Study On Lavipharm And Computer Financial Modelling Finance Essay

Lavipharm S.A was established in 1911 and is today a taking pharmaceuticals company with operations in Greece and major international markets such as the USA and France. The Company is chiefly a commercial distributer non merely of drugs but besides of cosmetics. Lavipharm S.A offers merchandises derived from ain research every bit good as high-level services non merely to druggists but besides to consumers.

A innovator in the country of pharmaceutical engineering, Lavipharm S.A develops new dynamic schemes that are flexible in the invariably germinating international environment, but are ever in line with its vision. At the same clip Lavipharm S.A discusses and reviews new coactions sing its support and enlargement non merely in the Grecian but besides in the international scene.

The company ‘s strongest elements are its strategic focal point on the pharmaceutics market, it research and development and its international co-operations. In Greece it develops, represents, markets and distributes its ain R & A ; D merchandises every bit good as merchandises for 3rd parties.

Lavipharm ‘s market portions which are largely curative are:

1st place in antiseptics with a per centum of 52.8 %

1st place in drugs for cardiovascular diseases, with a per centum of 46.5 %

2nd place in drugs refering the cardinal nervous system, with a per centum of 36 %

fourth topographic point in anti-lice merchandises with a per centum of 9.7 %

The company utilizes an extended web of agents, medical helpers and professionals advancing pharmaceuticals gross revenues of its ain history, every bit good as for 3rd parties.

The pharmaceutical industry in Greece

Demand

The analysis of the drug demand includes both the description of the factor that determine it, such as demographic and epidemiological features of the population and secondly the estimate of the clip way through the sizes of pharmaceutical outgos.

Harmonizing to the National Statistical Service, in 2006 the Grecian population exceeded 11.1 million. Furthermore, in 2007 there were 111.9 1000s of births and 109.9 1000 of deaths.A The mean lifetime increases significantly, making about 79.6 old ages. However, apart from the addition in life anticipation, theA age compositionA ofA theA populationA contributesA more to theA pharmaceutical outgo. It is clear that half of the population which is still economically active maintains all the others.

In 2007 the pharmaceutical outgo amounted a‚¬5.4 billion stand foring the 21.6 % of the public outgo. It is noted that drugs are a little portion of wellness outgos whilst besides a societal good as the comparative cost is covered by 86.5 % from the societal security.

Pharmaceutical outgo in Greece is associated with the rise of ingestion of drugs as a consequence of socio-economic and fiscal factors. Specifically, the ageing population and new finds of scientific discipline are factors that lead to an addition in the ingestion of drugs.

2010A wasA undoubtedlyA oneA ofA the most ambitious periods in recent old ages, with major alterations at all degree of the national economic system. Specifically, the Grecian drug market suffered a batch of breaks since the beginning of the twelvemonth which significantly affected gross revenues at pharmaceutical companies. Changes in drug monetary values were in turn held in early June and September prompted a lessening in militias and resulted in a important bead in gross revenues, decelerating the activity degree and influencing borders in the industry.

Supply

In 2007, there were 150 pharmaceutical wholesales and drugs ‘ co-ops. These Numberss rank Greece in the 3rd place in Europe, as there were merely 9 in France and 16 in Germany. Furthermore, comparatively to the population, Greece has got the greatest figure of pharmaceuticss among other states of Europe ( 94.2 pharmaceuticss per 100.000 citizens ) .

During 2009, the entire sum of gross revenues was a‚¬5.5 billion, the 72.5 % of which has been gross revenues to jobbers and pharmaceuticss, while the remainder were drained to infirmaries. Furthermore, both the productiveness and investings in the sector every bit good as the figure of employees rose.

Exports

The Grecian pharmaceutical sector has become much more extrovert in recent old ages than it did in the past. Companies export in approximately 60 states all over the universe and in about all EU states. Furthermore, Grecian companies have been modernized, with a important credence by other states as to the quality of the drugs they produce, invariably opening to markets.

Porter ‘s five forces analysis

Fig.1: Porter, M. , ( 1980 ) , Competitive Strategy, Free Press, New York.

Dickering power of providers

Lavipharm depends upon organic chemicals providers. The chemical industry is really competitory and disconnected. The chemicals used in the company are mostly a trade good. The providers have really low bargaining power and Lavipharm can exchange from them without incurring a really high cost. However, what can go on is that the provider can travel for frontward integrating to go a pharmaceutical company

Dickering power of clients

Customers of the companies that constitute the industry are chiefly pharmaceuticss and jobbers. Their bargaining power is limited, as the net income border is institutionally limited. It is claimed that merely the large companies of the industry have some bargaining power, which is relevant to the sum of merchandises they trade. This, give them flexibleness and an ability of dialogue as for the trading conditions.

