Finance Transformation in Pharmaceuticals: When the Party's OverDOWNLOAD
After years of record growth, declining profitability forced this large pharmaceutical company to increase its focus on efficiency and costs. Yet issues within its existing finance operations made it hard to gain control and drive performance improvements.
During the 1990s, the pharmaceutical industry enjoyed record profits and didn’t pay much attention to efficiency. But, in recent years, slackening growth and profits – and a rise in costly lawsuits – have triggered big changes in how drug companies manage their operations.
In this case, the chief executive officer led the drive for improvement. He set out to shift the company from its single-minded focus on customer service to a more balanced perspective that included cost management and productivity. Unfortunately, the company’s financial accounting and reporting operations weren’t quite up to the task. Specific problems included:
The company’s finance transformation comprised 32 projects across five major areas: organization design, accounting simplification, global close process and calendar, consolidation and external reporting.
The first step was to develop a future vision for finance. With Deloitte’s assistance, the team delved deeply into finance’s organization and processes to understand the problems and develop a vision for how things should be. The second step was to develop a road map and business case for finance efficiency and improvement.
It’s important to note that these changes all focus on processes and people, not technology. In fact, senior executives expect that the significant operational improvements currently being made in finance will serve as a strong foundation for the company’s subsequent Enterprise Resource Planning implementation.
The finance transformation effort is expected to generate $21 million in benefits over the next six years, while significantly enhancing the company’s ability to manage costs and improve productivity.
As used in this document, the term “Deloitte” means Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Tax LLP and Deloitte Financial Advisory Services LLP, all subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.