One of the coronavirus pandemic’s overriding messages is the need for speed. Companies rapidly switched gears to do their part in stemming the spread of the virus, and “non-essential” employees quickly adapted to working from home. For the life sciences companies that are developing new drugs or tests that can help save lives of those affected by COVID-19, they are up against an incredibly fast, pressure-filled clock.
Unlike other industries where funding has dried up, some life sciences companies are seeing an abundance of interest by venture capital firms and other investors to get their products market-ready as soon as possible, to ease COVID-19-related suffering or to help prevent more people from getting sick. While working toward meeting new, urgent deadlines, these companies need to be thoughtful and strategic about their spend, putting controls and processes in place to protect, record and track where the money is going. Under these situations, some areas of the business may not get the attention they require, so here are a few key actions to ready your life sciences company for the changes ahead:
- Prepare for investor scrutiny: Before agreeing to a deal, however amazing it appears, be thoughtful of the terms and conditions being imposed on your company and your ability to meet them. New funding is a wonderful development but does create new needs, including a redo of previous forecasts, a clear understanding of what the money will be used for, and an oversight system. Consider how you’ll meet the expectations of your investors and how you’ll keep them informed.
- Look for any cracks in the foundation: Do your current processes and systems provide you with the insights you need to make the right decisions and pivot quickly when necessary? Or is it time for an upgrade? As companies go through transformations—as they scale or prepare for a big change, such as changing their business model—there’s often a need to bring in new skills and knowledge to help them get to or transition to the next stage of their journey. It may be time to bring in new people who have experience with what your company is going through right now.
Also look carefully at your supply chain, if you haven’t already, during this pandemic. Is it up and running, ready to support the company’s growing and, perhaps, changing needs? You must have resilient partners and backup if unexpected changes occur. For new suppliers, pay attention to creditworthiness to avoid joining up with a company that could be out of business tomorrow.
- Create a cautious culture: Unfortunately, some bad actors have already seized the opportunity for exploiting security lapses during this pandemic. Threats to data security rise if remote employees are suddenly using new technologies or ways of accessing company systems; controls have been relaxed in the interest of getting everyone up and running from home quickly; or people are busier and emails are higher in number. Vigilance and strong controls are always important, but employees could use extra reminders at this time to be careful with the information they have access to and share. They should also be reminded that when asked to wire money, they need to double-check the request.
- Keep the auditors—and your stage of growth—in mind: Our finance and accounting pros support a wide range of life sciences companies, from pre-revenue entities that don’t yet have audited financial statements to public companies well accustomed to audits. As companies receive new funding or change their business models, some may find themselves growing quickly and having to catch up with accounting requirements that previously didn’t apply to them, or apply to them differently, such as revenue recognition. They will also need to record the new investment on their books, or may have to disclose a subsequent event in their financial statements.
- Think beyond today: Under the most normal of circumstances, planning beyond short-term demands can be tough. It’s even harder today when volatility and uncertainty persist. This is when finance and accounting experts can help you consider the long-term needs of your company as you make decisions today. By having the right processes and systems in place—for keeping the company in check and ensuring access to timely, accurate information—the company can be laying the groundwork for whatever lies ahead, whether there’s an IPO in the future or a potential M&A deal at some point.
Life sciences companies fighting COVID-19 face both challenges and opportunities during this crisis. Expectations are high. Moving rapidly is a must. Aided by funding, life sciences companies can achieve great feats—but that funding needs to be applied with thoughtfulness, monitoring and proper controls. Finance pros who understand this market and the unique needs of these companies can help you meet those requirements so that everyone else in the company can focus on saving and protecting lives.
As CEO of RoseRyan, David Roberson leads the day-to-day business and builds upon the firm’s established reputation for taking companies further, faster. He also serves as CEO of Kukuza Associates, a RoseRyan subsidiary that provides accounting and finance services to cannabis companies. David previously served as a senior vice president for Hewlett-Packard Co.; president and CEO at Hitachi Data Systems, where he has previously held the titles of COO, CFO, CIO and general counsel; and he has served as a director of 12 companies including Brocade, Quantum, IGT, Spansion and IDT.