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Sector                 : Health care
Sub Sector         : Pharmaceuticals

This comparison would look into companies that manufacture and distribution of pharmaceutical products. There are five (5) companies in this industry:


Competitiveness

Market shares is an importance indicator to determine the competiveness of the company. Total revenue make from manufacturing and distribution of pharmaceutical products for the year 2018 is RM 3,994,481,510.

COMPANY
REVENUE (PHARMACEUTICAL PRODUCTS) 2018 (RM)
MARKET SHARE (%)
643,557,510
16.11
498,733,000
12.49
178,476,000
4.47
2,384,956,000
59.71
288,759,000
7.23
PHARMA had the highest market share in manufacturing and distribution of pharmaceutical products in 2018 which is 59.71 %.

Operational

For operational, operating income of the companies had been review. Operating income determine how much the companies’ revenue had turn into profit after reduction cost of operating expense.

Besides operating income, operating margin ratio is also calculated. Companies with higher operating margin ratio have more probability to survive in today financial crisis. The median operating margin ratio for this group of companies for 2018 is 11.57 %.

COMPANY
2018 OPERATING INCOME (RM)
2018 OPERATING MARGIN RATIO
68,823,824
10.69
65,824,000
13.09
20,652,000
11.57
106,292,000
4.46
43,537,000
15.08
PHARMA is having the highest operating margin ration in this industry.

Sustainability

For the sustainability of the business, debt of the companies is being review. There are two criteria to look at interest coverageratio, which is used to determine how easy the companies able to pay off the interest of outstanding debt and debt ratio. The median debt ratio for 2018 is 0.37.

COMPANY
2018 INTEREST COVERAGE RATIO
2018 DEBT RATIO
43.02
0.28
8.45
0.42
4.35
0.37
2.95
0.72
10.69
0.22
AHEALTH and YSPSAH  are good companies for sustainability because they has either high interest coverage ratio and low debt ratio.

Summary

In summary a point is given to each company to evaluate each company competitiveness, operational and sustainability. Points given are as follows:

Competitiveness

Criteria
Point
Greater than 50 % Market Shares
5
30.01 % - 50.00 % Market shares
4
10.01 % - 30.00 % Market shares      
3
5.01 % - 10.00 % Market shares        
2
1.00 % - 5.00 % Market shares           
1
Less than 1%
0
Operational

Criteria
Point
Greater than 15.00  Operating Margin
5
12.51 – 15.00 Operating Margin
4
10.01 – 12.50 Operating Margin        
3
5.01 – 10.00 Operating Margin          
2
1.00 – 5.00  Operating Margin           
1
0.00 – 1.00 Operating Margin
0
Less than 0
Disqualified
Sustainability

Criteria
Point
No Financial Cost
2
Greater than 10 Interest Coverage Ratio
1
Less than 10 Interest Coverage Ratio
0
Criteria
Point
Less than 0.30
3
0.30 – 0.40
2
0.40 – 0.50
1
Greater than 0.50
0
COMPANY
Competitiveness
Operational
Sustainability
Total
3
3
4
10
3
4
1
8
1
3
2
6
5
1
0
6
2
5
4
11
From the evaluation above, YSPSAH (11 points) and AHEALTH (10 points) are worth for further evaluation.



http://ivkls.blogspot.com/2020/04/industry-comparison-pharmaceuticals.html
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