are so few leaders with biology or medical degrees (although, not surprisingly, there are a number of chemists). Looking into the history of a number of these companies shows why business degrees were highly favored years ago. While we think of these organizations today as primarily focused on pharmaceuticals, many of them are (or in most cases, were) conglomerates in years past, with wide ranging business interests. These include selling a variety of over-the-counter health products, diagnostics, animal health products, as well as cosmetics, raw chemicals, and consumer foodstuffs.

American Cyanamid’s Lederle division (which was absorbed into American Home Products, then Wyeth, then Pfizer) developed both tetracycline and methotrexate, useful drugs that are still prescribed today. As a conglomerate, however, American Cyanamid also sold Formica countertops, Old Spice aftershave, Breck shampoo, and Pine Sol cleaner, along with numerous agricultural products and industrial dyes and chemicals. Cosmetics manufacturer Elizabeth Arden used to be a part of Eli Lilly, American Home Products (now part of Pfizer) sold Chef Boyardee canned pasta products for over 50 years, and GlaxoSmithKline sells fruit and energy drinks. Thus, it’s not surprising that former leaders of these types of companies were more business focused than pharma focused: medicines made up only a part of their product portfolio. The majority of these companies have divested themselves of these side businesses in recent years, or the pharmaceutical component has been sold off (e.g. Abbott’s spin out of Abbvie).

Acquisitions also make it hard to evaluate innovation. In the last 15 years Pfizer has gobbled up Warner-Lambert, Pharmacia, King Pharmaceuticals, and Wyeth, and these companies in turn had already acquired Upjohn, Sugen, Parke-Davis, Agouron, and Searle among others. If you’re having trouble innovating, you can certainly buy innovative drugs across a widely varied pharmaceutical landscape. This process is still in progress today, a recent example being Amgen’s acquisition of Onyx Pharmaceuticals.

In summary, it seems pretty clear that the idea that scientists led Big Pharma companies during their most profitable (and possibly innovative) period is false. Most Big Pharma CEOs today are not scientists, but that was true in 1980, 1990, 2000, and 2010 as well. However, in a business that spends one of the highest percentages of all industries on R&D (up to 20 percent of revenues), CEOs must work closely with their research heads and Chief Science Officers if they truly want to be running innovative companies. An excellent example here is the relationship between Regeneron CEO Leonard Schleifer (MD-PhD) and his CSO George Yancopolous, as detailed in a Forbes story on the company’s remarkable recent run of success.

Biopharmaceutical companies are not struggling today because scientists are no longer running them. They are in serious trouble because they have failed to adapt well to a changing scientific, business, and healthcare environment. As Charles Darwin has been paraphrased as saying, “it is not the most intellectual of the species that survives; it is not the strongest that survives; but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.”

Stewart Lyman is Owner and Manager of Lyman BioPharma Consulting LLC in Seattle. He provides strategic advice to clients on their research programs, collaboration management issues, as well as preclinical data reviews. Follow @

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4 responses to “Are Some Degrees Better than Others for Big Pharma Leaders?”

  1. Bernard Munos says:

    This is an interesting study that needs to be done, but it really should start with a complete data set. Sampling every decade and looking at the highest degree is fraught with potential problems. For instance Roy Vagelos, MS (chemistry) and MD does not show up under Merck, although he took over from John Horan in 1985. Genentech and Art Levinson are omitted. Several MBAs have engineering degrees, including Dick Wood (Purdue), Gordon Binder (Purdue), Ed Pratt (Duke), and Miles White (Stanford). As for Roche, its situation cannot be appreciated without an understanding of the influence of the Hoffmann and Oeri founding families.

    While a scientific training helps run a pharma company, it does not guarantee performance. One does not have to go far to find scientists that are lousy CEOs or accountants that are good ones. But a scientific training — whether it’s basic science or engineering — equips a CEO with an understanding of how science works. It makes them comfortable with uncertainty and complexity. But there are other important traits and drivers of executive performance such as aptitude at taking risks, conceptual skills, and ability to sense the future.

