LIFE SCIENCES

OTC transformational redesign delivers positive

ROI of 1.8 million in profit and 3.5 million in cash
flow for biopharmaceutical major
About the client

In a conscious move toward becoming a more intelligent enterprise, a

Major biopharmaceutical company

(OTC) assessment of its European export entities and U.S. operations to

Industry

help the OTC process become a value-add business partner within the

Life Sciences

Enterprise Process (SEPSM) methodology for its logical, holistic approach

Business need addressed

Understand, define, and manage an
effective and efficient Order to Cash

global biopharmaceutical company wanted an end-to-end Order to Cash

company. In a competitive bid process, they chose Genpacts proven Smart

and process-level granularity. A six-week end-to-end assessment provided
transparency into the entire OTC function and resulted in 1.8 million
increased profit annually and 3.5 million additional cash flow impact for
our client.

(OTC) process in support of the function

becoming a value-add business partner
for the organization.

Business challenge

Genpact solution

This major biopharmaceutical company sells products to third-party

End-to-end OTC process redesign to drive

and other pharma manufacturing companies mainly located in Eastern

greater transparency, smarter processes,

Europe, based on royalties, and delivers export orders to its international

and more effective business strategies.

clients. The client utilized different distribution models across the different

Business impact
Increased profit by 1.8 million annually
through improved recovery of invalid
deductions and disputes
11% savings from improved cash flow
and 6% efficiency savings
Improved cycle time for query
resolution
Improved controllership and data
quality built into ERP
Enhanced controllership of cash
received

customers such as wholesalers, private and public hospitals, pharmacies,

countries:
Pull Strategy: Actual customer orders specifically requested from clients
manufacturing units
Push Strategy: Third-Party Logistics (3PL) ownership model: Products
manufactured and sent to 3PLs based on historical sales and forecast
Push Strategy: Client ownership model: Products manufactured and
sent to 3PLs without change in ownership. Invoicing and collections
responsibility lay with the client, but activity was managed by the 3PL
These models were implemented using fragmented systems, tools,
and structures. The overall organization was decentralized, with local
accountability down to the functional level and no end-to-end visibility
into the OTC process.
In addition, the European OTC processes for third-party customers did not
consistently include or apply critical best practices across different entities.
A further lack of analytics resulted in undefined business strategies, while
manual processing created long turnaround times.

In the U.S., processes were highly automated, but gaps in master

assessment to understand improvement opportunities within its

data creation and dispute management threatened customer

Gross to Net accrual and processing activities.

satisfaction, compliance, and cash and cost optimization.

Genpact recommendation

Although the client embraced end-to-end business process

management, they needed to better understand their OTC

Genpact presented detailed process and technology

function in order to support Finances global contribution to the

recommendations that formed a comprehensive OTC

enterprises goals. The clients overall objective was to deliver

transformation roadmap, along with a detailed priortization and

tangible, sustainable benefits to the enterprise on key business

implementation plan:

outcomes such as cash flow, customer satisfaction, profit, and

compliance.

Recommended a template for the OTC cycle to improve

key metrics such as Days Sales Outstanding (DSO), dilution,

Genpact approach

compliance, and customer satisfaction

Genpacts goal is to help our clients become more innovative,

better able to adapt to challenges, and more globally

Designed a centralized, standardized, and automated process

across export businesses instead of the current five entities
managed in five different ways

effectivewhat we call an intelligent enterprise. For this

client, we used our SEPSM framework to conduct a thorough

Implemented metrics for performance benchmarking and

analysis of their OTC operations and create an overall

management across OTC, including backlog metrics for

improvement roadmap. We used this granular methodology to

contracts and new metrics for SAP/Business Intelligence

thoroughly diagnose the end-to-end OTC process and identify

opportunities for improvement such as:

Conducted statistical modeling on multiple linear regression

variables in 8-10 major revenue debit types to reduce

Processes were decentralized and there was a lack of

variation and true-up adjustments

enabling technologies such as workflow

Increased visibility into unapplied cash and payment method

There was no visibility into key metrics in cash application,

optimization

such as unapplied cash and payment optimization

Implemented SAP usage enhancements for better order

Key metrics to manage and measure backlogs in contracts

management, billing, cash application, claims management,

were not implemented

and dispute resolution processes

SAP features that could have driven more process efficiency

were not fully implemented

Genpacts holistic strategy for addressing process gaps and

improving end-to-end performance resulted in a phased

This successful European assessment convinced the client

implementation of the recommendations based on priority for all

of Genpacts capabilities. The client then requested a U.S.

business units across this clients U.S. and European export business.

Order to Cash transformational redesign

1. Compliance

2. Customer satisfaction

3. Cash & cost optimization

3.5 million in WC
1.8 million in profit**
200K

1.8 million
3.5 million

Cash flow
improvement

700K

Profit impact

Net incremental
cost

Operational
efficiency

Overall
impact
**Payback = 5 months

Export business

U.S. business

Business impact
The clients goal of making OTC a value driver for the enterprise

6% efficiency savings
Better controllership and visibility

is well underway. Benefits derived from the dual European and

Genpact powers a more intelligent enterprise through process.

U.S. assessments thus far include:

Our combination of smart analytics, processes, and technologies

Increased annual profit of 1.8 million

Cash flow impact of 3.5 million
11% savings from improved cash flow

helps our clients become not just more efficient but also
more effective in serving customers, driving higher customer
satisfaction, and growth.

About Genpact

For More Information, Contact:

Genpact Limited (NYSE: G) is a global leader in transforming and running business processes and
operations. We help clients become more competitive by making their enterprises more intelligent:
more adaptive, innovative, globally effective and connected. Genpact stands for Generating Impact for
hundreds of clients including over 100 of the Fortune Global 500. We offer an unbiased combination
of smarter processes, analytics and technology through our 60,000+ employees in 24 countries, with
key management based in New York City. Behind Genpacts passion for process and operational
excellence is the Lean and Six Sigma heritage of a former General Electric division that has served GE
businesses for 15+ years.

Sajeesh Kumar
Assistant Vice President, OTC Practice
India: +91 974 257 7277
sajeesh.kumar@genpact.com

For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook and LinkedIn.
2013 Copyright Genpact. All Rights Reserved.

Julia Pshenichnaya
Assistant Vice President, Sales & Operations
US: +44 782 790 1148
Julia.pshenichnaya@genpact.com