The pharmaceutical market is growing, while invoice payments are delayed
The retail sales of pharmaceutical products in Romania are marked by a general increase of the market as well as by an increase in competition. This is the conclusion of the“Analysis of the Pharmaceutical Products Industry Trade in Romania 2008-2015”Study,conducted by the Academy of Economic Studies in partnership with Coface Romania.
- The number of operating companies experienced a steady decline in recent years, from 5,098 in 2011 to 4,736 in 2014
- The main 10 players have a 26% market share in the sector sales in 2014 compared to 17.4% in 2008
- The most important 20% companies accomplished 83% of the industry turnover
The study took into account 2008-2014 period and 2015, regarding the payment behaviour being analysed: liquidity ratios, activity and financial indicators, performance indicators, solvency, quality indicators revenue, the competitive environment as well and indicators capturing payment behaviour in the sector.
The pharmacy retail includes 8,200 pharmacies in 2014 and about 4,700 operating companies, industry largely having characteristics of a relatively mature sector. A few players dominate the competition; the profit margins are reasonable, while investments are mainly oriented to marketing, promotion and innovation.
Turnover reached the thresholds of the 3.5 BEUR in 2014, an increasing of 47% compared to 2008, when it was 2,349 MEUR. In addition, the average annual sales growth was 6.8% during 2008-2014. Furthermore, the volume of assets amounted to 2 BEUR in the past two years due to a significant decrease of nearly 20% of the volume invested capital in the industry.
The pharmacy retail is characterized by a rapid growth: assets have evolved with an average of 7% annually, between 2008 - 2014, the turnover increased by almost 7% annually, while the number of employees increased by an average of 2% per year. It is noted that the dynamics of the last period analysed, i.e. 2012 - 2014, is much lower than in 2008-2010.
The industry is highly competitive. The top ten companies accumulated sales of over 887 MEURO in 2014. Their share of sales increased from 17% in 2008 to 26% in 2014. The top three companies being Sensiblu SRL, with 8.1% market share in 2014, Siepcofar SA, 4.3% market share and Ropharma (3% market share).
The intensifying competition showed an increasing degree of concentration in the last four years, from 77% in 2011 to 83% in 2014. At the same time, in 2015 was noticed a 14% evolution of the total legal actions - commercial process - opened against companies which operates in pharmaceutical industry, in comparison with 2014.
The largest increases were among payment orders (+31), foreclosures (+13%), requests of insolvency +9%. This means in total 1,191 lawsuits, being 255 below the average 2009-2012.
Outstanding balances owed to ANAF were approx. 13 MRON at the end of 2015, up to 20% from the level in the previous year and almost three times higher compared to 2011.
These figures showed deterioration in the payment behaviour in 2015 compared to 2014, a seemingly paradoxical aspect, while the workload and the average level of profitability increased lately.
The dynamic is explained by the negative value of the cash conversion cycle, which indicates that these companies have the ability to honour their bills on time, but prefer to focus their resources towards investments in new points of temporary work and the repayment of long-term debt to banks.
Analysis of the assets rotation and current liabilities indicate an improving trend obvious in the rate of recovery, from a value of 95 days in 2012 to 55 days in 2014 and the reducing of the duration of debt term short value from 156 days in 2012 to 116 days in 2014.
“The economic and financial analysis is the art of making smart decisions in the business world. This art begins with a serious and coherent work of obtaining and processing information. Making a regular radiography of the Romanian economy is an important and ambitious project of the ASE Financial Economic Analysis and Evaluation department, and an important step is releasing of AEEF #4773 aimed at industry analysis of Pharmaceutical Affair”,Prof. Ph.D. Ion Anghel, FRICS, MAA, Head of Analysis and Evaluation Financial Economic Studies Bucharest stated.
Through the partnership between Academy of Economic Studies and Coface Romania were analysed the activity of about 5,000 companies in the industry over the period 2008-2015, obtaining useful and relevant data for the management of companies in the industry, investors, banks and financial institutions, public authorities, employers and employees and for the public.
"By developing the partnership with the Academy of Economic Studies, Coface wants to substantially contribute to the research and understanding of the business environment in which we operate, in order to fulfil the mission of our organization: helping companies to achieve sustainable development. Thus, the first survey on retail sales of pharmaceutical products, developed in collaboration with ESA, is only a first step in this direction, so will publish together a series of studies aimed to analyse other strategic sectors of the Romanian economy”,Iancu Guda, Services Director and Senior Economist Coface Romania, declared.
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