-- Firms realize that boosting working capital efficiency
can offset the market's current challenges, finds Frost &
Sullivan
MOUNTAIN VIEW, California,
July 29, 2015 /PRNewswire/ -- Efforts
to improve working capital efficiency are becoming entrenched in
the growth strategy of pharmaceutical firms in North America and Europe. The realization is that an effective
working capital management will ease the difficulties caused by low
sales, pricing pressures and patent cliffs. Big pharma companies
expect to invest in optimizing working capital efficiency to
bolster returns.
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Analysis from Frost & Sullivan, Working Capital
Management in the North American and European Pharmaceutical
Industry (https://www.frost.com/neaf), reveals companies in the
U.S. effectively managed to reduce the cash conversion cycle by
44.2 percent between 2012 and 2013. European companies were not as
successful, managing to reduce the cash conversion cycle by 26.2
percent between 2012 and 2013. The cash conversion cycle is an
indicator of working capital efficiency.
For complimentary access to more information on this research,
please visit: http://bit.ly/1bKUs6c.
"Business models in the North American and European
pharmaceutical industry are evolving; placing emphasis on achieving
working capital efficiency by focusing on outsourced manufacturing
and new market entry," said Frost & Sullivan Senior Research
Analyst Saneesh Edacherian.
The following issues highlight the importance of effective
working capital management.
Decreasing Profitability: Global economic slowdowns,
expiring blockbuster drug patents, intensifying competition and
lowering public spending on drugs affect the profitability of
participants in the pharma and biotech industry, spurring the need
for effective working capital management.
Fizzling Innovation Model: Leading pharmaceutical
manufacturers are facing a twofold crisis. The number of
blockbuster drugs about to lose their patents is alarmingly high,
and pipelines are empty. With no new sources of revenue emerging,
cutting costs through working capital management is crucial to
optimize expenses.
Price Premium Pressure: Strict regulations and diverse
healthcare models across geographies are compelling drug companies
to cut costs, making working capital management a necessary
ingredient in their strategic mix to sustain profits.
Access to New Markets: Working capital management will
gain further significance as major market participants in
North America and Europe look to developing economies for merger
and acquisition opportunities.
"Chinese, Indian and Latin American countries constitute large
unexplored markets for drug makers," concluded Edacherian. "The
development of research centers and manufacturing plants will
require adept working capital management, and a surefire way to
ensure a smooth entry into these regions."
Working Capital Management in the North American and European
Pharmaceutical Industry is part of the Business and
Financial Services
(http://ww2.frost.com/research/industry/business-financial-services)
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Working Capital Management in the North American and European
Pharmaceutical Industry
NEAF-F1
Contact:
Kayla Belcher
Corporate Communications – North
America
P: +1.210.247.2450
F: +1.210.348.1003
E: kayla.belcher@frost.com
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