Financial Analysis and Market Comparison between Dar Al Dawa Company

and Jordan Pharmaceutical Manufacturing Company

Background
1. Dar Al Dawa
Is a MENA-wide leader in pharmaceutical and consumer health products, with a history of more than
40 years, we are a trusted leader and competence center with a reputation for exceptional quality.
As a fully integrated pharmaceutical company, we have a long established customer-centered
approach to developing, producing, marketing and commercializing high-quality affordable medicines
and wellness consumer products in emerging markets, with more than 900 people serving patients in
more than 40 countries throughout Middle East, North Africa and Europe.
Dar Al Dawa possesses a high-performance business drive combining unparalleled experience,
comprehensive capabilities across all management, development, production, technology, marketing
and commercial teams and business functions.  According to Jordan’s Drug owners association, Dar
Al Dawa is ranked first in 2013 considering the number of new drug registration submissions.
The company generated gross revenues of US$60 million for the fiscal year ended Dec 31, 2012, an
increase of 5.6% versus 2011 results.
History
Dar Al Dawa’s history dates back more than 40 years, during which time it has transformed itself
from a small pharmaceutical company to Jordan’s second largest producer of high-quality generic
and branded pharmaceuticals and regional leader in anti-infectives and differentiated products.
Throughout our long and distinguished history, we have been led by dedicated and visionary
individuals who have always aspired to be one step ahead and who have delivered success through
high-quality products and services.
Products
Our core business lies in the development, production and distribution of high-quality, affordable
generic medicines and wellness products. We offer more than 100 products in more than 200 dosage
forms across more than 20 therapeutic areas worldwide and are a leading provider of differentiated,
value-added products.
Business
Dar Al Dawa is a MENA-wide leader in pharmaceutical and consumer health products. With a history
of more than 40 years, we are a trusted leader and competence center with a reputation for
exceptional quality. As a fully integrated pharmaceutical company, we have a long established
customer-centered approach to developing, producing, marketing and commercializing high-quality

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affordable medicines and wellness consumer products in emerging markets, with more than 900
people serving patients in more than 40 countries throughout Middle East, North Africa and Europe
Corporate Governance
Dar Al Dawa has a firmly established policy of conducting our affairs in compliance with the letter and
spirit of the law and adhering to the principles of business ethics. Our policies are designed to ensure
that the company conducts its business for the benefit of all its stakeholders – our customers,
employees, shareholders, suppliers, and host communities. The framework will be certified this year.
Our Business Conduct Guidelines reaffirm our commitment to integrity as the cornerstone of our
business practice. They are intended to remind us of our legal and ethical obligations. All employees,
directors, contract workers, and others who act on behalf of Dar Al Dawa are expected to abide by
and uphold these guidelines.

2. Jordan Pharmaceutical Manufacturing

Is an innovative manufacturing company operating in diversified sectors within the healthcare
industry. It was established in 1978 as a brad-generic developer and producer and this remains the
core operation of the company.
During the early years since establishment, the corporate adopted innovation as the major growth
driver. As direct result of this innovation, operations were diversified outside the traditional generic
pharmaceutical industry by spinning out mature technology platforms into subsidiaries with
independent management and resources. JPM holds the regional benchmark in innovation with
more than 70 patents. JPM operations span:
• Core branded generic pharmaceutical business
• Natural products through the Delass subsidiary
• Biotech diagnostics through the AraGen subsidiary
• Novel recipients and drug delivery systems through the Suwagh subsidiary

Social and environmental responsibilities feature highly in the corporate values. This responsibility
transcends boarders and the corporate is now a recognized champion of South-South cooperation,
providing knowhow and training to regulators and manufacturers around the world. JPM is the most
prolific provider of technologies in the region boasting tens of licensing partnerships with
manufacturers across the three continents: Asia, Africa and Europe.

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 Mission

We enable quality health care for all people, through diversified and innovative contributions to the
global health care industry.

Vision
JPM will be a recognized innovative and creative provider of diversified quality health care products
and solutions with effective presence in developing markets;

 through efficient and focused industrial operations, JPM will provide affordable quality
pharmaceutical, natural and diagnostic products, as well as their starting materials 
 through innovation and entrepreneurship, JPM will enrich and add value to its activities by
developing and commercializing innovative health care technologies, and by implementing
entrepreneurial business modules  

Values

JPM believes in and holds the following values at the core of its business ethics:

 We embody quality
 We believe in creativity and innovation 
 We are entrepreneurial and we nurture self confidence 
 We are passionately loyal to improving healthcare in developing communities 
 We advocate and support education in the communities where we operate, and we see it as
the basis for societal development  
 We practice equality 
 We conduct ourselves with transparency and integrity, always and everywhere

JPM has always embraced its social responsibility. Over the years, this grew into an institution-wide
policy with far-reaching impact. The concept of social responsibility developed with time to become
more mature and holistic, Sustainability became the base of our strategy forming process, we believe
that our existence as a healthcare organization is directly linked to sustainability, our organization as
reflected in our mission statement exists to serve one of humanity’s essential needs; healthcare and
wellbeing. JPM acknowledges its accountability to the impact of its activities on the culture, society,
environment and economy, it subsequently operates with full transparency and cooperates with its
stakeholders and the local authorities to improve and upgrade its contribution to sustainability.

