Beyond The Printed Page | March 22, 2021

How The CFO Role Has Evolved

Source: Life Science Leader
Rob Wright author page

By Rob Wright, Chief Editor, Life Science Leader
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Joseph Wolk, J.D., C.P.A, EVP and CFO of Johnson & Johnson (J&J)
Joseph Wolk, J.D., C.P.A, EVP and CFO of Johnson & Johnson (J&J)

When interviewing Joseph Wolk, J.D., C.P.A, CFO of Johnson & Johnson (J&J), for an upcoming feature in Life Science Leader, we began the conversation with a question regarding how the biopharma CFO has evolved. “Whether biopharma or elsewhere, there is an overwhelming amount of data at our fingertips these days,” he begins. According to Wolk, CFOs and financial professionals pride themselves on coming to a discussion or presentation with objectivity. “For me, the key is sifting through all that data and coming up with the right data from which to make the best possible decisions.” And while you aren’t going to get every decision right, if your set of facts is solid and your assumptions are credible, most often you’re going to have a good result.

Wolk notes another difference for finance executives today. Beyond being responsible for lending to the credibility of an organization and ensuring debits and credits are correct, what really distinguishes the premier finance people is their understanding of the business. “Debits and credits are not just reflective of results generated and a means of keeping score; they can sometimes be predictive as to what’s going on operationally in the business or marketplace,” he contends. “We can and should take pride in keeping score, but finance executives of today need to understand that the predictive aspects of this job are a means of actually influencing the outcome of the game.”

How are you zeroing in on the most important data?

“That varies by the opportunity,” he responds. For example, Wolk says he always wants a sales or marketing person to believe they can sell anything under any circumstance. Similarly, he wants R&D leaders to have the mind-set that they can invent anything to meet an unmet need. “Finance’s job is to reign in that enthusiasm — not curtail it — but make sure it is based on fact.” To do that, sometimes Wolk looks at trend analyses. Sometimes he’ll bring in external sources to validate some of what internal folks have been saying. Depending on the situation, you need the data that is most applicable, credible, and proven to be factually correct. For example, back in January Wolk was preparing for an earnings call. “People are very curious about the state of the pandemic and how it is impacting our medical device business.” In a normal year that’s typically $27 to $28 billion, so fairly sizable. “Often, we report our earnings first, and that becomes the read through to other medical device manufacturers.” In addition to what he was being told by internal medical device leaders withing J&J, Wolk also looks at procedural volume, case counts, reimbursement levels, and shipments of devices going out the door. “We see hospitals are responding differently during the latest pandemic peak than they did in the first (i.e., March, early April 2020). “Buying patterns, procedural numbers, and some of the diagnostic numbers indicate healthcare institutions have found a way to balance the treatment of patients afflicted by COVID-19 with the other patients persisting through other very serious illnesses in need of remediation.”

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