Survey underscores changes in pharmaceutical firms.

Ernst & Young research underscores a number of important changes in the role of the CFO and the 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 percent of respondents in an Ernst & Young 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," says Carolyn Buck Luce, Global Pharmaceutical Sector Leader at E&Y. "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."

The survey showed that 92 percent of respondents rated global cost reduction as a key issue for their business, with 25 percent saying cost reduction has been a focus for more than two years and 35 percent saying it has been a focus "for as long as I can recall." Over half (56 percent) felt it was the CFOs role to lead cost reduction initiatives and that competitive pressures (58 percent), profitability (58 percent) and the need for better returns for investors (33 percent) were the key drivers for cost reduction.

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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 CFO role are increased regulatory and compliance requirements (46 percent), increased corporate governance obligations (36 percent) and increasing risk management responsibilities (32 percent).

"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 percent 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 functions than those in other industries; 64 percent of respondents are currently considering outsourcing certain internal functions as part of a cost-reduction measure versus 46 percent of respondents from a cross-industry population.

Respondents were least comfortable in outsourcing clinical trials (36 percent), followed by sales and marketing (33 percent).