Over 50% of biotechs across US and European markets have all-male boards . Also, in only 7% of biotech companies, more than a quarter (25% or more) board directors are women. More importantly, our data show that biotech boards have so few women directors (often only one, with an average board size of 7.5), that if one-woman director leaves, it contributes to noticeable fluctuations in the number of diverse boards.
This effect is a result of a lack of critical mass. The critical mass principle suggests that in order for a diverse board to out-perform that of a single gender, there must be a high enough number of women (i.e. 3, or 30% of total number), for female members of the board to be seen as individuals and not as ‘diversity figureheads’.
This number is significant because initiatives like the 30% Club and also the UK’s Davies Report signal that achieving over 25% of women on boards across the industry would create adequate internal market diversity to become self-perpetuating. In biotech, this would signal a transformation in 93% of companies.
This level of gender diversity on the boards will clearly require a significant shift in culture in biotech but will offer important advantages. Building a critical mass of women on boards would not only enhance performance results of companies but would dampen the effect of losing women from boards through normal turnover. Greater numbers of women directors per company’s board would bring a sustained level of gender diversity that would be culturally transformative. Nevertheless, although a sustainable change in boardroom diversity seems hard to achieve without creating the critical mass, efforts of companies to add women board directors can contribute to an overall change.
In fact, a cumulative analysis of newly public biotech companies (IPO 2013-2016) showed that the number of boards that had at least one woman did grow. The change between 2013 and 2016 shows that 9% more companies had at least one woman on the board, signifying that for the first time in any of our studies, the number of all-male boards in studied companies was below 50%. This must be taken as a positive signal.
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