Uncovering the Truth about Women's Progress in the Workplace
On the Horizon
Listeners, welcome! We're celebrating the 60th birthday of our flagship publication, the McKinsey Quarterly. It's live and available for free at McKinsey.com. This edition focuses on the wild ride of technology and its impact on society, business, and leadership. Just 60 years ago, touch-tone telephones were a novelty, and now we wear computers on our wrists. In 60 years, the banking industry might look very different with the advent of generative AI. Our Global Banking Annual Review is now live on our website.
Now, let's hear about the recently published Women in the Workplace report with senior partners Alexis Krivkovich and Lareina Yee.
Battling Change Fatigue
My origin story is very personal. After becoming an elected partner at McKinsey, I attended my first global partner meeting and was shocked to see the low representation of women. I had two young daughters and was about to have a third, and I didn't want them to face the same situation in 25 years. Lareina's story was similar. She noticed the imbalance when walking into client meetings and decided to use McKinsey analytics to solve the lack of women at the top. This year, McKinsey interviewed 15,000 employees, and one Black woman manager shared her perspective. She said the biggest barrier is will. Companies need to recommit to change to scale and accelerate women's gains.
What's causing companies to deprioritize these initiatives? On the surface, it's the complexity of the market. But underneath, we may be facing fatigue before making enough progress. We need to reframe this as a non-zero-sum game and help all talent access the coaching and development they need.
What's Better for Women at Work
Women are often described as less apt to put themselves forward for promotion, but that doesn't mean they're less ambitious. The issue is the system and the hurdles they face. Over the past ten years, the biggest gains have been at the C-suite level, from 17% to 29%. However, there's fragility in this progress. Companies added seats at the C-suite but often in staff roles that don't lead to the CEO position. They also looked outside their organization to fill diverse talent seats instead of promoting from within.
Many things in corporate America have improved for women. Parental leave, bereavement leave, and elderly care are more common. Recruiting processes have also become more diverse, and flexibility has evolved. But we're still a long way from equal experience.
What's Slow to Change
Women tend to be the primary caretakers of children and aging parents. When companies talk about returning to the office, it raises concerns for working mothers. Returning to the office has benefits, but it may not fit everyone. The key is to architect your career with flexibility when needed. In society, we still haven't solved for the responsibilities beyond the workplace. Women are more likely to hold household and childcare responsibilities at home.
Reaching the C-suite is still hard for women. At the entry and managerial levels, there are structural barriers and a lack of diverse talent. For example, Latinas face the most challenging broken rung. They make up a small percentage of the entry pipe and the C-suite. The criteria for evaluating potential is often biased against women of color.
What's Worse
At the start, we don't see our fair share of diverse talent in the corporate pipeline. Women have graduated with more than 50% of college degrees but only make up 48% of the entry pipe. For Latinas, the numbers are even more challenging. They face the least equity in advancing to manager seats. The day-to-day experience for women, especially women of color, is different. They are challenged on their competency and don't get the same support as men.
What Can Be Done
Companies have made efforts to formalize hiring and advancement processes and look for bias. Technology can help identify and disrupt bias and even the playing field. Generative AI gives us new capabilities to debias and improve recruiting. Access to capital and entrepreneurship are also areas of optimism.
Practical suggestions for allyship include helping in the day-to-day experience, defending a woman colleague's work, and asking about professional ambitions. Leaders can also grade themselves on the diversity of their sponsored and mentored list.
To help women advance more quickly, we need discontinuous thinking. We need to think differently about entrepreneurship, technical skills, and the manager layer. We also need to collaborate with public sector entities to find solutions to childcare and other challenges.
We've seen progress, but we need to keep going. It will take rigor and persistence to root out bias and encourage change.
Unleashing the Potential of First-Time Launchers in Pharma
Innovation in the Pharmaceutical Industry
Within the pharmaceutical industry, first-time launchers play a crucial role as innovators. They are developing breakthroughs in new modalities that have the potential to revolutionize patient care. For instance, cell and gene therapies make up 22 percent of their portfolios, compared to just 12 percent for established launchers. These companies are also providing promising solutions for rare-disease patients who previously had few or no treatment options, ranging from Duchenne muscular dystrophy to amyloidosis.
Despite their innovative efforts, first-time launchers face unique challenges when bringing their products to market. The high cost of launching and building a commercial engine while maintaining R&D commitments can strain their resources. Additionally, the recent biotech downturn has led to increased competition for the funding needed to power commercial launches.
