WIXLIB

International Journal of Scientific and Research Publications, Volume 11, Issue 2, February 2021ISSN 2250-3153636Bangladesh Pharmaceutical Industry: A Research onFinancial Performance Based AnalysisMd Saikat Hosen*, Md Shohidul Islam*, Alam Rafikul**Master of International Business, College of Management,Capital Normal University, Beijing, CHINA.DOI: 10.29322/IJSRP.11.02.2021.p11081Abstract- The research applies performance evaluation ofpharmaceutical company in Bangladesh. It means evaluate howwell the company performs. The main aim is achieved throughratio analysis of four pharmaceuticals (Beacon, ACI,GSKSmithkline and Square pharmaceutical Limited) companiesin Bangladesh. The main data collection from the annualfinancial reports on Beacon, ACI, GSKSmithkline, and Squarepharmaceutical companies in 2014 to 2019. The differentfinancial ratios are evaluated such as liquidity ratios, assetmanagement ratios, profitability ratios, market value ratios, debtmanagement ratios, and finally measure the best performanceamong the Four companies. The mathematical calculation wasestablishing for ratio analysis among four companies from 20142019. The graphical analysis and comparisons are applyingamong Four companies for measurement of all types of financialratio analysis. The Liquidity ratio is conveying the ability torepay short-term creditors and it total cash. Asset managementratio is a measurement of how to effectively a company to useand controls its assets. A Profitability ratio is evaluating howwell a company is performing by analyzing and how profit wasearned relative to sales, total assets and net worth for bothpharmaceutical companies. Debt coverage ratio is performingthat the property insufficient to collect their mortgage for bothcompanies and market value to analysis their future market valueof the stock market. Overall analyses are measurement the bestone among Beacon, ACI, GSK Smithkline and SquarePharmaceutical Limited Companies.Index Terms- Financial Performance, Altman Z-Score, Commonsize, Pharmaceutical Industry, Bangladesh.I. INTRODUCTIONPerformance evaluation of a company is usually related to howwell a company can use its assets, share-holder equity andliability, revenue, and expenses. Financial ratio analysis is one ofthe best tools of performance evaluation of any company,(Hosen, 2020). In order to determine the financial position of thepharmaceutical company and to make a judgment of how wellthe pharmaceutical company efficiency, its operation andmanagement and how well the company has been able to utilizeits assets and earn profit. The pharmaceutical industry inBangladesh is one of the fastest-growing sectors, which is on thebrink of attaining self-sufficiency in meeting the country’sdomestic demand. Dominated mainly by the local manufacturerswith their market share of around 87% and the rest by themultinational companies, the export earnings by the drugmanufacturing firms now stand at approximately 27.54 millionto more than 90 countries globally (Haque & Islam, 2013).Pharmaceutical sector of Bangladesh is the third largest industryin terms of contribution to the government’s revenue. There areabout 250 registered small, medium, large and multinationalpharmaceutical companies (a little over 100 are operating) in thecountry producing around 97% of the local demand andexporting the rest, (Nath, Islam, & Saha, 2015). A growingnumber of consulting companies and individuals specialize inhelping clients identify their training needs; SquarePharmaceuticals ltd. has its own TNA techniques, (Sultana,2013). Bangladesh pharmaceutical industry has some strengths,which are as follows: (a) a strong production capacity; (b) wellestablished quality control facilities; and (c) skilled humanresources. By fully utilizing these strengths, Bangladeshpharmaceutical companies have been able to produce numerouspharmaceutical products and export their products to othercountries, (Mitsumori, 2018). Propelled by better health andeducation, lower vulnerability, and an economic boom,Bangladesh, Local producers are meeting 98% of the country’sdemand for medicines, and there are 851 factories functioning inBangladesh for the production of medicines. (Ferdous &Ishtiaque, 2013). Of them, 266 are producing allopathic drugs,26 are producing Uunani medicine, 207 Ayurvedic, 79homeopathic and 32 herbal medicines. (Islam, Rahman & AlMahmood, 2018).We have used ratio analysis for easy measurement of liquidityposition, asset management condition, profitability, and marketvalue and debt coverage situation of the pharmaceutical companyfor performance evaluation. It determines of share marketcondition of the pharmaceutical companies. It also used toanalysis the pharmaceutical company past financial performance,and to establish the future trend of financial position.This publication is licensed under Creative Commons Attribution CC 081www.ijsrp.org

International Journal of Scientific and Research Publications, Volume 11, Issue 2, February 2021ISSN 2250-3153II. LITERATURE REVIEWThe Financial Ratio Analysis for Performance evaluation. Itsanalysis is typically done to make sense of the massive amountof numbers presented in company financial statements. It helpsevaluate the performance of a company, so that investors candecide whether to invest in that company. Here we are looking atthe different ratio categories in separate articles on differentaspects of performance such as profitability ratios, liquidityratios, debt ratios, performance ratios, investment evaluationratios (Hosen, 2020). The Profitability Ratio Analysis of IncomeStatement and Balance Sheet Ratio analysis of the incomestatement and balance sheet are used to measure company profitperformance. The income statement and balance sheet are twoimportant reports that show the profit and net worth of thecompany, (Islam, 2021). The