Navigating Pharma Budget Season: Three Principles to Align Strategy and Financial Planning

By Susan Nemetz

Budget season can be painful for even the most seasoned pharma leaders. One cause for undue stress is focusing too much on the numbers or individual line items before aligning the team on the bigger picture. 

No matter where the numbers are in a budget document, many senior leaders go there first. Their refrains are all too familiar: “That total is way too high. Drop it by 10%.” Or: “How could we possibly spend $X on market research? I have a friend who…”

Of course, budgeting is a vital discipline, and costs genuinely matter. But this kind of numbers-first thinking derails many pharma teams if they don’t have a strategic story to tell. There’s a better way to manage the financial output. Here are three principles to try:

1. Align on Strategy, Objectives, and Priorities

Whenever possible, align the audience on the strategy, objectives, and priorities for a plan or program—including any related assumptions. This way, the conversation can be about the strategy or objective rather than the number. Often, it’s better to hold the view of the dollars until this alignment takes place since the agreement regarding your intention should guide your investment. For example, if your team wants to be THE leader in a category, that investment will be different than if you know you will be the fifth in line with modest differentiation. 

Achieving alignment early on creates a North Star for your team so you can better manage shifting timelines and emerging data. When disruptions happen, many teams default to the knee-jerk response, “How does this impact the budget?” It’s far better to say, “With this new timeline, our strategy has shifted,” or “Nothing has changed on the strategy, but the timing of the costs will be different.”

2. Speak the Same Language

Finance colleagues are trained to look at numbers, and we are grateful to them for that. We need to ensure they understand the plan first and the numbers second. If they focus only on the numbers and deem them too high, the budget justification could stall. So, what’s a functional or program leader to do? 

Savvy leaders earn credibility by connecting the dots for their counterparts in finance. They understand the company strategy, build their plan, and align the numbers to that plan. They create communication tools to convey the strategy and budget to both internal and external stakeholders. By framing the budget in the context of strategic goals, they foster better understanding and support for their financial requests.

3. Enable Seamless Updates

As we all know, in the biopharma industry, timeline changes are bound to happen in any clinical trial, and these will have a downstream effect on commercialization plans and their related budgets. The challenge is that many commercialization budgets are too static and buried in their functions to accommodate the changes—the long-sought-after solution is to create a template or framework that enables easy updates. If that template/framework/software was also prepopulated with “starting point” data, then nirvana would be possible. Teams would have a plan, objectives, and a budget, be able to explain it and update as new information emerged.

This nirvana template could be used at the company or functional levels. Either way, it would include:

• Strategies and objectives: Define the overarching goals the budget will support. 
• Assumptions: These might include market conditions, regulatory changes, or other variables that impact the financial projections.
• Tactics: Identify the specific actions or programs to drive the budget, including the required financial and human resources.
• Dollars: Detail the financial requirements, including out-of-pocket expenses and personnel costs. Ensure these align with the tactics and overall strategy.
• Risks: Identify potential risks and uncertainties that could impact the budget. This helps in planning for contingencies and managing expectations.

Final Thoughts 

Budget season doesn’t have to be a painful exercise if approached with a strategic mindset. By aligning your strategy with your budget, creating robust planning processes, and leveraging integrated tools, you can streamline the budgeting process and make it a strategic asset rather than a source of contention. 

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Corval is dedicated to leveraging technology to help biopharma companies navigate the complex journey from clinic to market, provide a single source of truth, and build capabilities.

The Corval Platform is a cloud-based strategic planning platform that enables teams to quickly build and manage auto-populated, multi-year commercialization roadmaps, detailed budgets, and full resource plans including headcount, salary ranges, and operational fees associated with your objectives and activities. Your team gets a single source of truth that’s easy to adjust when needed.

Start creating accurate, actionable budgets and roadmaps in a fraction of the time. It's about investing the right amount, on the right resources, at the right time. Curious how Corval can strengthen your budget planning process? Learn more here.

➡️ Plus, discover more insights from our e-book... 7 Fundamentals to Building a Biopharma Budget