Novo Nordisk A/S's Sørensen Named Best-Performing CEO in the World
October 13, 2015
By Alex Keown, BioSpace.com Breaking News Staff
BOSTON – The verdict is in and Lars Sørensen, chief executive officer of the Denmark-based diabetes drugmaking giant Novo Nordisk , has been named the world’s best-performing CEO, according to the Harvard Business Review.
This year, the HBR selected Sørensen as the number one chief executive for its annual “100 Best Performing CEOs.” Sørensen, who they dubbed as a “mild-mannered, bespectacled executive” who “isn’t a household name” was selected to top the list based on a number of factors, including financial metrics such as shareholder return, but new factors the reviewers included this year sprung the reportedly mild-mannered Sørensen to the top of the heap. Three factors the authors pointed out that cemented Sorensen’s position are Novo Nordisk’s “decision to offer insulin at a steep discount to consumers in developing countries; its transparent and limited political lobbying practices; and its responsible policy on animal testing.”
Sørensen has been effective in guiding Novo Nordisk’s successful pipeline development. It was his decision to shut down the company’s pill research division in favor of diabetes treatments, a move that paid off well for the company as the diabetes division generated 78.3 percent of the company’s revenue in 2013.
Speaking with the reviewers at HBR, Sørensen said he believes that businesses need to look at long-term planning and perspectives, which include social and environmental issues – things that aren’t measured on a financial ledger.
“Corporate social responsibility is nothing but maximizing the value of your company over a long period. In the long term, social and environmental issues become financial issues,” Sørensen told the Harvard Business Review.
Part of that philosophy is explained on Novo Nordisk’s website, dubbed the “Triple Bottom Line.”
“In practice, this means that any decision should always seek to combine three considerations: is it financially, socially and environmentally responsible? This way, we continuously optimize (sic) our business performance and enhance our contribution to the societies we operate in,” the company said on its site.
Some of those societal contributions include the launching of an information center for those living with bleeding disorders such as hemophilia. The company launched RareBleedingDisorders.com, a website providing a range of medical information specifically for people in the United States living with hemophilia and other rare bleeding disorders, as well as their caregivers. The website, developed with input from members of the bleeding disorders community, is a simple, centralized repository featuring the latest disease-state specific information and research updates.
Of course, where Novo Nordisk has hedged its bets is in treatments for diabetes. Earlier this year, the company said it plans on ramping up production of insulin to more than double its current output as more and more diagnoses of diabetes are made. In 2012, nearly 10 percent of the U.S. population had been diagnosed with some form of diabetes, according to the American Diabetes Association. Type 2 diabetes is on the rise in the United States, driven partly by the increase in the waistlines of Americans. A 2014 study published in the Annals of Internal Medicine showed a steady increase in diagnoses of the disease over the past decade.
Novo Nordisk’s stock didn’t get too much of a Sorensen bounce this morning. Stock prices are down slightly, trading at $54.34 per share. Over the past year though, company stock has steadily ticked upward from prices around $43 per share to remain in the $50+ per share for the past five months. Sørensen had been planning on retiring before his contract expired in 2019, but opted to stay on as CEO after the top replacement candidate and current company president Kåre Schultz abruptly stepped down in April.