Life Science Manufacturer Survey Highlights Lack of CFO Confidence in Compliance and Contracting Processes

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Results from AMR Research Survey Highlight Growing Importance of CFOs in Revenue Management Technology Decisions, Expose Critical Gaps in Tracking Contract Performance

Contract Management: A Core Component of a Successful Sales Strategy

According to a recent AMR Research Survey, less than one-quarter of leading Life Science manufacturers are highly confident in their organizations' ability to stay compliant with government programs regulations and only 18% have confidence in their efforts to improve visibility into regulatory risk avoidance processes.

The survey drew responses from 124 sales, contracting, and IT executives and directors from across the Life Science industry, including branded and generic pharmaceutical companies, biotechnology firms, and medical technology manufacturers. Results from the survey will be examined in detail at a Web Seminar, "Clear Mandate for CFO's to Address Revenue Risk" hosted by Model N, featuring AMR Research, on January 23, 2008.

Finance Organizations a Growing Influence on Revenue Management Technology Purchasing

When asked which departments claim ownership of the revenue management technology budget, 43% of respondents stated finance and/or the Office of CFO, with only 14% claiming sales leadership was responsible for revenue management purchasing decisions.

More than five years after the implementation of the Sarbanes-Oxley Act (SOX), a significant percentage of survey respondents still lack complete confidence in their current systems' ability to satisfy SOX requirements (31%). Less than half displayed a high level of confidence in implementing a flexible response to the more recent Deficit Reduction Act (DRA) final rule. In addition, less than half of responding companies trusted their ability to effectively manage the linkage between marketing programs, sales initiatives, and government compliance.

"Sarbanes-Oxley and new government program legislation such as the DRA are placing a higher burden on CFOs and finance organizations to 'get the numbers right,' a fact reflected by the growing number of corporate integrity agreements in recent years," says Gopkiran Rao, Senior Director of Life Sciences Industry Marketing at Model N. "In a complex competitive and regulatory landscape, companies that continue to utilize spreadsheet programs and patchwork systems to manage revenue do so at their own peril. The results from this survey underscore the need for integrated revenue management solutions that reduce the risk of non-compliance and enhance revenue planning."

In the AMR Research article, "Contract Management: A Core Component of a Successful Sales Strategy," Hussain Mooraj, Research Director at AMR Research, concurs that the industry faces an unprecedented number of challenges. "Increased competition, intense pricing, and regulatory pressures are shaping industry dynamics. Companies realize that, in order to compete, effective revenue management must be central to the sales and marketing strategy."

Contracting Processes an Area of Concern

Results from the survey also highlight the concerns many Life Science manufacturers have regarding their contract management and compliance processes. Seventy-two percent of respondents reported their contracting strategy required performance commitments, while only 4% were highly confident in their ability to analyze contract performance effectively and efficiently.

Less than one-sixth of responding companies claim to have well defined contract negotiation policies and procedures that are commonly understood across the organization. Only two percent have confidence that incentives accurately align account manager objectives with contract profitability.

To learn more about the results from this survey and the growing role of finance leadership in setting Revenue Management direction, attend the upcoming Model N Web Seminar, featuring AMR Research, "Clear Mandate for CFOs to Address Revenue Risk" at 10 a.m. PST, January 23, 2008.

Model N Revenue Planning and Intelligence

In response to the challenges presented in the survey, Model N has recently introduced its Revenue Planning and Intelligence (RPI) solution, which provides CFOs, finance executives, and government pricing and compliance managers with unparalleled revenue planning, risk assessment, and business intelligence capabilities.

The initial RPI release is designed to meet the unique business requirements of the pharmaceutical industry. Seamlessly integrating with legacy systems and internally developed solutions, RPI delivers in-depth access to revenue and liability outcomes with contextual intelligence into historical data. By defining parameters and assumptions, users can accurately emulate anticipated scenarios and subsequently evaluate their impact through dynamic reporting and data views.

Sepracor was a strategic product design partner for Model N RPI. "Sepracor's long-term revenue management roadmap has always included taking its analytical and predictive abilities to the next level," said Anne Flaherty, Senior Director of Government Pricing and Compliance at Sepracor. "Model N RPI is a breakthrough solution that allows finance, sales, and contracting teams to collaborate in determining how critical business decisions will affect revenue and regulatory liability. Model N's efforts in partnering with customers such as Sepracor during the design process ensures RPI will evolve to meet changing market and regulatory requirements."

About Model N

Model N is the leader in Revenue Management solutions, offering an integrated suite of applications for analytics, pricing strategy and execution, contracts, compliance, rebates, fees, and chargebacks optimized for the industry practices of Life Sciences and High Tech companies. Enabling the creation of a seamless, end-to-end process from price setting through settlements payment, Model N's uniquely integrated approach eliminates revenue leakage and delivers the visibility and controls needed to avoid the risks of non-compliance to government reporting regulations such as Sarbanes-Oxley and government pricing requirements. Customers include: Boston Scientific Corporation; Bristol-Myers Squibb Company; Cypress Semiconductor Corporation; Intersil Corporation; Linear Technology Corporation; Medtronic, Inc.; Microchip Technology, Inc.; Micron Technology Inc.; Ortho-Clinical Diagnostics, a Johnson & Johnson company; ON Semiconductor, Inc.; and Pfizer, Inc. Model N is located in Redwood Shores, California. For additional information, visit http://www.modeln.com.

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Megan Reilly
Model N, Inc.
650-610-4773
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