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Pfizer enhances treasury efficiency through treasury transformation

Pfizer Inc. is a research-based, global biopharmaceutical company which applies science and global resources to improve health and well-being at every stage of life. Its diversified global healthcare portfolio includes human biologic and small molecule medicines and vaccines, as well as many of the world’s best-known consumer products.

Pfizer

The client’s challenge

Pfizer’s treasury team faced considerable challenges when it came to managing cash operations across Asia Pacific, with a large number of bank accounts across multiple banks in 15 countries where Pfizer has a presence.

Pfizer was looking to embark on a treasury transformation across Asia, with the aim of:

  • Centralising treasury operations in the region and shifting operational treasury processes to a shared service center (SSC) model.

  • Aligning the enterprise resource planning (ERP) migration along with the SSC migration and regional treasury model deployment.

  • Optimising the use of the company’s in-house bank (IHB) in Dublin, Ireland for foreign exchange (FX) management, liquidity and investments.

The team wanted to streamline the company’s bank account structures and pooling mechanisms by moving to a single banking partner. Standardisation would be achieved through the adoption of ISO 20022 as the global payments format. Also, a single ERP system would be adopted to unify business processes.

The J.P. Morgan solution

Pfizer partnered with J.P. Morgan to establish the SSC, also known as the Global Financial Solution Asia (GFS), in Dalian, China which supports the group’s operations across Asia Pacific as well as Pfizer’s global intercompany settlements.

By leveraging a single banking platform through J.P. Morgan, Pfizer eliminated manual processes and optimised the company’s technology infrastructure to achieve greater cash visibility, gain access to real-time information, and develop better cash forecasting and insights into its business operations.

Pfizer’s SSC in China manages its in-country bank account structure and in-country cash pooling, as well as providing forecasts on cash flow and FX exposure. The Dublin treasury centre manages the regional multicurrency notional pool, and with its end-to-end trading infrastructure, is also responsible for executing FX hedging and investment transactions. The treasury team further established the corporate policy mandating FX transactions and in-country liquidity investments.

In China, the opportunity to set up centralised collections and payments with netting and automated cross-border cash concentrations as well as intercompany lending transactions in foreign currency and Renminbi (RMB) became possible following a change in regulations in 2014. Pfizer seized this deregulation opportunity and partnered with J.P. Morgan in an end-to-end submission for approval of their application to the State Administration of Foreign Exchange (SAFE) to set up a centralised facility. Pfizer obtained formal approval in September 2015, and implemented its first US dollar (USD) on-behalf-of (OBO) transaction in record-breaking time in mid-November 2015.

The Result

J.P. Morgan’s solution was well-coordinated among Pfizer’s units including the international treasury teams in New York, Dublin and Singapore; the Global IHB in Dublin; the GFS in Dalian; and the financial teams across the region.

With an in-depth understanding of Pfizer’s business, J.P. Morgan was able to help Pfizer implement best market practices for its regional treasury operations, provide detailed advice that took Pfizer’s control requirements and treasury objectives into account, and ensure compliance with end-to-end processing requirements.

Pfizer has progressive plans to optimise its treasury management further as it grows its business in China, and the tailor-made USD cross-border centralised payments and collections structure will be fundamental in the development of its future plans.

The integrated and award-winning1 solutions have provided Pfizer with an optimal structure for its cash and treasury management, streamlined systems and processes, and allowed Pfizer to maximise the efficiency of their global and regional treasury operations.

Footnotes
  1. Pfizer Inc. was an award winner in the Treasury Today Adam Smith Awards 2013 ‘Asia Pacific Regional Award for Best Practice’ category

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