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Analysis of financial statements of Sanofi Aventis.

Par   •  14 Novembre 2017  •  5 219 Mots (21 Pages)  •  822 Vues

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- Import Duties

Many firms in pharmaceutical industry tend to import various raw materials along with other ingredients. In case where government raises the import duties, the imports will become expensive which will in turn increase the cost of production of these firms resulting into lower profits.

Problems associated with Pharmaceutical Industry

- Uncertainty in Prices

With prices fixed by the government, the pharmaceutical industry faces uncertainty as to the pricing of its products. The government imposed a price freeze across a majority of the product categories in December 2001. A price increase was granted for only some of the products recently despite the cost pressures faced by the industry on account of inflation and depreciation of the PKR.

- Uncertainty of Quota Allocation

There are certain products for which raw materials are imported and these imports are controlled and regulated by the Government (Narcotics Division) and in few instances these raw materials were banned for some months resulting in the shortage of products that required these materials.

- Reliance on the third party

A major portion of raw material, active ingredients and medical devices are supplied by third party suppliers however, if these suppliers are facing financial difficulties then there is a risk of supply interruption and specific quality material will not be supplied.

- Productivity of counterfeit products

There are instances where counterfeit products are distributed illegally through various channels in the market. In case of a negative reaction these products can materially affect the health of a patient and their confidence in an authentic product.

- Product liability claims

This is one of the most significant problems that firms in this industry face. Many claims for injuries have been alleged against pharmaceutical firms for which they have to pay for the damage caused by their medicines.

- Risk of Non Payment

Most of the pharmaceutical industry is subject to the risk of nonpayment mainly from distributors, government institutions and hospitals. So as to minimize this risk, many firms sell their products on cash basis.

INTRODUCTION TO SANOFI AVENTIS

Sanofi is ranked as the seventh largest pharmaceutical company and fourth largest by prescription in sales in 2014 with its head quarters located in Paris, France. With strong presence in the country, the company employs over 1000 workers to improve the healthcare conditions across Pakistan. They make sure that benefits are delivered to people through their quality medicine that caters to different age groups. Its manufacturing facilitates are environmental friendly and most modern according to the Good Manufacturing Practices (GMP).

Today Sanofi has a market share and growth rate of 4% and it offers a wide range of treatment and prevention solutions to fulfill the patients’ needs. In 2013 the company’s production was mainly of Consumer healthcare products and vaccines that registered a sales growth of 1.89% as compared to the previous year. Recently, Sanofi also penetrated the market of Afghanistan Pharma and launched its new product and registered a sales growth of 45.9% backed by increased volume of established brands.

Sanofi’s product portfolio includes life saving medicines in different classes; these are:

- Oral anti diabetic

- Insulin

- Oncology

- Pain management

- Allergy management

- Anti biotic

- Diarrhea

- Gastric disease

- Cough and cold

- Anti malaria

- Sleep disorder

- Cardiology

- Animal care drugs

For the manufacturing of these medicines both direct and indirect raw materials are used. Some if these include:

Direct Raw materials: Chemicals like Lasix substance, Gliben Clamide and Gelatin.

Indirect Raw materials: Bottles, vials, caps, PVC foil plugs and ammonium foil

SWOT ANALYSIS

Strengths

- Sanofi is one of the world’s largest producers of medicines with best of the line, cutting edge manufacturing facilities.

- Strong global presence is the major strength of the company. The company is well known for its prescription sales as it is holding the fourth position throughout the world.

- Broad product portfolio.

- It has acquired US biotech company Genzyme which has given it considerable presence of solution for uncommon diseases.

Weakness

- The profitability of Sanofi relies heavily on a few products like Ovenex and Plavix and their sudden sale decrease will have adverse effects.

- Patent of most of the drugs will expire in coming years.

- Generic products that are the main source of earning income are not being prepared according to the demand and their competitors enjoy the fruit of their sale bearing less manufacturing cost.

Opportunities

- Strong emerging markets in developed countries like Brazil, Russia, and China which can be leveraged by updating healthcare facilities.

- The company can use its globalization power to take advantage of the rapidly aging population in some countries and emerging markets.

Threats

- Growing generic competition might dilute market share and tighten profit margins.

- Government reforms to cut government spending on health care.

- Problem of counterfeit medicines in emerging

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