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Mar 19, 2018 - I was lucky in that my CPA license, corporate finance experience at a publicly traded company, and focus
FINANCIAL SERIES

14T H LIF E SCIENCES

CONGRESS MARCH 19-21, 2018 | HILTON PHILADELPHIA AT PENN’S LANDING | PHILADELPHIA, PA

Our 2018 Advisory Board Members lent their insights to ensure a fresh agenda that offers solutions to industry’s most pressing challenges. In advance of the Congress, they also answered some key questions to give you a look into how they got their start in the industry, their thoughts on pharma finance, their top challenges and more.



Chris Cooper, Partner, National Audit Life Sciences and Health Care Leader, Deloitte & Touche LLP



Bob Owens, Vice President and Assistant Controller, Bristol-Myers Squibb



James D’Arreca, Chief Accounting Officer, Allergan



Stephen Rivera, Vice President, Global Technical Accounting Advisory Services & Policy, Johnson & Johnson



Tim Gordon, Global FAAS Life Sciences Leader, Ernst & Young LLP



Gina Consylman, Chief Accounting Officer, Ironwood Pharmaceuticals

ORGANIZED BY:

A division of UBM Americas

2018 ADVISORY BOARD Q&A How did you get your start working in pharma finance? How many years have you been in the industry? “I began my career in public accounting in 1993 at Ernst & Young LLP as an auditor in their then high-tech practice and until 2009, I continued to work within the high-tech space. Varian Semiconductor, where I was employed for over eight years, was acquired by Applied Materials and all corporate positions were moved to the west coast. I decided to change industries at that time because I believed that the semiconductor industry would eventually move not just from the east coast, but also from the US. I was lucky in that my CPA license, corporate finance experience at a publicly traded company, and focus on manufacturing provided me with transferable skills to join Biogen. I choose the life science industry given its long-term viability in Boston in addition to the positive impact it makes on patients’ lives.” “My first experience in the life science sector was when I joined BMS in 2008. Working with a company that places the patient in the center of everything we do has been very rewarding to me.” “I began my career in public accounting and my first client happened to be in pharma. After a few years, I developed an industry specialization. I have been in the industry for 25 years now and still really enjoy it.” “My career started in Pharma Finance back in 2000 when Aventis was formed by the merger of Hoechst-Celanese and Rohn Poloanco Roeher. In that year, I was invited to my first Pharma Conference hosted by Lilly in Washington DC. At this conference, I realized this industry was very different than my prior experiences where folks were open to share their best practices on accounting and reporting. Now almost 18 years in the industry, our Pharma/ Biotech peers have grown and so has our Pharma Accounting and Reporting Committee. Having a group of peer companies who are general agreement with many of the accounting and reporting issues today, now can influence change in a positive way for the industry.”

What is one industry trend that will greatly impact the finance landscape in the next year? “There is a significant shortage of experienced, technical finance personnel. Our industry is changing at an accelerated pace given the convergence to IFRS and heightened compliance requirements. While this isn’t new to our industry, it continues to worsen, and if not addressed could place companies at risk. We need to think creatively to bring more talented people into this area, provide the training necessary and cultivate their careers in order to retain them.

Exacerbating this issue is the adoption of the new principles-based revenue recognition rules in 2018. While Ironwood and other companies have been preparing for the new revenue rules for years, lack of industry specific conclusions, such as the treatment of collaborations may heighten SEC scrutiny, comment letters and adjustments. Furthermore, reliance on principles instead of rules will most likely increase the effort in both the preparation of the financial statements and footnotes, which will place additional burden on resource requirements.” “Collaborations continue to grow and with the adoption of ASC 606, I believe there will be additional accounting considerations in this area.” “Tax reform in the United States. If it happens, there will be a huge domino effect on everything from tax planning and accounting to m&a strategy.” “The adoption of new accounting standards, such as revenue recognition and lease accounting, will put a strain on technical finance personnel for all companies to train, communicate and execute the news rules on contracts. Finance personnel are not equipped to understand a principle based rule unless they have been while trained with strong understanding of US GAAP. Now there is much more judgment and documentation for a view on an accounting position versus a rule based standard that is used today.”

Are there specific challenges or complexities facing your organization today? What is the most critical challenge you face? “Ironwood is at an inflection point. We were founded approximately 20 years ago, and three out of our four founders still work here today. We just launched our third commercial product and have a robust, innovative pipeline. But we are approaching profitability and will now be under increased scrutiny to provide and meet external guidance and deliver sustainable, growing cash flows. This new burden and visibility will require increased financial discipline to balance the needs of a growing commercial business, advance the pipeline and meet shareholder expectations.” “We are focused on increasing the cost effectiveness and reducing the level of effort throughout our finance organization. For example, balancing global standards and processes with specific local reporting requirements, particularly in periods of rapid accounting and reporting changes is often difficult.”

“I don’t think we face any unique challenges as compared to other industry participants. Critical for us is managing our business through a potential significant LOE on one of our top products and at the same time managing a successful launch of a key pipeline product if it achieves regulatory approval.” “Today, like many other companies, we are continued to be challenged to remain competitive and cost effective. At J&J, we come from a strong heritage of having a very decentralized organization. The challenge is where to centralize certain functions and where decentralized functions still make sense in order to remain competitive.”

Why is a Congress such as this important to your corporate development plan? “Ironwood sends multiple employees to the Congress each year as we value the learning as much as the networking. The topics have been diverse, enabling employees from various backgrounds and levels to gain tremendously from the experience. In addition, the Congress provides adequate opportunities for time to meet with peers to discuss hiring, new rule adoption specific issues we are tackling and to trade ideas on best practices within our own organizations.” “This Congress has been a great opportunity to reconnect with people and share experiences. I typically learn something new regarding industry trends, cutting edge technologies and new processes.” “For me the answer is simple. When I attend the conference each year, I am able to discuss the emerging issues in the industry with my peers and subject matter experts. I always leave the conference smarter on the important issues and with a few action items for immediate attention.” “This Congress has been a great experience to collaborate and share ideas and important matters effecting our industry. Just the great speakers the Congress is able to request in order to attend, speaks volumes of the caliber and the reputation it has among all finance professionals. First timers of the conference, always leave with a great experience and better after attending. Sometimes I refer to this conference as the “Academy Awards of Accounting & Reporting” as the place to be if you want to be informed on what is trending.”

What are you most looking forward to at the 2018 Congress? “I always enjoy the first full day the most. I especially like to hear from the luminary, SEC and FASB. I have also enjoyed relatively new topic additions, such as the focus on women and developing talent. In addition, I find the Congress to be a refreshing work week out of the office. I am normally with multiple members of my team, and the Congress affords me the ability to spend more quality time with them as compared to a normal day in the office. Lastly, there are many participants I only connect with at the Congress. We always make time to catch up.” “I am always interested in sharing views regarding challenges and potential opportunities with others in our sector. This has always been an open and transparent group of colleagues. Hearing Cathy Engelbert’s insights with the NCAA tournament is also a highlight.” “Any discussion related to tax reform. Also interested in any topics related to the potential transformation of the supply chain industry with the likes of Amazon or UPS getting involved in the pharmaceuticals business.” “This our opportunity to reconnect again after year- end to see where we are on new accounting standards recently adopted or issues that came up at year-end for the 10-K. It is a great recap to know what is hot for the upcoming year and learn from others who would like to share the “war stories” from year-end.”

Want to hear more? Register online at www.cbinet.com/accounting. See you in Philadelphia!