LE/LRP Budgeting
Budgeting in Biotech: An Opportunity Hiding in Plain Sight
Budgeting season is here. In most biotechs, the annual LRP/LE process is driven by finance, who ask each function to submit operational spend and headcount plans. Each group works through its Excel template, often in isolation, and finance rolls everything up into a consolidated view.
For finance, the output is a way to control spending. For the board, it’s an exercise in oversight.
But for the organization? Too often, it’s a missed opportunity.
The Pain Points We See
Different assumptions: Each function pictures the future differently, but those differences rarely surface.
Headcount angst: Adding roles is expensive; removing them is disruptive. This is where most of the friction shows up.
IT left out: Instead of helping plan systems and data investments across functions, IT is often reduced to sorting out duplicates and untangling costs.
The focus stays on the output — the budget itself. What’s overlooked is the process.
How to Turn Budgeting Into Alignment
When approached intentionally, budgeting can be just as valuable for alignment as it is for financial control. Here’s how:
Create a common picture
Develop a consistent set of organizational assumptions — anchored to a timeline and a few key drivers. This becomes the shared reference point when functions think about what they need to accomplish.Set instructive goals
Organizational goals should be defined at a level that unifies functions. Think outcome objectives, not just milestones. Goals should guide functional choices, not sit abstractly on a slide.Integrate assumptions function by function
Have an integrator (finance, IT, or an external facilitator) sit with each function to document their assumptions and rationale. Capture not just the numbers, but the “why” behind them.Compare stories for gaps and inconsistencies
Bring the assumptions together and look for places where functions are misaligned — timing, ownership, dependencies. These conversations are where real clarity emerges.Preserve the metadata
Don’t lose the assumptions, timelines, and rationale once the budget is submitted. Use them again in the next LE, and a year later in the LRP. This is valuable organizational knowledge that usually disappears in the conventional process.
Why This Matters
Budgeting doesn’t stand alone. It should connect directly to commercialization planning and launch readiness planning. If budgets and plans don’t draw from the same assumptions and timelines, cracks emerge later:
Who owns what?
Who’s accountable for delivering?
What initiatives are under- or over-funded?
When these processes reinforce each other, budgeting stops being just a financial exercise and becomes a strategic enabler for launch success.
The conventional way puts all the stress on defending the outputs. A better way is to manage the inputs — assumptions, rationale, interdependencies — so that the outputs take care of themselves. Want help, Let’s Chat.