Menace of new entrants

The pharmaceutical industry is governed by a specific institutional model which creates strong obstructions in new entries. Furthermore, new entered rivals have to cover with a important sum of required capital and the creative activity of a sufficient publicity web. In the pharmaceutical industry, a new entrant may be faced with assorted hurdlings erected by established concerns, such as:

Economies of scale – fabrication, R & A ; D, selling, gross revenues, distribution

merchandise distinction – established merchandises, trade names and relationships

capital demands and fiscal resources

entree to distribution channels: preferable agreements

regulative policy: patents, regulative criterions

exchanging costs – employee retraining, new equipment, proficient aid

The figure of companies is already important, as there are besides international cases apart from the Grecian one time, and covers the demands of the market.

Menace of replacement merchandises

There are no replacement merchandises for medical specialty. This is one of the great advantages of the industry. Whatever happens, demand for pharmaceutical merchandises continues and the industry thrives. One of the cardinal grounds for high fight in the industry is that as an on-going concern the pharmaceutical industry seems to hold an infinite hereafter.

Competitive competition within an industry

The entire pharmaceutical industry is characterized by a strong competition because of the big figure of companies.

Strong strategic motions are used from the side of the industry ‘s companies, through of which they try to make expanded partnerships with coactions and amalgamations. They move to acquisitions and set up subordinates in order to get by with competition. The larger companies of the industry make investings so as to refill the mechanical equipment they owe and continuously put on research and development of new merchandises.

In the table shown supra, 20 of the largest companies with international presence are classified in conformity to the sum of gross revenues they achieved in 2008.

Table 1: The 20 largest international pharmaceutical companies, ranked harmonizing to the sum of planetary gross revenues in prescribed medical specialty, ( 2009 ) , IMS Health

Harmonizing to an ICAP research which was held in 2008 the three Grecian leaders of the industry are:

Genesis Pharma: the first strictly Grecian company. In 2008 its gross revenues reached a‚¬220 million and its net incomes a‚¬31 million.

Elpen: After an addition of 15 % its company ‘s turnover approached a‚¬121 million in 2008. Consequently, net income increased by 27.3 % and reached a‚¬11.4 million.

Demonstration: Demonstration was established 42 old ages ago. During 2007 and 2008 it investing activities reached a‚¬40 million. Its turnover was a‚¬90 million while it had a net income of a‚¬696.000.

SWOT Analysis

Strengths

Failings

Merchandises with popular hallmarks

Organised distribution channels

Market experience

There are no subordinates for drugs, as it is an unreplaceable good

Increased demand for drugs as a affair of the increased life anticipation

Advanced drug solutions by its international retentions

In Greece there is a important hold on the payments from the side of the populace sector ( up to 12 months )

Difficult to take the license of mandate for new merchandises

The industry of pharmaceuticals is stiff

Not a good fiscal place

Opportunities

Menaces

Development of organic and homeopathic medical specialty

Use e-commerce as a new distribution channel for the sector of cosmetics

Engagement in research procedures

Enhance of the export activities

Changing manner of pricing policies of drugs

Increased sums of forgery medical specialty

Strong competition from international companies

By jurisprudence, the sum of money which could be used for publicity can be limited

Low borders, as in Greece the monetary values of drugs are regulated by the governmentFig 2: Swot Analysis

Strengths

Failings

Alternate schemes for Lavipharm S.A

Merchandises with popular hallmarks

Organised distribution channels

Market experience

There are no subordinates for drugs, as it is an unreplaceable good

Increased demand for drugs as a affair of the increased life anticipation

Advanced drug solutions by its international retentions

In Greece there is a important hold on the payments from the side of the populace sector ( up to 12 months )

Difficult to take the license of mandate for new merchandises

The industry of pharmaceuticals is stiff

Not a good fiscal place

Opportunities

S – Oxygen Schemes

W – Oxygen Schemes

Development of organic and homeopathic medical specialty

Use e-commerce as a new distribution channel for the sector of cosmetics

Engagement in research procedures

Enhance of the export activities

S2, S3, S5 – O4: Expand abroad and run into the demand

S3, O1: Focus on organic and homeopathic medical specialty and occupy new market portions

W4 – O2, O4: Use e-commerce to increase gross revenues and lessening administrative disbursals

Menaces

S – Thymine Schemes

Changing manner of pricing policies of drugs

Increased sums of forgery medical specialty

Strong competition from international companies

By jurisprudence, the sum of money which could be used for publicity can be limited

Low borders, as in Greece the monetary values of drugs are regulated by the authorities

S2, S3 – O3: Decrease menaces from competition by taking advantage of the market

Fig 3: SWOT Matrix Analysis

Strengths

One of the chief points of industry is the nature of the merchandises and the market they appeal. Drugs are an unreplaceable good with a continuously increased demand. Grecian pharmaceutical industries have developed publicity webs every bit good as a successful growing in research and development of new merchandises. Furthermore, during the last decennary Grecian companies achieved increased exports of their merchandises in about EU states every bit good as to other states all over the universe.

