Corporate Performance Management or CPM is, essentially, a new classification for the tools used in the FP&A function. Recently we’ve also heard the phrases Enterprise Performance Management (EPM) and Business Performance Management (BPM) used to define those same tools. Like any other classification (think ERP), this is a large bucket that many software tools are thrown into. In this post, we’ll talk about what CPM means for a development stage and/or early commercial pharmaceutical company and the special requirements that should be evaluated.
First a foremost, let’s define what we mean when we talk about a CPM solution. The following is a list of functionality we consider to be included in this scope:
- Budgeting: Detailed annual budgets pushed to an ERP solution derived from Planning
- Planning: Forward looking (3 to 5 years), higher level
- Forecasting: What-if scenarios and alternate reality planning
- Reporting: External and Management reporting especially when the reporting includes budgeting, forecasting or planning
- Dashboard: KPIs and other analytics that help with the control and direction of business
In the above context, a pharmaceutical company will need to be aware of several differences in the way it thinks about CPM. Below are some of the areas which should be discussed in any pharmaceutical CPM implementation:
- Multi-Currency: Almost all late development pharmaceuticals will deal in multiple currencies and multiple geographies in its pursuit to drug approval. It’s important for the CPM solution to handle planning within those currencies.
- Expense by Contract: Heavily outsourced pharmas will need to plan by expected contract spend. There are several types of contracts and each will have some variation on tracking. For example, a clinical contract may expense based on site and patient enrollment trends.
- Revenue: When a pharma plans for commercial there are several factors that have to be considered that are specific to the industry. Gross-to-Net, Patient Acquisition Models and Market Models are only a few of the areas to be considered. The forecast for a pharma is generally plan on top of plan, on top of plan – it’s important to make sure your CPM solution can handle the complexity.
Other business areas that are not specific to pharma but are still important to your CPM solution:
- Staffing: Most CPM products will contain staffing sheets for US-based employees. If the pharma is global the CPM will need to track multiple, different staffing sheets.
- Travel: Travel planning can be simple or complex. Most CPM solutions will handle assumption-based planning for travel (e.g. – a single international trip will cost $11,000). If your travel planning it more complicated, you will want to review this prior to committing to a solution.
- CAPEX: Most CPM solutions will provide some level of this functionality
- OPEX: Most operating expenses outside of the clinical area will be handled with a normal planning model and should be generic in most CPM solutions.
As your company moves to select a CPM solution (or evaluate the in-place processes), it’s important to think about the future of the company and if the current or selected solution will work as the company advances through the clinical development process.
To learn more about CPM in Pharmaceuticals, join us December 15th at 10:00 AM EST for Adaptive Planning for Clinical Trials.