Finance for Non-financial Managers in the Pharma Industry

Course overview

Achieving R&D success is probably the key driver that defines the pharma industry, but whatever area you work in, your managerial performance is eventually translated into numbers. These numbers are used to measure your performance and that of your organisation.

In an increasingly competitive world you need to ensure you have sufficient grasp of the financial tools and techniques available to maximise and add value to your business. This intensive and detailed two-day programme has been developed to deliver everything you need to know about financial management in the context of the pharma industry. Using financial accounts, examples and cases from the pharma industry over the two days it will examine, explain and apply financial and commercial tools and techniques. By the end of the two days you will be a financially aware manager and make a positive impact on financial efficiency and profitability.

The key objectives of the programme

UNDERSTAND the language, terminology and structure of accounts
FAMILIARISE yourself with the business finance cycle in the pharma industry
LEARN how to manage and measure cash flow to ensure financial success
DEVELOP your skill at planning, evaluating and controlling budgets within this highly regulated sector
EXAMINE how operational performance is analysed in financial terms, and what is expected of a pharma company
APPRECIATE the role of financial management and future looking decision making within a financial context
GET-TO-GRIPS with the application of key ratios for effective financial performance
UNDERSTAND and anticipate the financial drivers and concerns of pharma customers, suppliers, shareholders, investors and analysts

Who should attend?

This programme has been designed to increase and develop the financial awareness and commercial skills of individuals from all levels of the organisation within the pharma and biotech sector. If profit responsibility is a requirement in your role but you do not have the foundation of a formal financial training upon which to base your decisions this course will enable you to fulfil your role more effectively.

This includes:
Managers, team leaders and technical specialists from R&D, clinical, regulatory, commercial, sales and marketing, manufacturing, distribution and purchasing.

Programme

THE PHARMA BUSINESS MODEL

How cash ‘flows’ in your business
Equity, debt and leverage – how muchdebt in a pharma business?
How much debt is appropriate in a pharma business?
The difference between turnover, cash and profit
Capital expenditure (Capex) and operating expenditure (Opex)
Tangible and intangible assets – what are the differences?

FINANCIAL TERMINOLOGY AND POLICIES IN PHARMA BUSINESSES

Margin versus mark-up
Gross and net margins
COGS, SGA
Depreciation and amortisation
Revenue recognition
EBIT, EBITA and EBITDA
Accruals and prepayments
Capitalisation of project costs
Reserves
R&D costs – alternative methods of Pharma accounting

INTERPRETING THE KEY FINANCIAL STATEMENTS

Balance Sheet
Cash Flow Statement
Income Statement (Profit & Loss)
- Published accounts of pharma companies will be reviewed and compared
Management accounting vs financial accounting
Types of organisation and their publishing requirements
Accounting standards (IFRS, IAS, GAAP)

KEY BUSINESS RATIOS OF PHARMA BUSINESSES

Use and calculation of key ratios: Profit margins, asset velocity, return on investment; gearing, interest cover and liquidity – inventory, receivable and payable days
Specialist pharma measures: COGS as a % of product sales, R&D as a % of turnover, S, G&A as a % of product sales
EBIT and EBITDA
Intangibles – In-process R&D, goodwill and brands, patents and IPR
Earnings and dividends per share, dividend cover

THE CITY VIEWPOINT

How to read the financial pages: dividend yields, price-earnings ratios, market capitalisation of pharma companies
What influences share price?
What is meant by terms such as ‘equity’ and ‘shareholder value’ and EVA?
Why EBIT and EBITDA are key measures of performance
Understanding investor expectations and capital market pressures on businesses
Analyst predictions and forecasts
Exceptional items – accounting treatment
Gearing and Leverage – why they are different
Free Cash Flow – how it is calculated and what it means

COST and PRICING

The relationship between price, volume and costs
The Profit Improvement Model
Fixed, variable, direct and indirect costs
Break-even analysis
Relevant, opportunity and sunk costs
Overhead allocation using standard costing
Marginal costing vs full costing
Activity Based Costing and ‘cost to serve’
Key Performance Indicators in a pharma business

CORPORATE PLANNING AND BUDGETING

How the business plan fits with the budget
Planning techniques and business planning models
The fit between business strategy and financial strategy
The Balanced Scorecard and its application in a pharma business
Budgetary control – techniques
Alternative methods of budgeting – focus on business processes and key performance indicators

THE BUSINESS CASE

The business case template
The principles of investment appraisal (time value of money, cost of capital, relevant cash flows)
The key methods of evaluating capital projects
- Payback
- Net Present Value
- Internal Rate of Return
Dealing with uncertainty and risk – ‘what if’ scenarios

FINANCIAL STRATEGY

What is the appropriate level and type of funding in a pharma business?
How do we decide the dividend policy?
How do we value a business for acquisition?
How does financial strategy fit with business strategy?

The expert presenter

George Fildes is Managing Director of Qualitas Consultancy which specialises in financial training and consultancy. With over twenty years experience in general management, George’s experience spans business management, logistics, customer operations and financial management. He has been involved with mature, turnaround and startup companies. In 2001 he established Qualitas Consultancy and has since developed a series of tailored business improvement programmes. Pharma clients include Pfizer, Takeda, Kimberley Clark, NHS, Caridian BCT and Novartis. George is a Chartered Management Accountant (FCMA) with a Cranfield MBA. He also has a Diploma in Marketing and is an accredited finance tutor for the Chartered Institute of Management Accountants (CIMA).