Profitability of Pharmaceutical Companies in the Visegrád Countries

Fenyves, Veronika; Nyul, Balázs; Dajnoki, Krisztina; Bács, Zoltán; Tömöri, Gergő

doi:10.14254/1800-5845/2019.15-4.8

Cited by 12 publications

(11 citation statements)

References 31 publications

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“…The pharmaceutical industry as an economic sector is one of the most profitable and largest industries in the world, but it has not been protected from the global financial crisis and its harmful effects [14]. According to international estimates, global pharmaceutical sales are projected to reach $ 1.17 trillion by 2021, and the number of economic entities in the pharmaceutical industry will approach 316 thousand in 2019 [8]. An important research [16] in the pharmaceutical field focuses on the evolution of the pharmaceutical field in Romania for the period before the financial crisis and the period after the crisis.…”

Section: Discussionmentioning

confidence: 99%

“…The biotechnology sector, but especially the pharmaceutical sector is among the most innovative subsection of industry in Europe [10]. According to international estimates, global pharmaceutical sales are projected to reach $ 1.17 trillion by 2021, and the number of economic entities in the pharmaceutical industry will approach 316 thousand in 2019 [8].…”

Section: Problem Statementmentioning

confidence: 99%

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Analysis and Evolution of Profit and Net Profit Margin in the Pharmaceutical Industry in Romania

Hada

Mihalcea

2020

International Conference Innovative Business Management &Amp; Global Entrepreneurship (IBMAGE 2020)

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Profit is considered to be an important source of financing the financial activity of any economic entity. The main purpose of any activity is to make a profit. As a significant part of equity, employees can be remunerated from profit (as part of their profit share) and also shareholders/associations can be also remunerated in the form of distributed dividends. The appreciation of financial performance is closely linked to the ability to make a profit. In this sense, the main purpose of this article is to analyze and describe the evolution of profit and net profit margin, as an indicator of performance appreciation, for economic entities in the field of manufacture of basic pharmaceutical products in Romania. The basis of the analysis is the annual financial statements for a number of 46 entities for the period 1999-2018 (20 years). The results of the research show that, from the point of view of the evolution of the number of entities that register profit, we are witnessing an increase from 12 entities in 1999 to 23 entities in 2018. However, referring to the increase in the number of entities from a total of 17 in 1999 to 46 entities in 2018, we notice that in 2018 only half of them register a profit. The other half falls into the category of less performing entities due to losses. However, after a period of financial decline (2008-2009) we see a gradual increase in profits recorded by economic entities in the pharmaceutical industry in Romania.

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Section: Discussionmentioning

confidence: 99%

Section: Problem Statementmentioning

confidence: 99%

Analysis and Evolution of Profit and Net Profit Margin in the Pharmaceutical Industry in Romania

Hada

Mihalcea

2020

International Conference Innovative Business Management &Amp; Global Entrepreneurship (IBMAGE 2020)

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“…Profitability trends have improved in the last year in terms of the most important corporate indicators (Fenyves et al 2019). By measuring the revenue-to-cost ratio, prof-itability indicators such as gross, net or operating profit margin (Paramasivan and Subrahmanyan 2020) reflect a company's ability to grow, although these indicators may already be double-edged swords for a non-profit actor involved in medication research, as their low or high values can generate criticism from the community or the governing body, respectively (Nowiczki 2018).…”

Section: Impact Of Profitability On Financial Investments In the Pharmaceutical Industrymentioning

confidence: 99%

The Effect of Financial Risk Taking on Profitability in the Pharmaceutical Industry

2021

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The significance of the pharmaceutical and commercial sectors in the national economy has noticeably intensified, as a result of the COVID-19 pandemic. The main objective of this study was to gain a better insight into the main management characteristics of the actors in the sector. It was assumed that more efficient management of financial investments (acquisitions, loans) caused higher risk financial investment decisions in the pharmaceutical industry in order to place companies in a better position in view of equity investors, illustrated best as the profitability of equity (ROE). This paper examined one possible means of covering the extremely high indirect costs (R&D, marketing) of pharmaceutical companies, also justified by the restructuring of the industry and the effect of investments in long term financial instruments on the ROE of the same business entities. Built on the EMIS database, the analysis only used the indicators of those companies operating in the pharmaceutical industry in Visegrad countries for 2019. The authors sought to draw conclusions about possible management characteristics of the entire pharmaceutical sector of these countries using cluster analysis and linear regression. The initial assumption, or main hypothesis of the study, was that in one of the countries studied or for those businesses operating above a certain revenue category, the impact of a company’s risk-taking (which can also be expressed in terms of asset-based financial income) on profitability, may appear or intensify. The performed studies did not show a strong correlation between the explanatory and profit variables either at the national level or at the level of groups formed by regional market position. In other words, the extremely high level of indirect costs were mostly covered by sales of successful cash products, and companies not indebted to suppliers undertook significant risks in the field of financial investments, thereby offsetting the positive impact of the latter on earnings.

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“…Information on a company's performance, is important for evaluating changes in financial resources that the company control it in the future and for prescribe the ability to make cash flows with existing resources, and based on performance formulates reasoning regarding the efficiency with which the enterprise can use new resources [3]. The determination of profitability indicators has a special significance in the activity of industrial financial analysis [11].…”

Section: Problem Statementmentioning

confidence: 99%

Analysis and Evolution of Profitability in the Pharmaceutical Field in Romania

Hada

2020

International Conference Innovative Business Management &Amp; Global Entrepreneurship (IBMAGE 2020)

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The pharmaceutical industry is an important field of activity that contributes to the diagnosis, treatment, maintenance of the health of the population. The need of pharmaceuticals has led to an increase in both the number of drug manufacturers and the number of distributors. A significant part of the specialized studies deals with the problem of the profitability of the pharmaceutical industry. The study of the financial performance of the economic entities in the pharmaceutical field in Romania is a necessary concern in the conditions of a progressive annual increase of the profitability of this sector. The main purpose of this paper is the analysis and presentation of the evolution of profitability indicators (return on assets, return on capital, return on sales) as part of the activity of assessing the financial performance of economic entities operating in Romania in the pharmaceutical industry (manufacturing of basic pharmaceutical products - CAEN code 2110). Profitability indicators were analyzed for a number of 46 entities in the pharmaceutical industry in Romania for a period of 20 years (1999-2018). We are talking in this case about a turnover of 1.1 Billion lei (249.2 million euros), a number of employees of 3,098 employees, a profit of 135.2 million lei (30.7 million euros) - representing 0.12% of the net profit made in Romania. The research results show that in the period 2008-2009, the financial crisis left a strong mark on the evolution of profitability in the pharmaceutical industry. However, during the 20 years we talk about a positive evolution, in the sense of increasing the profitability of this field, which justifies the increase in the consumption of pharmaceuticals products.

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Profitability of Pharmaceutical Companies in the Visegrád Countries

Cited by 12 publications

References 31 publications

Analysis and Evolution of Profit and Net Profit Margin in the Pharmaceutical Industry in Romania

Analysis and Evolution of Profit and Net Profit Margin in the Pharmaceutical Industry in Romania

The Effect of Financial Risk Taking on Profitability in the Pharmaceutical Industry

Analysis and Evolution of Profitability in the Pharmaceutical Field in Romania

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