Financial Analysis of Annual Reports

Abbott & GlaxoSmithKline Pakistan

FOR THE KIND CONSIDERATION OF

Mr. Farhan Shah
RIPHAH INTERNATIONAL UNIVERSITY - ISLAMABAD

Ahsaan Nadeem
M.COM
CMS # 24698
 Table of Contents
A. Profile of the Companies
B. Competitors / Other producers
C. Performance over last 5 years (Key Ratios)
D. Conclusion

2
 Company’s Profile – Abbott Pakistan
• Abbott Pakistan: Abbott has a history of more than 125 years globally and
presence in Pakistan almost since its inception. We employ more than 1,400
people directly while providing indirect employment opportunities to
thousands. The Company was incorporated in 1948 and commissioned its first
manufacturing facility in 1962. Currently, the Company operates two state of
the art manufacturing facilities and is listed on the Pakistan Stock Exchange.
• Presently, Abbott operates in four different businesses(Established
Pharmaceutical Products, Diagnostic Products, Nutritional Products and Vascular
Products) and is the 2nd largest Pharmaceutical company in the country. It is
one of the leading tax payers with contribution to the National Exchequer of
Rs. 3.68 billion (2016: Rs. 3.73 billion).
• The majority shareholding of the Company is with Abbott Asia Investments
Limited, UK with the ultimate holding company being Abbott Laboratories,
USA.
3
 Company’s Profile – GSK Pakistan
• GlaxoSmithKline Pakistan Limited was created on January 1st, 2001, through
the merger of SmithKline and French of Pakistan Limited, Beecham Pakistan
(Private) Limited and Glaxo Wellcome (Pakistan) Limited, and stands today as
one of the largest pharmaceutical company in Pakistan
• GSK Pakistan operates mainly in two industry segments: Pharmaceuticals
(prescription drugs and vaccines) and consumer healthcare (over-the-counter-
medicines, oral care and nutritional care). In Pakistan, the Company deals in
Anti-infective, Respiratory, Vaccines, Dermatological, Gastrointestinal,
Analgesics, Oncology, Urology, Central Nervous System, Allergy,
Cardiovascular and Vitamins therapy areas.

4
 Competitors / Other Producers

• Ferozsons Laboratories
• Pfizer Pakistan (1959)
• Hilton Pharma
• Wyeth Pakistan
• Getz Pharma (1995)
• Bayer

5
 Performance over last 5 years
Five Years Turnover (Rs. 000)
Abbott GSK Linear (Abbott) Linear (GSK)

40000000

35000000
32773770

30000000
27563533
RS. (000)

26088233
25230878
25000000 23821926 23387915
22843250
21170446
19692354
20000000
17217258

15000000

10000000

5000000

0
2013 2014 2015 2016 2017

Years

6
 Performance over last 5 years
Earning Per Share (Rs.)
Abbott GSK Linear (Abbott) Linear (GSK)

50

45

40 40
40
Times

35

30
30

25

20

15

9.5
10 7.8 8.3 8.3
7
5.3
5 3.3

0
2013 2014 Years
2015 2016 2017

7
 Performance over last 5 years
Gross Profit Ratio (%)
Abbott GSK

45

40.1
38.5 38.3 38.9 38.7
40

35
Percent

30 27.4 28
26.3 26.5
24.7
25

20

15

10

0
2013 2014 2015 2016 2017

Years

8
 Performance over last 5 years
Net Profit to Sales Ratio (%)
Abbott GSK

20

18 16.9 17.2
16.1
16 14.7
14.3
Percent

14

12

9.6
10 8.9 9.2

8
6.1
6
4.2
4

0
2013 2014 2015 2016 2017
Years

9
 Performance over last 5 years
Return on Equity (%)
Abbott GSK

35

28.9 29.3
30
27.7 27.6
25.9

25
22.7

20.2
Percent

19.8
20

14.1
15

9.4
10

0
2013 2014 2015 2016 2017

Years

10
 Performance over last 5 years
Return on Capital Employed (%)
Abbott GSK

35

28.9 29.3
30
27.7 27.6
25.9

25
Percent

20

14.2
15 13.5
12.9

9.1
10
6.2

0
2013 2014 2015 2016 2017

Years
11
 Performance over last 5 years
Current Ratio (Times)
Abbott GSK

5
4.61
4.5

3.86
4 3.73
3.56
3.5
2.96
3
Times

2.5

1.9
2 1.8 1.8
1.7
1.5
1.5

0.5

0
2013 2014 2015 2016 2017

Years

12
 Performance over last 5 years
Cash to Current Liabilities (Times)
Abbott GSK

3
2.79

2.51
2.5 2.39

2 1.84
1.76
Times

1.5

0.6 0.6

0.5 0.4 0.4

0.3

0
2013 2014 2015 2016 2017

Years

13
 Performance over last 5 years
Inventory Turnover Ratio (Times)
Abbott GSK Linear (Abbott) Linear (GSK)

5
4.52 4.54
4.5 4.35 4.32
4.08 4
4

3.5 3.4 3.4

3.3
3.2

3
Times

2.5

1.5

0.5

0
2013 2014 2015 2016 2017

Years

14
 Performance over last 5 years
Inventory Period In Days
Abbott GSK Linear (Abbott) Linear (GSK)

140

120 115
112
107 108
Times

100
92
89.38
83.95 84.41
80.82 80.44
80

60

40

20

0
2013 2014 2015 2016 2017
Years

15
 Performance over last 5 years
No. Of Days In Receivables
Abbott GSK Linear (Abbott) Linear (GSK)

18
17

16

14
12.56
11.8
12
10.59
10 9.54
Times

8.27
8
7 7
6
6
5

0
2013 2014 2015 2016 2017

Years

16
 Performance over last 5 years
No. Of Days In Creditors
Abbott GSK Linear (Abbott) Linear (GSK)

80

70 66.97

60.28
Times

60 58.13

48.78 49.32
50
43

40
35 34 35
31
30

20

10

0
2013 2014 2015 2016 2017
Years

17
 Performance over last 5 years
Operating Cycle In Days
Abbott GSK Linear (Abbott) Linear (GSK)

100

90 86
82
79
80 77
Times

73
70

60
52.4
50
44.17

40 34.72
30.96
30 26.03

20

10

0
2013 2014 2015 2016 2017
Years

18
 Conclusion
• Based on the analysis of above ratios for both companies, it appears that
Abbott is more profitable in terms of its operations and also from the
investment point of view as it is clear from cash dividend per share distributed.
• But GSK depending on its age (Appr. 18 years In Pakistan) have shown
impressive growth. As it is clear form annual turn-over of both, GSK is ahead of
Abbott. It also appears that GSK is taking low profit margin as compared to
Abbott which could be the reason of less cash dividend per share for its
shareholders.
• Since its inception pharmaceutical industry have shown tremendous growth in
Pakistan and as a result Industry meets around 70% of the country's demand of
Finished Medicine.

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Thank you for your patience.

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