Pharmaceutical giant Cipla’s Regional CFO and Executive Director of Business Development for Sub-Saharan Africa, Nishant Saxena, started his career in Finance after obtaining an MBA specializing in Finance & Strategy.
While working as an intern at Procter & Gamble, he was offered to join the company in Japan as an FP&A analyst. Then followed a variety of roles in, amongst others, Accounting & Tax, Commercial Finance, and M&A. He finally joined Cipla – first as India CFO and then as Regional CFO for Sub-Saharan Africa. The journey also gave him assignments in countries like Japan, Singapore, Philippines, Delhi, Australia, Mumbai and, now, Cape Town.
In between, Saxena was an entrepreneur guiding MNCs on Finance Transformation (how to move Finance from a bean counting function to a strategic value add) where he consulted for big names like Nestle, J&J, KPMG, Cadbury and Kraft Foods.
For Saxena, the biggest challenge as a CFO is balancing the partnering role (which requires collaborating with business and seeing and enabling opportunities as they see it) with the traditional finance role (which requires a ‘conservative’ approach with an eye on risks and investments).
“It is easy to say no to new initiatives and investment, and it is equally easy to be gung-ho about new ideas. Maturity lies in finding the golden mean.”
He strongly believes in networking. “There is always a lot to learn from your peers. Also, we find good people who can fill key positions.”
On investing in Africa
Saxena believes that, within Africa, South-Africa has everything required to play the leading role: largest GDP, stable governance, independent judiciary, strong military, deeply entrenched capital markets and largely a transparent public procurement system. SA also has its set of challenges: rand volatility, weak growth and the constant threat of junk grading.
Specifically for Pharmaceuticals, despite these challenges, the private pharmaceutical market is showing a reasonable growth of 7%, and the government invests significantly in tenders.
Saxena says he would recommend new multinational corporations (MNCs) wanting to enter the SA pharma market to enter through partnerships, leveraging existing commercial setups of local partners with the MNC’s international products or brands and R&D strengths.
“Unfortunately, a typical CFO only pays attention to governance – at best a rear view mirror telling the CEO what is happening to the business, but generally after-the-fact.”
“There is potential. However, the barriers of entry are high (large retail chains, complex medical schemes, pricing and other regulations, evolved patients etc.), and hence the reco to enter through local partnerships.” Cipla itself has done strategic partnerships with Teva and Actavis.
Beyond SA, while there are more than 70 African countries, each represents a small market (with some exceptions like Nigeria) which may not be justifiable on their own. “So supply chain harmonization and reducing overall complexity is key.” He says within Pharma, regulatory blocs and packaging standardization helps to consider, for example, the whole of East Africa as one cluster.
These opportunities are definitely worth the risk and effort, according to Saxena. “Within Africa, our fastest growth is probably in Uganda and its profitability is also accretive to the group. We also need to explore innovative business models that reduce risks.”
On the changing role of the CFO
This topic is very close to his heart, says Saxena.
“When I was a consultant, our main intervention was: How to make the Finance team world-class. Today’s CFO has to be the top-line steward (growth is the only sustainable way to deliver shareholder value), bottom line owner (constantly improving ROIC and EBITDA, not just by cutting costs but by finding where value is being created in the chain); and governance champion (best practices in accounting, audit, tax etc.).”
Presenting his own role as an example, Saxena says he has three key responsibilities:
Firstly, he has to steward half of the company’s aggressive revenue growth expectations. “This means every year I need to find about R150m revenue opportunities, by mapping out white spaces, building networks within industry and striking partnerships, exploring strategic M&As where there is head-room for significant growth etc. And then lead integration so that synergies are delivered without disruption.”
Secondly, each year finance has to ensure profitable growth, with EBITDA and ROIC expansion by 200-300 basis points. This requires looking for pricing opportunity, higher profit market segments, mix, costs, investments etc. “Given the devaluation of rand, to maintain relevance at the HQ level, we simply need to manage costs and investments.”
Thirdly, Saxena highlights the importance of impeccable governance. “Reporting, compliance, audit, tax, treasury, accounting etc. This is almost a given at CFO level. One mistake can be career limiting. Cipla SA is doing so well (25% growth, 5% margin improvement), the last thing we want is for our stakeholders to have a question mark on our numbers.”
He says in many companies, unfortunately, a typical CFO only pays attention to governance – at best a rear view mirror telling the CEO what is happening to the business, but generally after-the-fact – and playing a reporter role vs. a value-creator role. “Hence the need to not just announce what didn’t happen, but to partner with the CEO to make it happen.”
Saxena says when he was still a consultant, the entire Finance Transformation programme involved initial training, then audit of existing processes, mapping those against best-in-class processes, making a 12-24 month action plan, and doing regular monitoring.
“Coaching of CFO and CFO-1/CFO-2 was critical (on strategic thinking, financial partnering/ analytics and behavioural /influencing skills). Often the CFO had a large vision but was hampered by a sub-standard team below him. And, worse, the accounting/MIS processes were so antediluvian that most of the time was wasted in just churning out basic reports, instead of analytics being done on those reports. Sadly, when this realization dawns, there is a sudden knee-jerk reaction and companies start buying very expensive IT systems and tools. Which are so not needed – all you need are clear priorities, reasonable excel skills, constant monitoring and a lot of passion.”