Polpharma Consolidates Financial Statements for 20 Subsidiaries in Five Days, Reduces Financial Management Costs by More Than 50%
 
 

Polpharma Consolidates Financial Statements for 20 Subsidiaries in Five Days, Reduces Financial Management Costs by More Than 50%

Polpharma S.A. Pharmaceutical Works is among the world’s top-20 generic drug manufacturers, operating seven manufacturing plants in Poland, Russia, and Kazakhstan, as well as six research and development (R&D) centers. The company’s products include approximately 600 prescription drugs and medications used to treat hospitalized cardiology, gastroenterology, and neurology patients. It is developing another 200 pharmaceutical products, including biotechnological drugs.

After operating under government control for more than 60 years, Polpharma reached a milestone when it became a privately owned entity in 2000, with all of its shares held by Polish investors. The company began a thorough restructuring and significantly invested in R&D, manufacturing, and distribution capabilities. By 2012, Polpharma had expanded its footprint through mergers and acquisitions in Poland, Russia, and Kazakhstan and was establishing representative offices across Central and Eastern Europe, as well as Central Asia.

By this time, planning, budgeting, and forecasting processes had become increasingly inefficient and expensive. Polpharma faced a serious challenge to address this, as it was operating in one of the most heavily regulated industries without accurate financial coordination across its multinational environment—each country having, for example, its own chart of accounts. Nor did the company have proper accounting procedures and controls for reconciling different currencies or legal and financial standards, such as fiscal years, tax rates, and report templates. Polpharma needed to standardize workflows across all locations and introduce state-of-the-art financial-management systems.

By deploying Oracle Hyperion Financial Management, Polpharma enabled rapid consolidation and reporting of financial results across subsidiaries and compliance with global regulatory requirements, such as generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). The company’s finance team gained the ability to close monthly financial statements for 20 subsidiaries with the same staff that had been used for just 4 subsidiaries—a five-fold efficiency gain.

 
Competing Successfully in the Global Pharmaceutical Market

A word from Polpharma S.A. Pharmaceutical Works

  • “Oracle Hyperion Financial Management has enabled us to honor our financial close commitment of five business days even as the company grew from 4 to 20 subsidiaries and we kept the same number of controllers. At the same time, we reduced our financial-management costs by an estimated 50%.” – Wojciech Rosa, Director of Controlling Department, Polpharma S.A. Pharmaceutical Works

Polpharma has a leading share in key therapeutic areas in Poland and specializes in pharmaceutical preparations for cardiology, gastroenterology, and neurology. The company portfolio also includes dietary supplements, medical devices, cosmetic products, and phytopharmaceuticals (drugs with active substances derived from plants). Over-the-counter (OTC) medications account for a significant part of its product portfolio. Polpharma also develops biotechnological drugs, which are produced using living systems and organisms. It is one of Poland’s main manufacturers of active pharmaceutical ingredients (APIs), competing successfully in the developed pharmaceutical markets of the European Union and the United States.

Polpharma’s finance team faced regulatory pressures to deliver financial statements for each of its subsidiaries according to each local GAAP, as well to as create consolidated statements that complied with Polish GAAP and IFRS.

Polpharma used Oracle Hyperion Financial Management to ensure regulatory compliance across 20 countries while eliminating the need for external auditors and financial teams in each subsidiary. The reduction of the number of financial teams to 1 from 20 cut the company’s financial insight cost by 50%, not counting the reduced data-compilation time and effort. Polpharma now delivers its financial statements, which comply with all local standards and currencies, via a single, monthly financial-closure process in just five business days.

 
Gaining Comprehensive Forecast Capacity

 
Optimizing Decision-Making

 
 

 
 

Challenges

  • Replace spreadsheet-based financial reporting by creating an enterprise-performance-management platform that can rapidly consolidate and report financial results across the pharmaceutical group
  • Improve the ability for today and into the future to manage financial statements, including balance sheets, profitability, and cash flow by deploying an easily scalable solution
  • Consolidate budgets from multiple international manufacturing plants, logistic centers, and research entities into one standard tool to enable quick recalculations with multilanguage support and multicurrency capabilities
  • Standardize financial KPI measurement across geographies and enable product managers to easily verify worldwide stock availabilities and sales indicators for drugs and dietary supplements marketed by Polpharma

Solutions

  • Deployed Oracle Hyperion Financial Management to optimize financial consolidation of 20 subsidiaries, from Kazakhstan to Spain, in only five working days every month, providing management with an accurate reflection of financial results and company assets for the group and all acquired entities
  • Achieved an estimated 50% reduction in financial management costs by choosing Oracle Hyperion Financial Management—operated by an internal finance team—over external accounting service providers and auditors in each of Polpharma’s 20 operating countries
  • Gained the ability to deliver reliable statistical predictions regarding sales and return on research and development (R&D) investment for a wide range of prescription drugs and pharmaceuticals by implementing Oracle Hyperion Planning as a centralized planning, budgeting, and forecasting solution
  • Leveraged Hyperion Planning’s dynamic modeling capability, including quick product-profitability-analysis tools and flexible what-if scenarios to proactively address market requirements for innovative therapies and to develop products that will generate profits quickly
  • Enabled 220 product managers to update forecasts, budgets, volumes, prices, discounts, commissions, and numerous other variables at the same time, with no performance or data consolidation issues
  • Integrated financial management and business planning with Oracle Business Intelligence to support executive-level decisions via interactive dashboards and ad-hoc reporting, consolidated production views, KPIs, and strategy management tools
  • Increased the effectiveness of Polpharma’s financial teams by consolidating financial closes across subsidiaries—each with different currencies, legal standards, and local accounting principles—and compiling a centralized financial database that complies with Polish and international accounting and financial reporting regulations

Why Oracle

“The Oracle team had a deep understanding of our industry and business context, and our collaboration was excellent. Oracle Enterprise Performance Management solutions help us strategize, plan, and optimize business operations, and they allow us to capture new opportunities in the current market while scaling for future growth,” said Wojciech Rosa, director of controlling department, Polpharma.

Implementation Process

“We worked with Oracle partners Grupa Exorigo-Upos and MDDP Business Consulting to deploy the solution. The standard functionality of Oracle Hyperion Financial Management, which allowed out-of-the-box multiGAAP financial consolidation and reporting, greatly eased the deployment. We involved MDDP Business Consulting as a third-party project advisory, while external consultants helped to develop the business concept for the solution and assisted during the implementation process. Such an approach was really beneficial, because external knowledge was crucial to properly prepare and start the project, while additional resources helped our project team realize their daily duties and additional project tasks. Straightforward delivery of financial statements in accordance with numerous national accounting principles and reporting standards was exactly what we needed,” Rosa said.

Advice from Polpharma

  • Do not implement all elements at the same time.
  • Start with critical processes and train end users. Establish your business’ true priorities.
  • Clearly define requirements and encourage creative competition between internal and external team members to get the most out of their perspectives.
  • Standardize processes following industry best practices.

Partner

“We chose Oracle partners Grupa Exorigo-Upos as an external implementer and MDDP as a business consultant because we did not have internal resources for such a project. The decision proved extremely beneficial for us. The team’s extensive product expertise helped us focus on our priorities and ensure success with a step-by-step approach. We met all deployment milestones and stayed within budget,” Rosa said.