Harvard Business Review’s annual list of the 100 top performing CEOs in the world is out, and four of the top ten are in the healthcare industry. John Martin of Gilead Sciences, David Pyott of Allergan, Lars Rebien Sørensen from Novo Nordisk and J. Michael Pearson, CEO of Valeant Pharmaceuticals all made made it to the top.
A little bit about how the CEOs were chosen and how the healthcare guys stack up:
The top CEOs have undeniably been effective. The top 50, on average, have delivered total shareholder returns of 1,350% (adjusted for exchange-rate movements) during their time on the job. That translates into an annual return of 26.2%. Adjusting for industry effects, average total shareholder returns for the top 50 are 1,161%, and for country effects, 1,087%.
# 2 – John Martin, Gilead Sciences: Total shareholder return country adjusted was as 7,206%, industry adjusted was 6,919%, and market capitalization change was $128 billion. Martin’s personal compensation was $15,451,862.
#4 – David Pyott, Allergan: Total shareholder return country adjusted was as 1,948%, industry adjusted was 1,929%, and market capitalization change was more than $50 billion. Total compensation was $11,632,936.
#6 – Lars Rebien Sørensen, Novo Nordisk: Total shareholder return country adjusted was as 621%, industry adjusted was 1,214%, and market capitalization change was more than $101 billion. Total personal compensation was $2,760,550.
#8 – J. Michael Pearson, Valeant Pharmaceuticals: Total shareholder return country adjusted was as 1,144%, industry adjusted was 1,100%, and market capitalization change was more than $44 billion. Total compensation was $6,997,734.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Not too shabby. But it should be said, Pearson’s place on this list is debatable. HBR wrote, “We incorrectly calculated the performance of J. Michael Pearson, CEO of Valeant Pharmaceuticals. The problem arose because of a 2010 merger, which created ambiguity over the company’s returns and Pearson’s start date. Because this case is unique and the correct calculation is open to interpretation, we have chosen not to re-rank Pearson’s position on the list.”
[Photo from flickr user Scott Schiller]