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Evaluation of Financial Statements:

Dar Al Dawa Company

Dar Al-Dawa 2018 2017 2016

Gross profit Margin 24.64 34.26 38.83

Operating Profit Margin 22,027 117,018 20,283
Net Profit Margin -13.33 -25.88 -10.26
Current Ratio 1.8 2.5 5.74
Acid test Ratio 0.85 0.94 0.96
Stock days 87.05 85.4 84.94
Debtor days 60.83 58.26 57.64
creditor days 43.94 40.68 39.22
Return on Assets -3.73 -10.23 -4.458
Return on Capital Employed 0.4625 0.4524 0.4351
Gearing 4,245,942 39643,96 39034,53
Interest coverage -2.206701189 -16.90853023 -8.516836335
P/E Ratio 1.225032779 1.136398569 1.642922701
Earnings per share 15.25841252 14.2595425 12.3258741

Jordan Pharmaceutical Manufacturing Company

JPM 2018 2017 2016

Gross profit Margin 23.55 22.65 35
Operating Profit Margin 24,285 120,570 22,541
Net Profit Margin -12.52 -24.85 -11.30
Current Ratio 2.1 2.2 1.9
Acid test Ratio 0.9 0.92 0.91
Stock days 88 80 79.26

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 Debtor days 55.21 54.63 49.24
creditor days 39.14 38.65 34.87
Return on Assets -3.05 -12.36 -4.88
Return on Capital Employed 0.4888 0.4411 0.4952
Gearing 353,449 436718 487927
Interest coverage 6.324642202 4.490248678 -0.881760617
P/E Ratio 2.475262432 2.423541806 2.753864249
Earnings per share 14.99055126 14.34081593 11.78883215

Analysis and interpretation of the results

When extracting the results of the financial statements of both companies, many equations were
used to extract the values, including:

Gearing Ratio= (Long-term debt + short-term debt + bank overdrafts) / shareholders' equity

The Formula for Gross Profit Margin:

Net Sales−COGS
Gross Profit Margin =
Net Sales

The Formula for Operating Margin Is:

Operating margin= Operating earnings/Revenue

Operating Profit Margin=OI/SR

Where:

OI = Operating income

SR = Sales revenue

Formulas and Calculation for Net Profit Margin

Net profit margin= (R−COGS−E−I−T/R)*100

= (Net income/R)*100

Current Ratio = Current assets/ Current liabilities

Acid Test= (Cash Marketable Securities + A/R)/ Current liabilities

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Where:

A/R=Accounts/Receivable
Inventory Days = Average inventory / (Cost of goods sold / 365)

Debtor days is: (Trade receivables ÷ Annual credit sales) x 365 days

Creditor Days = Creditors / Average daily purchases = Creditors / (Purchases / 365)

Interest Coverage Ratio= EBIT/ interest Expense

Where:

EBIT=Earnings before interest and taxes

Comparison with Competitors

When comparing the gross profit margin of the two companies, it turns out that Dar Al-Dawa
Company has a profit margin in its 3 years from 2016 until 2018. When we look at the profit margin
of the Jordanian company, we notice that it has a decrease in profit margin up to 2018 which
reached 23.55 which is less than Dar Al-Dawa, which reached 24.64 in 2018.

As for the operating profit margin of the two companies during the three years, the Jordanian drug
company outperformed Dar Al-Dawa with an operating margin of 24,285 in 2018.
The rest of the comparison points are Net profit margin, current ratio, acid test ratio, stock days,
debtor days, creditor days, return on equity, working capital return, readiness Interest coverage,
price-earnings ratio, earnings per share, and net profits reached at Dar Al-Dawa in 2018 to 15.25
compared to the Jordanian Pharmaceutical Company which reached 14.99 in 2018.

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Conclusion

The researcher concluded after comparing the financial statements of the two companies under
study that the financial analysis of both companies according to liabilities was not easy process,
where the researcher used many equations to analyze those lists, which concluded that the
researcher Dar Al-Dawa was the highest margin profit, The drug has a share in the Jordanian market
greater than the Jordanian pharmaceutical company and its sales more than the Jordanian
pharmaceutical company and it became clear to the researcher through the values which extracted
from the financial statements, which exceeded the company Dar Al-Dawa, during 3 years in the
process of comparison Between the two companies.

References
https://www.ase.com.jo/ar/products-services/securties-types/shares
https://www.ase.com.jo/ar/company_historical/DADI
https://www.ase.com.jo/ar/company_historical/JPHM

This assignment is related to the financial analysis and corporate management course in the
International MBA program in Bedfordshire University. And was written by student Laith Abdel
Rahman Nimer Abu Hassan and it may contain errors.