Dividing the Business, Consolidating the Value
An 'Open Stage' session by Michel Verholen, Director, Global Treasury Centre, Zoetis
In addition to the formal plenary sessions and workshops, the Cash Management University launched its ‘open stage’ in 2016 in which participants could present, engage with, and debate the issues that they were dealing with in their organisations. One of these open stage sessions featured Michel Verholen, Director of Zoetis’ Global Treasury Centre, who described how treasury had supported and reinvented itself as a result of the company’s spin-off from Pfizer. Vincent Roskam, Key accounts manager for cash management in EMEA for BNP Paribas also added his comments.
Pictured: Michel Verholen (centre)
Pfizer’s animal health business developed substantially during the sixty years from the 1950s, when the corporation first entered this sector, through to 2012 when the decision was made to spin off the business into a separate company, Zoetis. Throughout its history, both as part of Pfizer and as an independent corporation, Zoetis has been characterised by its innovative approach to research, acquisition and international growth, developing the medicines, vaccines and diagnostics that keep both livestock and companion animals safe and well across more than 100 countries. Today, we generate $4.8bn in annual revenue through more than 300 products for eight animal species, and employ a workforce of more than 9,000 globally.
Building a treasury framework
Treasury was inevitably one of the business functions most affected by the decision to spin off Pfizer’s animal health business into Zoetis. Not only did we have to manage the process of dividing up assets and liabilities, and setting up new bank relationships, accounts and liquidity structures without interrupting our core business activities, but we also needed to establish a treasury function that could manage the ongoing needs of a large, global, acquisitive corporation.
We had the opportunity to leverage Pfizer’s technology platform for a period of time following the spin off, but we needed to design a new treasury function that would support both short- and longer-term objectives. We aimed to automate our treasury processes wherever possible by implementing a single treasury management system (TMS) which would capture all of our treasury transactions, provide a cohesive control environment and facilitate the smooth integration of transactions between our banks and our internal systems. Pfizer has a highly centralised treasury organisation, but we wanted to take this even further by implementing a fully centralised treasury and banking model. This would give treasury full control over cash and financial risk management processes, and facilitate automated cross-border cash concentration, working with a maximum of four regional cash management banks around the globe. We had a three-year rollout programme for a global ERP, which enabled us to put in place a strategy to fully standardise and automate straight-through processing (STP), leveraging SWIFT for bank communications, and achieve a consistent approach to managing exposures and cash flow forecasting information.