Financial Success and Portfolio Considerations
At the core of any biotech company is its portfolio. Assets targeting rare-disease or white space indications have a higher chance of launch and financial success. First-time launchers with assets in white space indications are 1.7 times more likely to exceed expectations than those in indications with three or more competitors. These companies have thrived in rare diseases, with a launch success rate of approximately 40 percent. About half of rare-disease first-time launchers also outperformed the S&P Biotech Index in total shareholder returns, as shown in Exhibit 3.
Innovative assets can pave the way to launch success, but they do not guarantee financial success. Over 30 percent of innovative assets from first-time launchers outperform expectations, compared to 20 percent of less innovative products. However, first-time launchers with innovative assets are no more likely to outperform the S&P Biotech Index than those with less disruptive products. A company's pipeline also plays a critical role in its financial success and future growth potential. First-time launchers with multiple assets have higher rates of financial success, with about half outperforming the S&P 500 Biotech Index over a five-year period, compared to roughly 30 percent of their single-product peers.
Commercial Launch and Funding
Any commercial launch requires significant SG&A investment in addition to funding for R&D. First-time launchers need to support investment throughout the launch period to achieve success. On average, they invest $80 million to $100 million annually in SG&A starting from the launch year and continuing for subsequent years. Those aiming to beat prelaunch forecasts or compete with established launchers typically spend much more. Companies that outperform commercial expectations invest 1.5 times as much on launch activities as their peers that do not, as shown in Exhibit 4.
Due to cash constraints, first-time launchers have historically struggled in larger indications. However, some have managed to succeed in highly competitive and expansive treatment areas dominated by established players. For example, some first-time launchers in neuroscience and primary care indications have leveraged a robust commercial engine and a large sales force to compete effectively.
Fundraising and Market Timing
The ability to finance a large-scale launch while maintaining a focus on R&D is crucial for first-time launchers. Most go public about six years before launch and seek follow-on fundraising. Successful first-time launchers raise significantly more funds, on average two to three times that of their less successful peers. They typically raise funds earlier and more aggressively in the years leading up to launch, as shown in Exhibit 5. Timing fundraising to critical moments in asset development, such as initial pivotal trial results and regulatory approval, can lead to greater success in today's competitive biotech fundraising environment.
Alternative Paths to Market
First-time launchers lacking funding or an asset mix can consider alternative approaches. Partnering with an established launcher or developing next-generation commercial capabilities can be viable options. Partnerships may reduce short-term revenues but provide long-term benefits by tapping into the partner's expertise. Companies can also invest in next-generation capabilities to become more precise at initial launch and across future commercialization efforts.
Next-Generation Commercial Capabilities
Commercialization needs have shifted across go-to-market capabilities. First-time launchers can meet these challenges by leveraging lessons from industry leaders. Data-driven, precise marketing techniques are crucial for them with limited resources. AI tools like "next-best action" models prioritize healthcare professionals based on factors such as historical behavior and patient demographics. First-time launchers can also maximize the impact of direct-to-consumer engagement by tailoring content to microsegments defined by patient needs and behaviors.
New channels like social media, connected TV, and revamped websites offer cost-effective reach for first-time launchers. Recruiting marketing roles early ensures that digital capabilities are ready for launch. With a digital, data-driven go-to-market strategy, these companies can set the stage for next-generation commercial engagement from the start.
Access and Distribution Strategies
Pharmaceutical companies face complexity in market access. First-time launchers often struggle due to limited portfolio breadth and payer relationships. They tend to delay onboarding their market access function, which leads to a late access strategy. However, by prioritizing access earlier in their launch planning and building in-house capabilities or contracting with external vendors when needed, they can set a sustainable access strategy.
A clear demonstration of high patient need with rapid volume growth can enable earlier coverage expansion. Companies can accelerate coverage by considering access in pivotal study design and generating early superiority data. Early engagement on access and an impactful evidence strategy can position a therapy for earlier coverage expansion.
First-time launchers should also consider the complexities in distribution strategies. A fit-for-purpose strategy is important for complex products like cell and gene therapies. Some select first-time launchers in broader indications have partnered with existing pharmacies or telehealth providers for direct-to-patient distribution. By determining their distribution strategy early, they can establish a clear pathway for patient access upon approval.
First-time launchers represent a growing and vital part of the pharmaceutical industry. By learning from their predecessors and crafting a tailored go-to-market strategy, these innovators can achieve their growth and performance aspirations while maximizing shareholder value and patient impact.