Profitability Ratios MeasureMargins and Returns such as gross, Operating, Pretax and NetProfits, ROA ratio, ROE ratio, ROCE ratio. However, hedetermines the Gross profit is the surplus generated by sales overthe cost of goods sold. He discussed about the Gross ProfitMargin Gross Profit/Net Sales or Revenue, (Islam & Khan,2019). The return on assets is an important percentage that showsthe company’s ability to use its assets to generate income. Thehigh percentage indicates that the company’s is doing a goodutilizing the company’s assets to generate income, (Sultana,2016). To perform inventory analysis and inventory turnoveranalysis to better understand a business as well as to identifyeffective inventory management. He knows that there are threetypes of business inventory: Raw Materials (RM), Work-InProgress (WIP), Finished Goods (FG), (Tazin, 2016). Fixedassets are assets that are used in the production or supply ofgoods or services and are to be used within the business for morethan one financial year. Consequently, fixed assets represent thecompany's long term income-generating assets, and they caneither be tangible or non-tangible. It includes land and buildings,plant and equipment, golf courses, casinos, football players,machinery and hotels depending on the nature of the businessunder consideration, (Sharif & Islam, 2018). The accountsreceivable is an important analytical tool for measuring theefficiency of receivables operations is the accounts receivableturnover ratio. Many companies sell goods or services onaccount. This means that a customer purchases goods or servicesfrom a company but does not pay for them at the time ofpurchase. Payment is usually due within a short period of time,ranging from a few days to a year, (Ferdous & Ishtiaque, 2013).Fixed costs are those costs that are always present, regardless ofIII.637how much or how little is sold. Some examples of fixed costsinclude rent, insurance, and salaries. Variable costs are the coststhat increase or decrease in ratios proportion to sales, (Hosen,2020). Debt collection and debt recovery tools a company guideto using debt solution tools for effective debt collection: creditinsurance, a solicitor or debt attorney or a debt collection agency.Moreover, collection of accounts receivable, debt collection ordebt recovery is an important source of a company’s cash flowand business finance. As such, learning about credit managementand debt recovery can prove vital for entrepreneurs, (Mitsumori,2018). Fast extension within the economies of China andSoutheast Asia, combined with government and privatewellbeing care activities, (Hosen, 2020). Is making majoropenings for pharmaceutical companies in this locale. In all ofthe nations looked into here, pharmaceutical showcasedevelopment comes to twofold digits over the past five a longtime and is anticipated to stay solid well into the followingcentury (Islam, 2021). The markets in Indonesia and thePhilippines, each worth well over 1 billion, developed 25% and18%, individually, in 1995. In spite of the fact that developmenthas not been as confounding in Thailand, where deals come to 900 million in 1995, deals by foreign-based companies aregrowing quickly. In Malaysia, the government is growing andprivatizing wellbeing administrations and is advertisingmotivations for the outside ventures. (Sultana, 2016). Moreover,a positive factually significant relationship between the numberof days in stock and profitability was backed proposing that firmsthat stock-up and keep up their stock levels endure less fromstock-outs and dodge challenges of securing financing whenneeded (Tazin, 2016). Working capital is the subordinate variablewhereas firm size, profitability, use, working cycle, developmentand level of economic action are autonomous variable. Workingcapital is contrarily connected with firm measure whereaspositively linked with development and level of financial actionfor UK Pharmaceutical firms. (Sharif & Islam, 2018). A ponderon Nigerian Manufacturing Companies found a critical negativerelationship between the components of working capital (DCP,APP and ITID) and productivity (ROI). The relationship andspearman’s positioning strategy indicates a weak relationship anda negative relationship between liquidity and productivity. (Hoq,Ahsan & Tabassum, 2013). Pharmaceutical division is one of thedynamic businesses in Bangladesh that have the tremendouscommitment to the economic development of the nation. TheSedate Control Act, 1982 is one of the proclaiming variables forthe quick development of this division. (Islam & Khan, 2019).METHODOLOGYWe have used the model for the performance evaluation ofpharmaceutical companies. It indicates the different steps such asselection of financial report, Identification of balance sheet,income statement and cash flow statement, ratio analysis,mathematical calculation, statistical analysis of companies,comparison of among both companies and declaration of bestone among both companies. The first step of model, we did theselection of financial report that means choose of annualfinancial report. The annual financial report presents financialdata of a company's position, operating performance, and fundsflow for an accounting period. The study period is 06 years (2014to 2019) performance of each company. We have selected thefour highly reputed companies entire the pharmaceuticalsindustry are ACI pharmaceuticalslimited, Beaconpharmaceuticals limited, Glaxosmithkline Bangladesh limited,and Square pharmaceuticals limited. Which company’sperformance is the better than other pharmaceuticals companies.We tried to select the company which level is “A” categorywhich company’s share demand is high in Dhaka stock exchangeand Chattogram stock exchange better than others company.This publication is licensed under Creative Commons Attribution CC 081www.ijsrp.org