The finance career of Nir Naor, the CFO of Tampa, Florida-based Axogen, has spanned myriad sectors of life sciences, the type of businesses in which resource allocation and spend optimization, executed smartly by the CFO, can add considerable value.
After CFO gigs at Arbor Pharmaceuticals and Swedish-based MedTech Mölnlycke, Naor joined Axogen, a provider of products for peripheral nerve repair, in late 2023. His current focus is helping the 15-year-old company achieve bottom-line profitability and cash positivity. The key? Cost-efficient topline growth.
We asked Naor about his firsthand experience of the variance in the CFO position depending on the organization’s maturity, size, ownership and, for life sciences firms, product development lifecycle—a factor that can significantly influence what the finance chief spends their time on.
In your career, how have the demands on the CFO varied across sectors, company size or ownership?
I have spent most of my career in life sciences, yet I found that the demands on a CFO vary depending on the type of company and its sub-industry. Pharma companies have very long development cycles, so they need to focus on long-term resource allocation. In a prior company, I founded the global portfolio management and resource allocation function. That function prioritized and optimized the company’s long-term spend, mainly around its R&D pipeline. It supported manufacturing and IT investments and considered ROI, financial risks and the investment schedule.
Medical device companies, on the other hand, are less regulated, and development cycles are shorter. That changes the CFO’s focus to tactical, mid- and short-term spend prioritization. At biotech companies, my focus was fundraising. I had to be able to present the company from A to Z and be well-versed in the science.
In a publicly traded company, the investor and public relations functions are much more prominent due to the greater transparency required. That transparency results in a need to consider and communicate the short-term results of long-term initiatives.
At smaller companies, I have found I needed to be hands-on and very results-oriented. In addition, I was often very focused on supporting the success of the company’s turnaround, exit or IPO. At large companies, in contrast, the size and complexity of the finance team and its operations made optimizing its cost and structure more important. I more often led finance transformations there, offshoring certain functions or moving to shared services models. Effectively implementing ERP and other systems was also central to the job.
What is your approach to more dynamic circumstances, such as a company crisis or when a company finds itself in a difficult situation?
As a finance professional, I always try to look at things analytically to understand the drivers and root causes of a crisis and devise a recovery plan. But sometimes, reporting isn’t at the right level of accuracy or granularity to understand the problem or its root causes. In such a case, the first step is to fix that, often while taking an 80/20 approach [80% of outcomes result from 20% of all causes]. In my experience, that helps a CFO understand the problem’s major dimensions quickly.
The second step is to devise recommendations on a potential solution and align with the CEO and other functions while being realistic about what can be achieved and by when. An example of a crisis I experienced was a rapid reduction in a company’s margin. We reacted by conducting a detailed analysis of the various causes and realized that the culprits were accelerated changes to both the customer and product mix. We implemented a plan to address the manufacturing costs of some of the low-margin products, changed the sales incentive plan, stopped prioritizing those products and agreed to change pricing at the next contract negotiation.
What is one piece of advice you received at the start of your career that you cherish?
From the outset of my finance career, I aspired to become a company CFO. Nonetheless, I was advised to start my career at a consulting firm or a large company and be a smaller cog in a big machine. In such situations, you learn best practices and see what “good” looks like.
That versatility of experience is invaluable for subsequent CFO roles at smaller companies. Although the best practices I’ve learned in large organizations were not directly and entirely applicable to small organizations, I found it helpful to know what good practices looked like and how to apply them. That brought considerable added value, from enhanced reporting and business support to better tax planning and compliance approaches.