  2. Stewart LymanStewart Lyman says:

    Thanks for you input. I agree it would be nice to have a full data set before reaching any final conclusions, but I’ll stand by my interpretation based on this admittedly limited data set. I only listed the highest degrees I could find (often the only ones listed on their bio’s), and it clearly is difficult to assess the degree’s themselves and how they would serve a CEO. For example, CEO that were in their jobs in 1980 may easily have gotten their undergrad degrees some 30 years earlier at a time pre-dating the determination of DNAs structure. A biology degree from the 1950’s may not be that valuable in understanding bioscience some 30 years later in one’s career. Where would a degree in Forestry fit (Lars Sorensen, Novo Nordisk) in the grand scheme of things? I agree that good scientific training would be invaluable for many pharma jobs, but many of us can name numerous people who have the degrees but seem not to have absorbed the lessons of how science is properly done.

    The jobs have changed over time and continue to evolve. I mentioned in the article that GSK sold fruit and energy drinks only to read that they sold that business today to Japan’s Suntory Beverage and Food for $2.11B. Looking up the degrees was pretty challenging, but even more so might be getting people to agree to a definition of what success and innovation looks like in this business. Finally, success and innovation often (appear) to arrive late in the biopharma game. Even in the Regeneron example that I used for a good relationship between CEO and CSO, I think few investors would be willing to be patient for several decades, which is the time it took the company to achieve financial successful. As I have written about before, no matter which storied biotech company one chooses to talk about (Biogen, Immunex, Genentech, etc), current investors have zero appetite for trying to reproduce this model in our current economic climate. These days, the virtual companies are the ones getting all the interest, even though they have little track record in producing new and innovative products for patients or their investors.

    • Bernard Munos says:

      I would respectfully disagree with your assessment of the value of degree in forestry science. It may be somewhat removed from endocrinology, but still provides valuable training in molecular biology, biochemistry, microbiology, pathology, tissue culture, genetic engineering, statistics, trial design, etc. Scientific knowledge may be short-lived, but the ability to keep learning as science progresses is the real value of a scientific education. It is what stays with us when what we have learned in universities has become outdated, whether we started out as engineers, plant scientists, statisticians, or any other discipline..

  3. Peter Boxer says:

    An interesting analysis fraught with many issues most of which you mentioned. However, I would chose to take another strategy and look at a single company headed by a scientist and look at its success. I chose Merck because I have held the stock for a very long time and its business has been mostly pharmaceuticals. First a correction, John Horan was not CEO in 1990, P. Roy Vagelos M.D. was (I have the Annual Report to prove it!). He became CEO in 1985 and stayed there until 1994. During that time Merck was the “most admired company for 6 years” and the stock appreciated enormously. Just to prove that I looked at the appreciation in stock price from 6/1/85 to 6/1/94. It started at $107, but there was one 2:1 stock split and two 3:1 splits before ending at $30.5 in 1994. So multiplying the closing stock price by 18 to adjust for splits would give a closing value of $549, for a greater than 5X return. By the time it split again in 1999 the price has risen to around $150 or another 5X. Those are extraordinary returns (any VC would be thrilled to do that well) and is a valid measure of the “success” of the CEO. Hence my concern with your analysis is that it doesn’t assess whether the CEOs were successful and really increased the value of the company. Also, it is really the head of R&D – almost always a scientist – that is responsible for most of the decisions about which drugs move towards an NDA. Others have pointed out how difficult it is to assess the “success” of R&D heads, because the success or failure of drugs usually can only be evaluated after their tenure. Stock price to assess the success of a CEO has some of the same problems, although the stock price factors both current performance and future potential. Adding any type of success metric to the list of individuals you identified would be a major task and I doubt that there would be a real conclusion (nice project for an ambitious MBA). In conclusion I think for a company to be great (not just good) it does require a leader with domain expertise, in the case of a pharmaceutical company a scientific discipline. Certainly when you look at technology companies one thinks of Microsoft/Bill Gates or Apple/Steve Jobs, which have had dramatic growth like Merck/Roy Vagelos.