Publicly traded life science solutions firm Cryoport provides temperature-controlled logistics services around the world. We asked its SVP, CFO and Treasurer, Robert Stefanovich, how he is managing potential disruptions to the firm’s supply chain – and balance sheet – as the world responds to the COVID-19 outbreak.
“With all the uncertainties around COVID-19, it is vital for all business leaders, in all industries, to implement best practices throughout their organisations,” says Robert Stefanovich, SVP, CFO and Treasurer, of global life science solutions firm Cryoport. And as part of that responsibility, he believes that it is more important than ever to communicate clearly and transparently with all employees to ensure they remain “informed, healthy and motivated”.
Indeed, this is part of a multi-step pandemic action plan developed at Cryoport specifically to address the threat of events such as the COVID-19 outbreak that affect the firm’s facilities globally.
To help keep the channels of communication open in the current environment, Cryoport has recently set up a separate site on its intranet, dedicated to COVID-19 information, aiming to address employee concerns.
As a business that is active in life sciences, Cryoport is fortunate in that it has considerable resources at its disposal that are well-versed with issues of this nature. Of course, the scale of COVID-19 is unprecedented in modern times.
With social media inundating people with information, not all of it correct, Stefanovich says that it helps to be in a position to extract the most credible sources and provide its employees with the option of looking on the intranet site for trustworthy information. “The struggle we all have is to take the emotional part out where we can, and be in a position to assess what actions need to be taken that are in the best interests of the company and the community at large.”
Being able to address specific employee concerns, through the site, is a valuable contribution to their welfare. But the firm has also modified its policies not only to enable employees to work more easily from home, but also to take time off to be with their families where needed. Additionally, Cryoport employees are being offered free health care provision, ‘virtual doctor’ visits and tele-health appointments so they can have direct and timely contact with physicians if they need it.
“We’re also encouraging the use of video conferencing, in preference to phone calls,” he adds. The reason for this is simple: in the current situation, where travelling is not an option, he feels it is important for employees and clients to maintain visual contact with each other.
It is important to maintain close relationships with suppliers too in this most testing of times, says Stefanovich. The firm is working in partnership with its suppliers in evaluating and mitigating the risks and accelerating PO fulfilments. This is critical for components derived from more impacted geographies to ensure Cryoport’s inventory has the right level of safety stock to continue assisting the movement of the lifesaving therapies it supports globally. Clients, too, are included in consultation, helping the Cryoport team develop plans to mitigate any disruption to their services.
As the backbone supporting temperature-controlled logistics for the likes of life-saving immunotherapy drugs, getting this right now is critical. “We cannot allow for any disruption,” says Stefanovich. “It’s something where we all have to be honest and proactive when communicating with suppliers and clients alike, to really understand where the risks lie, and to take the appropriate actions to mitigate them.” It is, he comments, “a team effort”.
To date, there has been no need to establish new supply chain relationships, Cryoport already having multiple partners around the world. “It’s really just about working more closely on a day-to-day basis with our existing partners, ensuring we have everything in place and that we can act as the situation changes,” he explains.
Although most of its mitigant actions are geared to managing the almost hourly global developments of COVID-19, there is strategic longer-term thinking underpinning Cryoport’s measures. This is an approach that Stefanovich believes other companies should adopt. He suggests that most should already have in place a pandemic ‘actions and communications’ plan specific to their operations. Every business, he says, needs to be confident that their entire management team and key employees are “fully engaged” in the process.
But this is not something just to have in writing, he warns. Companies need to be able to act quickly and decisively. To achieve this, leaders should be aware that a working pandemic policy demands significant management input. “It will take time away from other aspects of your business as you work through it because we are now dealing with real uncertainty.”
Actions within Cryoport that are being taken from a treasury perspective, are driven by its consistent conservative policy – an approach that has paid off in light of the significant downward spiral being seen across the world’s stock markets. “Given that we are well funded and debt free, we are not facing some challenges that other companies are, where some are having to seriously evaluate their cash runway and near-term prospects of securing funds at agreeable terms,” notes Stefanovich.
With Cryoport’s short-term investments and cash guided by strong and conservative policy, he nonetheless admits that, given the current uncertainties, there is a need to revisit this often. It’s about re-balancing short-term investments in a measured way, he explains. “But mostly it’s about protecting the capital at this time – we haven’t made significant changes so far, but I do have regular calls now with our advisors to re-assess our approach.”
Of course, what’s happening now is a reminder for all businesses to continue to be disciplined about how they use cash, make investments and set appropriate ROIs for those investments. “As a publicly traded company (Cryoport is traded on NASDAQ) we are engaging with our investors, analysts and bankers regularly so that they understand the actions we are taking to mitigate risk and protect shareholder value,” explains Stefanovich. This communicative approach could well stand other companies in good stead, should they need to raise funds at a future date.
For now, although risk mitigation is front and centre, Stefanovich believes that opportunities are available for most companies. “As an organisation, we are developing team-building and strengthening team spirit,” he says. “But now, in a time of need, we can also prove ourselves as an outstanding partner to our clients and partners. This can have a long-term positive effect; there is a silverlining in all this after all.”