Evaluating the financial performance of Companies from the Pharmaceutical Industry

• Author: Baba M. C.
• Pages: 223-228

Bulletin of the Transilvania University of Braşov

Series V: Economic Sciences • Vol. 9 (58) No. 2 - 2016

Evaluating the financial performance of Companies

from the Pharmaceutical Industry

Mirela Camelia BABA1

Abstract: The pharmaceutical industry has become a highly competitive environment, which

is why performance represents the key element to stay on a market. Evaluating the

performance of the economic entities from this sector is of high importance for the

management, shareholders, trading partners and creditors. This study focuses on

investigating and analyzing the financial statements for 12 drug producing companies in

Romania. The analysis is based on data corresponding to the period 2008-2015.

Key-words: financial statements, performance, pharmaceutical industry

1. Introduction

The pharmaceutical market refers to the industry of manufacturing and marketing

drugs. In the past years the consumption of drugs has increased per inhabitant, the

period 2008-2015 being quite favorable for the pharmaceutical market from

Romania. In times of crisis and economic uncertainty, the companies from the

pharmaceutical sector have registered economic growth, but given the fact that

competition is quite fierce, performance remains an important criterion for

maintaining your company on the market. Also, it can not be neglected the structure

of the analyzed sector, because on one hand it can determine the sectors' competitive

intensity and on the other hand its average profitability (Drumea, 2004).

Dincă and Dincă (2014) have analyzed financial performances for five

Bucharest stock exchange listed companies using an econometric model with data

for 2014-2011. The authors found that 64% of return on investment’s (ROI)

evolution was explained by the influence exerted by the determinants of the cash

conversion cycle, by return on assets and by the relative modification of the sales

turnover. Deari and Dincă (2015) have analyzed financial performances of 40

selected Romanian companies for the 2009-2013 period. They found that the

companies with higher current to total assets ratio have higher assets turnover and

ROA. The performance of an economic entity can be analyzed by using its financial

1 Transilvania University of Braşov, mirela.baba@unitbv.ro