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Richter Pharma Case

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Shailesh Soni

Richter is Hungary's largest pharmaceutical company, founded in 1901. It sells drugs in nearly 100 countries and has two production facilities in Hungary. In the 2000s, Richter implemented SAP across its operations to integrate functions and improve data reliability. It also implemented a document management system to help researchers find regulatory documents, and a SAP business warehouse for financial consolidation. Richter expanded SAP to its Romanian and Polish affiliates, facing challenges from language barriers and inconsistent networks. By 2007, Richter's IT department had standardized infrastructure across affiliates and implemented major systems to support business processes throughout the company.

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RICHTER: INFORMATION TECHNOLOGY AT HUNGARYS LARGEST PHARMA
HISTORY ? Started in 1901 by Gedeon Richter by the name Sas. ? Company known for its innovation. ? From 1901 to the end of war, 86 patents were done. ? By the 1960s, Richter was the prominent supplier throughout the Soviet Union.
? First oral contraceptive in 1966. ? Cavinton, a cerebral oxygenation enhancer for the CNS in 1977. ? In the early 1990s, it faced tough competition. ? Eric Bogsch focused on the companys specialty and brought many reforms.
RICHTER IN 2007 ? Hungarys largest pharmaceutical company. ? It sold drugs to nearly 100 countries. ? Three major categories of products: Generic Drugs Company Developed Compounds Licensed-in products ? Two domestic production facilities, at Budapest and Dorog. ? Active manufacturing capabilities in 4 countries.
ORGANIZATIONAL STRUCTURE ? Functional Structure ? Each head responsible for its function ? Given Importance to IT as Functional Department
HISTORY OF IT AT RICHTER ? No Integration among different functional domain ? Improper IT infrastructure ? No centralization ? No proper goal measurement in system.
SAP-FIRST WAVE ? Implementation Module: 1. Finance and accounting-Financial data becomes more reliable. 2. Asset Management 3. Controlling-More integration among functional department 4. Sales and Distribution module
SAP-SECOND WAVE Reasons: ? Y2k problem ? Expansion of Web ? Internationalization New Modules: ? Material Management ? Production Planning ? Cross functional team structure to integrate system. Problems: ? Record tracking ? Different bussiness process in SAP module
MAJOR IT INITIATIVES FROM 2000-06 IT Department installed different software applications: ? Document Management System ? SAP Business information Warehouse ? Additional SAP Modules in Hungary ? Rollout of SAP in Romania and Poland
DOCUMENTUM: DOCUMENT MANAGEMENT SYSTEM ? Purpose: Managing paper requirements in seeking regulatory approval on drugs. Main objective was to allow researchers and regulatory lawyers to find millions of documents through different search functions ? Run off an SQL database ? Customized by Richters IT Staff and external consultants
CHALLENGES ? Getting all the old data into the new database without even a single record being missed out ? To regulate the level of customisation.
SAP BUSINESS WAREHOUSE (BW) ? Required to ease the consolidation of Richters various legal entities and to give Richter a wider planning capability ? Went live in 2005. ? Replaced a 100 MB excel spreadsheet containing financial information. ? Helped in reducing the time required to consolidate all the financial data to less than a day. ? BWs close integration with other SAP basic financial modules gave it a competitive edge over other business intelligence products.
SAP EXPANSION ? 2002: SAP financial modules (FI, CO, AM) launched at Romanian affiliate (Armedica) ? 2003: A dedicated team of 12 SAP specialists added new modules QM, APO, HR to Hungarian operations. ? 2005: Dedicated servers for Romanian operations were moved to Romania because of inconsistent network connectivity. ? SAP expanded into Polish affiliate.
SAP EXPANSION TO POLAND ? Richters IT team setup 10 servers for 4 SAP Modules (FI, CO, AM and SD) ? Servers later shifted to Poland upon completion Challenges: ? Language Barrier between Poland and Hungary caused inconsistency.
Snapshot of IT Governance as of 2007 IT Governance IT Infrastructure Technology Network Hardware Software & Procurement ITs support of business processes Organization of IT department at Hungarian head office
? IT 1- year plan, which was presented in June every year. ? Developed by: Szucs + other IT specialists. ? Focus: How IT would support Richters business processes by stipulating ongoing maintenance projects, investments and changes to infrastructure & staffing. ? Major infrastructure decisions: Szucs ? Affiliate level: Plans were presented by affiliates CEO during June of each year. ? For larger projects ? Steering Committee = Head of each dept + Szucs + IT Specialist + External consultant
INFRASTRUCTURE ? Entire company connected via VPN (Virtual Private Network). ? Formed major policies to reduce misuse of Internet. ? Total 130 servers ? 110: Located at companys HQ in Budapest ? 20: Affiliates ? 120 servers (Windows) + 10 servers (Unix) ? Over 6000 PCs ? Warehousing trucks with bar code technology. ? No mainframe
BUSINESS PROCESS SUPPORT ? Senior management decides the implementation of SAP modules for major projects. ? Several weighted factors were considered: ? Cost ? Projected savings ? Improvement to processes
IT ORGANIZATION
QUESTION 1 ? Expansion of infrastructure, servers and database. ? Problem of increased sales volume. ? Outsourced the help desk. ? Outsourcing the new technology ???
QUESTION 2 ? Centralization of IT in Hungary ? IT infrastructure in Romania ? Cost and Benefits of IT infrastructure ? Failure and Risk Management ? Expansion of Company with Centralization???
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Richter Pharma Case

