Big Pharma Power Shift: CFOs May Have The Mojo Now
Big pharma CEOs might wanna watch their backs because there could be a burgeoning power struggle in the C-suite. Ernst & Young, which has a long history of doing comprehensive reports on the pharmaceutical and biotech industries, is out with a new one today declaring that it's big pharma Chief Financial Officers who have all the mojo these days.
E & Y, which surveyed 95 C-suite honchos of companies around the world with at least a billion dollars in sales, calls the drug company CFO the "emerging 'star player' in the executive suite." The firm did the canvassing last fall.
With drug companies less able to rely on robust topline growth, it's almost all about cost cuts. And that, says E & Y, is changing the function of pharma CFOs from simply "keeping score" to "shaping the play".
The leader and editor of the E & Y pharmaceutical project write, "...in an era when (drug development) pipelines are erratic, patents are expiring, pricing is under pressure, and payors (insurers) are pushing back, the role of the CFO and finance function will become pivotal in achieving improved returns and enhanced reputation."
And apparently the overwhelming majority of senior level execs want CFOs to raise their game and go beyond just being a number cruncher. E & Y says that nearly three-quarters of the managers, department heads and CEOs it interviewed said "they would like to see their finance chief take a greater hand in serving as business partner to the CEO and board of directors in shaping their company's strategic plans."
This'll come as no surprise to people in or familiar with the industry, but the E & Y report says: "There was near universal agreement that cost reduction has become essential, with 92 percent citing it as a key issue in their business, compared with 85 percent of respondents in other industries. A greater portion of pharmaceutical respondents reported that expense reductions had been implemented throughout their organizations--49 percent versus 43 percent for nonpharmaceutical."
The survey concludes that pharma CFOs still need the basic accounting skillset required for the job, but that they need to "realize that they are expected to operate outside what may be their comfort zone, dealing with key strategic issues alongside the CEO."
Pfizerfinancial veteran David Shedlarz was recently given a similar powerful role at the drug giant, but he made what some saw as an early exit at the end of last year after some corporate stumbles for which he reportedly may have been assigned at least part of the blame.
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