8 questions for Aspen CFO Sean Capazorio
Sean Capazorio's Finance Transformation Award winner speaks to us about the global success of Aspen Pharmacare, the role of finance and how he managed to turn the numbers from cold figures into good stories.
1. What has been the highlight of your career at Aspen?
“I started my career at Coopers & Lybrand and after leaving to serve in the army, I joined IT group Unisys as a finance manager. I then moved on to SA Druggists, a pharmaceutical, healthcare and chemical group, as a management accountant, working on group tax and corporate finance matters. After a period of 18 months, I transferred to an operational finance manager role in the group’s pharmaceutical division. Subsequent to Aspen taking over the pharmaceutical segment of SA Druggists in 1999, I was offered the FD role for the South African pharmaceutical business segment which over the years evolved to the role of finance officer for the group.
“Over the past 21 years of service in various roles, the group has expanded operations significantly across the world. We had a commercial pharmaceutical turnover of R1 billion in 2000 and in 2017 the figure grew to R31 billion. We sell products in 150 countries and have employees in 47 countries. It’s been quite a journey.”
2. What part have you played in Aspen’s global expansion strategy?
“Finance has been instrumental in globalising the business and driving value in and integrating acquired enterprises. We have bought manufacturing sites in Germany, France and the Netherlands, for example, which have vastly different cultures. Finance helped take the lead in bringing them in and converting them into the Aspen configuration. This was important, as manufacturing is a key strategic advantage for us.
“Following the completion of a significant deal with GlaxoSmithKline for thrombosis products, we were required to set up an infrastructural footprint in Europe to support the new revenue stream. We previously sold through distributors on the continent. In six months, we had to populate 17 European countries and create a structure of sales and marketing offices within regulatory boundaries. We followed a similar process in South America, closing a deal with Nestlé for infant milks and we set up structures for distribution and manufacturing.
“We recently established a presence in China, and took a year to set up operations. The market now boasts the biggest sales representative force and the fifth-largest turnover in the group. The keys to success have been putting the right people in the regions and leveraging their knowledge, moving quickly and cost-effectively, while developing the supply chain. As we do each deal, we learn about the cultural and commercial differences of the territory as well as the associated barriers to entry, which, naturally differ from country to country. Finance has been a strategic partner in the implementation of these acquisition drives, making sure that the culture is aligned and connecting the dots across the group.”
3. What did Aspen’s finance transformation look like?
“Given the way the business was changing, we had to alter our segmental reporting to accommodate a global footprint and to assist the market to assess our performance better. We used to have a regional approach, covering South Africa, sub-Saharan Africa, Asia-Pacific and the Rest of the World. This was tricky, because we had been reporting this way for many years and had entities in many different geographies.
“Our new structure was launched in June 2017 and was well accepted by the market. We were not sure of the impact that it would have and conducted extensive research before proposing a structure that was sound and made commercial sense. There was a lot of resistance internally initially, because it meant a lot of hard work had to be done to change systems throughout the group. However, once they saw the benefit and realised it was aligned to the way that Stephen Saad, our group chief executive, commercially assessed the business – including the effective management of key strategic brands and therapeutic groups – the revised structure was embraced internally. The board was very appreciative of finance’s role in restructuring the group reporting format.
“Our vision is to deliver value to all our stakeholders, including patients, funders, consumers, shareholders, government and investors, so we run a full stakeholder programme. We try to manage all concerns in our reporting, focusing quite heavily on patient-facing data, with financial performance at the core. There is a sectoral tension regarding the profitability of pharmaceutical companies and product pricing, but we are well positioned in reviving and sustaining older traditional brands and offering high quality, affordably priced products. We tend to anticipate problems, as we have a close relationship with the analyst community and Stephen Saad is adept at providing balanced commercially relevant answers.”
4. How has the collaborative management reporting benefited Aspen?
“We can now examine how key brands are performing across the group against the backdrop of a complicated and integrated supply chain. Our thrombosis product, Fraxiparine, for example, has a very complex supply chain involving different production stages in the USA, the Netherlands and France. Our new way of reporting allows us to tell the story of how the group is performing and the contribution from our core brands and therapeutic groups across a complex integrated supply chain. This has added immense value. Without it, we wouldn’t be able to do value-added segmented reporting.
“It took 18 months of hard work to achieve, but we can now manage the business from a single piece of paper. It’s not complete, but the process has been our proudest moment over the past two years. It’s also helped us to kick off a technology enhancement cycle.”
5. How are you leveraging analytics?
“We have tried to strike a fine balance between dedicated teams doing basic accounting and those doing analytics. The analytical space is our focus as we seek to understand trends and look at group-related data. This is where we are spending a lot of time, even in terms of recruitment. The numbers, however, must tell the story, and too much time is spent on checking the accuracy of data. We want to automate this process and interface. In time, we expect the percentage of manpower dedicated to analytics to increase.
“Finance’s mantra is to know the details, overall strategy and run a collaborative business. Aspen is run like a small business, notwithstanding the big numbers, and it is a very entrepreneurial organisation. Analytics are fully embedded not just in finance but commercially as well. This is part of the Aspen DNA. We harness external and internal data to guide our activities, and business unit reports are analytically driven.”
6. What role do risks and regulations play?
“We are a tightly regulated industry in terms of pharmaceutical compliance, controls, registration and selling, and there is a trend to raise standards worldwide. Globally, governments are trying to regulate pricing because healthcare is such a big spend, so we have to balance price pressure and increased costs. You can’t sell a pharmaceutical product like you would a car. There can be a lag of up to five years to register a new product because of the need to gain approval from the authorities and to conduct the supporting tests.
“We have dedicated teams that monitor changes, ensure compliance and find areas of advantage. We have rigorous hedging processes and a comprehensive treasury team that focuses on general forward cover. We have introduced constant currency reporting to remove the impact of forex volatility. Lastly, we find that relationship-building with the authorities is immensely helpful.”
7. What are your leadership qualities?
“I’m a fairly serious output-driven leader, but not a rigorous office manager. The Aspen culture is a good fit for me. Reporting lines are quite fluid and it isn’t the typical corporate hierarchy. I have an open-door policy with my team and don’t micromanage. I expect people to know the details and the big-picture perspective. Once I’m confident in their abilities, I delegate and leave them to work within the provided framework. At the same time, I’m not afraid to roll up my sleeves and get involved when necessary. Communication is crucial, so I have regular catch-up sessions and forums.”
8. How do you deal with succession and mentoring?
“We try to grow our own timber and develop our teams. We have adapted where possible a homegrown model, building up those in middle management to more senior positions. Succession is a challenge because I have been here a long time and know the organisation inside and out. In terms of recruitment, I look for honest, technically and commercially sound, energetic, forward-thinking self-starters. They also need to be able to change the message for different cultures.
“Coaching is generally an informal, on-the-job process, unless I have people in new positions, in which case I set up monthly calls to get feedback and offer advice. The more you teach others, the less you have to do yourself, so I enjoy it. Aspen’s employees are hungry to learn.”