RICHTER: INFORMATION TECHNOLOGY AT HUNGARY’S 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 company’s specialty and brought many reforms.

RICHTER IN 2007

Hungary’s 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 Management3. Controlling-More integration among functional department4. 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 Richter’s 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 Richter’s 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. BW’s 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

Richter’s IT team setup 10 servers for 4 SAP Modules (FI, CO, AM and SD) Servers later shifted to Poland upon completionChallenges: Language Barrier between Poland and Hungary caused inconsistency.

Snapshot of IT Governance as of 2007

IT Governance

IT Infrastructure

Technology

Network

Hardware

Software & Procurement

IT’s 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 Richter’s business

processes by stipulating ongoing maintenance projects, investments and changes to infrastructure & staffing”.

Major infrastructure decisions: Szucs Affiliate level: Plans were presented by affiliate’s 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 company’s 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???

Thank you