Finance & Accounting for Bioscience Companies conference: Key insights
INSIGHT ARTICLE |
RSM was a premier sponsor of the recent CBI Finance & Accounting for Bioscience Companies conference. Conceived from the success of CBI’s Life Sciences Accounting and Reporting Congress, the event focused on the unique challenges growing and emerging biotech businesses and pharmaceutical companies face. Various speakers and panelists shared insights on how to effectively scale businesses as well as best practices on accounting and reporting.
Significant takeaways from the event included:
- The chief financial officer’s role is key for the growing bioscience company. In a fast-paced, high-growth company, the CFO’s position is central to the success of the business. From wearing multiple hats and having a range of responsibilities (e.g., building the right internal finance team), to leveraging outsourcing and co-sourcing solutions, CFOs must optimize systems, processes and controls that grow with the business. Likewise, bioscience businesses must be dedicated to finding and retaining top CFO and other finance talent that truly understands the life sciences industry overall as well as its specific challenges and opportunities. In addition, CFOs need to continually balance the priorities and needs of the business with the science and direction of the company.
- Third-party relationships are essential for many bioscience businesses, but know the risks and address them upfront. While there are many benefits to working with third parties, so too come areas of risk. Failure to address these vulnerable areas can result in financial loss or expose a biotech business or life sciences organization to further regulatory or legal challenges. For instance, the European Union’s (EU) General Data Protection Regulation requires all organizations that hold, transmit or process EU resident data to comply with the law, regardless of whether the company or its third party actually operate in the EU. Noncompliance can result in significant financial penalties. There are a host of other regulations and corruption risks to consider when working with third parties. Life sciences companies, including biotechs and pharmaceutical businesses, must assess their specific risks and apply mitigating strategies to address their challenges.
- There’s a new revenue recognition standard on financial reporting and disclosures for life sciences businesses. Virtually all of the revenue recognition guidance previously applied by life sciences entities will be superseded by this new standard. Considerations for life sciences businesses, including biotechs and pharmaceutical companies, might include determining whether collaboration agreements are in scope of the new guidance, measuring and recognizing variable consideration, allocating the arrangement consideration or transaction price to the units of account, determining whether revenue should be recognized over time or at a point in time, accounting for licenses of and rights to use intellectual property, and accounting for sales involving distributors.
- Bioscience companies are enthusiastic about growth. Throughout the sessions, business leaders expressed excitement about the positive growth for companies in the life sciences industry, the funding environment, global expansion opportunities and future profitability.
Other sessions focused on evolving regulatory considerations, enterprise resource planning, commercialization, IPO insights and more. In addition, attendees, who included CFOs, chief accounting officers, controllers and senior-level directors, networked and shared ideas and experiences throughout the two-day conference.