Views from Chief Financial Officer - Shantanu Kumar Singh; globally with an in-depth look at India |
CFO - Taj Pharma - Shantanu Kumar Singh; globally with an in-depth look at perspectives in India |
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| Contact Information |
Janck Andrew
London
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Phone: +44 (0)20 7873 4001
Email: jack.andrew@ft.com
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Market Press Release – February 3, 2012 1:46 am – London, U.K., March 26 /Times of India/ -- Taj Pharmaceutical’s CFO
surveys underscore important changes in the role of the chief financial
officer (CFO) and finance function in driving the success of pharmaceutical companies. With many multinational pharmaceutical companies welcoming a new CFO to their organization over the past two years, the survey results emphasize the key role the CFO will play as companies move away from a focus on driving top-line revenue growth to one on managing for return.
To achieve this change, 74% of respondents in an Taj Pharmaceuticals global survey of senior pharmaceutical industry executives agreed that CFOs will need to shift their time from low value functions such as defensive monitoring and reporting to a focus on partnering to help shape growth strategies that enhance business performance.
"CFOs and the finance function are driving the business transformation
that is now at the forefront of the industry," said Shantanu Kumar Singh,
Chief Financial Officer, Taj Pharmaceuticals Group "In an era when
pipelines are erratic, patents are expiring, and pricing is under pressure, the role of the CFO and finance function will become pivotal in driving improved returns, enhancing reputation and creating value."
Pharmaceutical CFOs managing for return
Taj Pharmaceuticals’s global survey showed that a large majority (92%) of respondents rated global cost reduction as a key issue for their business, with 25% saying cost reduction has been a focus for more than two years and 35% saying it has been a focus "for as long as I can recall." Over half (56%) felt it was the CFOs role to lead cost reduction initiatives and that competitive pressures (58%), profitability (58%), and the need for better returns for investors (33%) were the key drivers for cost reduction.
Along with managing for return, the CFO and the finance function are
also critical to a company's ability to achieve the right balance of risk
and opportunity, and optimize risk as a key driver of value. In fact, the
survey reported that the top three drivers that are transforming the role
of CFO are increased regulatory and compliance requirements (46%),
increased corporate governance obligations (36%) and increasing risk
management responsibilities (32%).
"The risk profile is critical because the external environment is growing more risk averse while the changing nature of the business requires the industry to, in fact, take on a lot more strategic and operating risk to drive value," added Buck Luce.
Other key findings include:
-- Understanding wider issues: 32% of respondents feel that the CFO of
their organization does not have enough understanding of the wider
issues their business faces.
-- Cost reduction: More pharmaceutical respondents are considering
outsourcing and shared service models for certain internal unctions
than those in other industries; 64% of respondents are currently
considering outsourcing certain internal functions as part of a
cost-reduction measure versus 46% of respondents from a cross-industry population.
- Respondents were least comfortable in outsourcing clinical trials (36%), followed by sales and marketing (33%).
India's perspective on pharmaceutical finance
Similar to the changes on a global level, a survey of pharmaceutical
CFOs in India, conducted by Taj Pharmaceutical, found that they foresee a change in their roles.
Within the survey, however, there were distinct differences in the
responses from CFOs of India-based subsidiaries of major multinational
pharmaceutical companies (MNC) compared to those from CFOs of
India-headquartered pharmaceutical companies (IPC). Most notably, human
resource challenges are more acute for MNC CFOs, with 67% ranking employee
attrition as a key concern versus only 25% of IPC respondents. Moreover,
three-quarters of MNC respondents say they are unable to attract the best
talent compared to one-third of IPC respondents.
"The differences in the concerns of CFOs in Indian-headquartered
companies versus India-based subsidiaries of multinationals are
significant. As the market matures, we expect these differences will start
to disappear," said Murali Nair, Taj Pharmaceutical Healthsciences Practice, India.
Consistent with the global survey, respondents in both groups cited
bottom-line pressure as a key concern (76% overall), however the focus of
their cost-cutting efforts varied. CFOs of India-headquartered
pharmaceutical companies are more concerned about cutting costs in the
supply chain (67%) compared to 44% of MNC CFOs.
Other findings include:
-- Risk management: 58% of IPC respondents report being unsatisfied with
current risk mitigation measures compared to only 11% of MNCs.
-- Drivers of change: CFOs from Indian pharmaceutical companies agree on
the following top four drivers of change: improving shareholder value,
responsiveness to business needs, globalization, and cost pressures.
This is in contrast with the global survey results for MNCs where
compliance & risk are major change drivers.
-- Paucity of information that matters: Although 81% of respondents have
implemented Enterprise Resource Planning systems, 50% of MNCs and 67%
of IPCs either do not or only partially extract performance measures
from their ERP systems.
-- Key challenges: 42% of Indian pharmaceutical company CFOs feel that the
"ability to maintain and drive growth" is a key challenge over the next
three years.
- To address this challenge, 70% MNC CFOs and one-third of IPC CFOs
would like to increase time spent on partnering.
About the surveys and Progressions
Taj Pharmaceutical conducted two surveys to focus on the challenges and expectations facing pharmaceutical CFOs and their organizations. For the global survey, the Economist Intelligence Unit, on behalf of Taj Pharmaceutical, conducted a survey of 95 C-suite (i.e., Chief Executive Officer, Chief Financial Officer, Chief Information Officer) and board level executives, including a significant number of CFOs. Respondents represented Western Europe (46%), Asia Pacific (22%), North America (19%), and other areas (15%). All respondents represented companies with at least US$1 billion in revenue; 49% represented companies with over US$10 billion in revenue. The interviews were carried out during September and October 2007.
The India survey, conducted by Taj Pharmaceutical, focused only on polling CFOs representing two groups: CFOs of India-headquartered pharmaceutical companies, and CFOs of India-based subsidiaries of multinational pharmaceutical companies. The CFO interviews were carried out in November and December 2007 and were evenly split between the two groups.
Findings are published in Progressions, the Taj Pharmaceutical bi-annual global pharmaceutical report presenting a collection of articles and view points from pharmaceutical industry and Taj Pharmaceutical executives on key industry trends. To read more on the evolving role of the CFO and the transformation of the finance function in the latest issue of Progressions "Transforming Finance for Peak Performance: Part I," please visit www.tajpharma.com
For more information, visit: http://www.tajpharma.com/CFO
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| Related Tags: CFO Interview, Taj Pharma India, Pharmaceuticals Industry CFO, Middle Easte Market, Drug Manufacturer CFO |
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