In a biotech, costs change in scale and in nature at every stage of development. To keep a clear view of spending, from preclinical to Phase III, the financial controller has to build a tool that can follow the project without ever freezing it. An overview of the role, drawn from a recent mission with a biotech.
A long, risky and increasingly costly development
Bringing a biotech product to market is a long, risky and highly resource-intensive process. It runs through several successive stages, including the clinical phases, which validate the product step by step. Each phase brings a higher level of validation, but also a significant increase in costs and financial commitments.
From one phase to the next, the scope widens: more patients, more stakeholders, more operational constraints.
- Preclinical phase: the product is tested in the lab and on animal models, before any human trial.
- Phase I: the product’s safety is assessed in a small group of healthy volunteers.
- Phase II: its efficacy is tested in a larger group of patients affected by the condition.
- Phase III: efficacy is confirmed on a large scale, before the application for marketing authorisation.
From a financial point of view, the key point is this: costs rise sharply at each stage, while uncertainty about the product’s development remains at every phase.
The financial controller’s role, phase by phase
The financial controller’s first job is to give clear visibility on the costs the organisation has committed, and to plan future costs across these phases. Each stage, however, has its own specific features that call for particular attention.
Early phase: managing cash
At this stage, the main challenge is cash management. Biotech companies often operate without significant revenue other than fundraising and possible grants, which calls for very close monitoring of cash burn. Financial control sets up detailed budget tracking, often by activity, to spot overruns quickly and adjust priorities when needed. Flexibility is essential, as plans can change quickly depending on scientific results.
Intermediate phase: informing decisions
In Phase II especially, financial control takes on a more strategic dimension. The amounts committed become significant and structuring decisions multiply: continue development, stop a project or pivot to another indication. Financial control must then provide reliable indicators to inform these choices, such as cost per patient, cost per study or the financial impact of a delay in launching studies. It also helps build financial scenarios, factoring in different probabilities of success.
Advanced phase: controlling execution
In Phase III, the focus shifts to controlling execution. Budgets are high, contractual commitments are numerous (CROs, clinical sites, manufacturing…) and the slightest deviation can have a major impact. Financial control sets up broader, often project-based tracking, focused on managing commitments, monitoring budget variances, closely tracking timelines and making forecasts more reliable.
Several products, several phases: one tracking tool
It is common for a biotech to run several programmes in parallel, at different stages: one candidate in preclinical, another in Phase I, a third in Phase II. The financial controller therefore has to handle a cash logic, a decision logic and an execution logic at the same time.
Rather than multiplying tracking files, it is better to have a single tool that can quickly bring together information from every phase and every programme. That is the role of the analytical structure. It is not only about tracking spending, but also about building a relevant financial reading of a project that is uncertain and evolving by nature.
The analytical structure in practice
The principle is based on cost mapping: every expense recorded in the system (supplier invoice, purchase order, staff costs) receives, in addition to its general ledger account, a set of analytical codes. These codes show which product, activity and phase it relates to. General accounting says what was spent (fees, lab consumables, salaries); the mapping says what it was for.
Once this mapping is in place, costs can be grouped and compared on demand: by programme, by phase, by department or by grant-funded project.
Mission feedback: from tracking by nature to managing by project
During a consulting mission with a biotech, I had to set up a new analytical structure to meet this need for cost tracking.
When I arrived, costs were tracked mainly by accounting nature. To find out what a study or a phase had cost, the finance team had to rework accounting extracts by hand in Excel files. Figures arrived late, varied depending on who had prepared them, and operational managers struggled to recognise themselves in the budgets presented to them. Preparing grant claims also meant going back through invoices one by one.
To make the structure easy to adapt, I chose a multidimensional approach, generally recommended in this context, organised into five levels:
- Level 1, the therapeutic indication: to identify costs by project.
- Level 2, the activity, department or function: to track operational responsibilities and identify the budget owners.
- Level 3, the development phase: preclinical, Phase I, Phase II…
- Level 4, the detailed activity: for example patient recruitment, site monitoring, lab analyses or manufacturing of clinical batches.
- Level 5, the grant-funded project: to isolate and closely track eligible expenses.
This kind of structure creates a genuine management tool. It makes dialogue between finance and operational teams easier, while giving better visibility on what lies ahead. And when a programme moves to the next phase, you simply open a new code, without rethinking the whole architecture.
Grant tracking, a workstream in its own right
Beyond own funds and fundraising, a large share of biotech R&D projects is supported by public or institutional grants. The controller must then monitor not only the budget granted and its proper use, but also the expenses actually declared to the funding body.
This is where the fifth level of the analytical structure comes into its own. It makes it possible to isolate costs eligible for the grant-funded project, track them as a receivable from the institution and anticipate their impact on the company’s cash flow: grant reimbursement often comes with a significant delay compared with the expenses incurred.
A role that evolves with the project
Financial control constantly adapts to the project’s progress. Focused mainly on cash management at the start, it evolves into a decision-support role, then into managing performance and risk in the most advanced phases. In an environment as uncertain as biotech, it is a key lever to secure development and optimise resource allocation.
The financial controller’s role in biotech therefore goes beyond technical expertise. It means building an analytical tool flexible enough to work the budget easily and prepare different scenarios, and mastering grant management, from budget tracking to declaring receivables.
Are you structuring the financial tracking of an R&D programme? Altesia’s Finance consultants can support you, as interim support or on an advisory mission.