  • 1. RICHTER: INFORMATION TECHNOLOGY AT HUNGARYS LARGEST PHARMA
  • 2. HISTORY ? Started in 1901 by Gedeon Richter by the name Sas. ? Company known for its innovation. ? From 1901 to the end of war, 86 patents were done. ? By the 1960s, Richter was the prominent supplier throughout the Soviet Union.
  • 3. ? First oral contraceptive in 1966. ? Cavinton, a cerebral oxygenation enhancer for the CNS in 1977. ? In the early 1990s, it faced tough competition. ? Eric Bogsch focused on the companys specialty and brought many reforms.
  • 4. RICHTER IN 2007 ? Hungarys largest pharmaceutical company. ? It sold drugs to nearly 100 countries. ? Three major categories of products: Generic Drugs Company Developed Compounds Licensed-in products ? Two domestic production facilities, at Budapest and Dorog. ? Active manufacturing capabilities in 4 countries.
  • 5. ORGANIZATIONAL STRUCTURE ? Functional Structure ? Each head responsible for its function ? Given Importance to IT as Functional Department
  • 6. HISTORY OF IT AT RICHTER ? No Integration among different functional domain ? Improper IT infrastructure ? No centralization ? No proper goal measurement in system.
  • 7. SAP-FIRST WAVE ? Implementation Module: 1. Finance and accounting-Financial data becomes more reliable. 2. Asset Management 3. Controlling-More integration among functional department 4. Sales and Distribution module
  • 8. SAP-SECOND WAVE Reasons: ? Y2k problem ? Expansion of Web ? Internationalization New Modules: ? Material Management ? Production Planning ? Cross functional team structure to integrate system. Problems: ? Record tracking ? Different bussiness process in SAP module
  • 9. MAJOR IT INITIATIVES FROM 2000-06 IT Department installed different software applications: ? Document Management System ? SAP Business information Warehouse ? Additional SAP Modules in Hungary ? Rollout of SAP in Romania and Poland
  • 10. DOCUMENTUM: DOCUMENT MANAGEMENT SYSTEM ? Purpose: Managing paper requirements in seeking regulatory approval on drugs. Main objective was to allow researchers and regulatory lawyers to find millions of documents through different search functions ? Run off an SQL database ? Customized by Richters IT Staff and external consultants
  • 11. CHALLENGES ? Getting all the old data into the new database without even a single record being missed out ? To regulate the level of customisation.
  • 12. SAP BUSINESS WAREHOUSE (BW) ? Required to ease the consolidation of Richters various legal entities and to give Richter a wider planning capability ? Went live in 2005. ? Replaced a 100 MB excel spreadsheet containing financial information. ? Helped in reducing the time required to consolidate all the financial data to less than a day. ? BWs close integration with other SAP basic financial modules gave it a competitive edge over other business intelligence products.
  • 13. SAP EXPANSION ? 2002: SAP financial modules (FI, CO, AM) launched at Romanian affiliate (Armedica) ? 2003: A dedicated team of 12 SAP specialists added new modules QM, APO, HR to Hungarian operations. ? 2005: Dedicated servers for Romanian operations were moved to Romania because of inconsistent network connectivity. ? SAP expanded into Polish affiliate.
  • 14. SAP EXPANSION TO POLAND ? Richters IT team setup 10 servers for 4 SAP Modules (FI, CO, AM and SD) ? Servers later shifted to Poland upon completion Challenges: ? Language Barrier between Poland and Hungary caused inconsistency.
  • 15. Snapshot of IT Governance as of 2007 IT Governance IT Infrastructure Technology Network Hardware Software & Procurement ITs support of business processes Organization of IT department at Hungarian head office
  • 16. ? IT 1- year plan, which was presented in June every year. ? Developed by: Szucs + other IT specialists. ? Focus: How IT would support Richters business processes by stipulating ongoing maintenance projects, investments and changes to infrastructure & staffing. ? Major infrastructure decisions: Szucs ? Affiliate level: Plans were presented by affiliates CEO during June of each year. ? For larger projects ? Steering Committee = Head of each dept + Szucs + IT Specialist + External consultant
  • 17. INFRASTRUCTURE ? Entire company connected via VPN (Virtual Private Network). ? Formed major policies to reduce misuse of Internet. ? Total 130 servers ? 110: Located at companys HQ in Budapest ? 20: Affiliates ? 120 servers (Windows) + 10 servers (Unix) ? Over 6000 PCs ? Warehousing trucks with bar code technology. ? No mainframe
  • 18. BUSINESS PROCESS SUPPORT ? Senior management decides the implementation of SAP modules for major projects. ? Several weighted factors were considered: ? Cost ? Projected savings ? Improvement to processes
  • 20. QUESTION 1 ? Expansion of infrastructure, servers and database. ? Problem of increased sales volume. ? Outsourced the help desk. ? Outsourcing the new technology ???
  • 21. QUESTION 2 ? Centralization of IT in Hungary ? IT infrastructure in Romania ? Cost and Benefits of IT infrastructure ? Failure and Risk Management ? Expansion of Company with Centralization???