Sector reports

Screen shot 2015-05-14 at 08.48.40Our industry sector reports:

  • Offer guidance to increase the probability of long-term success for companies and investors by analysing how human capital factors affect company value and risk.
  • Identify common human capital issues that are pertinent to the sector that allow for the application of standardized, comparative and insightful analysis across firms.
  • Identify key metrics that can be used to provide better insights, additional means for measuring progress, and to aid predictions of future performance within the sector.
  • Provide a set of Board level investor key questions that are critical to long term value creation and enable deeper insight to aid investment choices and decisions.

Sector reports are provided on a bespoke basis although selective reports are periodically made more widely available for GBP£375/US$570.

Our latest sector report on pharmaceuticals analyses human governance for major firms within this sector. Sample extracts:

“The average OMR (percentage score) of the all-sector, Global OM Index is BB+ (52.39%) and we do not expect the pharmaceutical industry to be any different.  The baseline for this industry sample is relatively immature with a high of only BBB- (56.22%) and an average of BB (50.10%).”

“Our analysis shows that the rewards for most senior executives in this industry are based on short term financial targets and, even where value drivers such as innovation are incorporated there is little incentive to make long term investments.”

“Major R&D decisions have been taken by some pharmaceutical firms, without sufficient due diligence as to the human capital implications.”

“…internal rates of innovation are extremely poor. For example, there is little evidence that firms measure such outcomes. Even when this is done, the rates highlight the significant value that is lost.  In 2014, Pfizer reported 250 employee ideas from a population of 78,000 – a ratio of 0.32%. By comparison, Toyota’s human capital innovation rate averages in excess of 500% per year.”

“Product innovation – according to the CEO of Reckitt Benckiser (BBB+) the pharmaceutical industry is easy to compete against in product terms because of its poor ability to innovate beyond a new drug discovery….there appears significant scope for the exploration of value opportunities if pharmaceuticals were to focus more human capital on innovation with existing products, rather than just looking for the next “blockbuster”.

“As we have seen in myriad industries, the supply (or value) chain is a fundamental part of an organization’s whole human capital system but many management teams do not understand the problematic nature of managing value chain relationships for mutual benefit…This is a critical question for pharmaceutical companies and is perhaps the single biggest source of business risk.”

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Last updated May 2015