Failings

The weakest point that the industry faces is the institutionally controlled net income. Furthermore, the public wellness financess significantly delay their accumulations to the companies, normally for approximately 12 months. This factor in conformity to the limited support from the side of the Bankss threatens the operating capital of the companies. Besides, it is clip and money consuming for a company which has developed a new merchandise to take the license needed in order to hold the credence to put this merchandise on market.

Opportunities

Actions of researching and developing new types of merchandises, as for illustration homeopathic and biological medical specialty, every bit good as the sweetening of their trade name names refreshes the demand for merchandises and as a affair of fact commercialism. Furthermore, e-commerce can play a critical function for the industry and enhance non merely their acknowledgment from the market but besides decrease the sum of operational costs.

Menaces

A serious menace for the industry is the enlargement of foreign companies in the Grecian market. Thereby, the portion of the market that its company is addressed is acquiring smaller and competition additions. What is of equal importance is the fact that over the last old ages a serious sum of forgery medical specialty have been detected and sometimes confiscated at their effort to come in European boundary lines.

Scenarios

Scenario 1: Stability

In this scenario it is assumed that the company will go on to run like it did during the last twelvemonth.

A

Scenario 1

Gross saless Growth Rate

0.24 %

Cost of Goods/Sales

74.59 %

Administrative Expenses/Sales

36.87 %

Fixed assets growing

3.73 %

Table 2: Stability scenario

The gross revenues ‘ growing rate is 0.24 % . Even though the per centum is really low, it could be claimed that chiefly because of the planetary fiscal crisis, it presents world. As a affair of fact, the company is traveling to go on its concerns by bring forthing, advancing and selling the same merchandises. All ratios are considered to stay stable. ROA every bit good as ROE are somewhat increasing during the prediction old ages even though they are still negative. The net present value of the company is a‚¬99,974,275.01 and its value of portions is a‚¬1.14. What is let downing in this scenario is that net net incomes are progressively negative over the forecasted period.

Scenario 2: Adulthood

In this scenario it is assumed that the company will go on its operations and bit by bit mature.

A

Scenario 2

Gross saless Growth Rate

3.73 %

Cost of Goods/Sales

74.59 %

Administrative Expenses/Sales

36.87 %

Fixed assets growing

3.73 %

Table 3: Adulthood scenario

It is assumed that the gross revenues ‘ growing rate will be 3.73 % . In fact, this a instead optimistic scenario as the fiscal crisis has affected the pharmaceutical sector as good. The company is traveling to run in the norm of the last five old ages and bit by bit come in the adulthood stage, by selling apart from the already bing merchandises some new developed 1s. All the other ratios will stay stable. It could be claimed that the addition on gross revenues could be a consequence of developing new lines ‘ for the company merchandises, as for illustration biological and homeopathic.

The scrutiny of this scenario shows that this could be a really good position for the viability of the company. Net present value of the company significantly increases ( a‚¬ 192,254,228.74 ) and the value of its portions reaches a‚¬2.98.

It is proposed that the company should re-organize its operations, managing disbursals in a different, more efficient manner.

Scenario 3: Harsh competition

In this scenario it is assumed that the company will confront rough competition.

A

Scenario 3

Gross saless Growth Rate

2.50 %

Cost of Goods/Sales

74.59 %

Administrative Expenses/Sales

28.00 %

Fixed assets growing

3.73 %

Table 4: Harsh competition scenario

Despite the good place that the company has achieved to derive, there is ever the menace of supplanting by other rivals, non merely new but bing every bit good. It is a common phenomenon particularly today because of the fiscal crisis, holding companies merged and conquers really good market places with important power. The gross revenues ‘ growing rate of the company s considered to be less than the old examined old ages.

If Lavipharm S.A has to cover with such a instance in the hereafter it should do attempts to diminish its disbursals. Net present value continues to be positive and equal to a‚¬69,211,229.95 and it value of portions a‚¬0.53.

Scenario 4: Enter new markets

In this scenario it is assumed that the company will spread out in new markets apart from those in which it already does.

A

Scenario 4

Gross saless Growth Rate

6.50 %

Cost of Goods/Sales

74.59 %

Administrative Expenses/Sales

36.87 %

Fixed assets growing

8.00 %

Table 5: Enter new markets scenario

Lavipharm S.A has embarked in an international class since 1984. France was its first international effort which was followed by USA and Cyprus. Balkan states are a really attractive finish for the bulk of the Grecian companies. This scenario requires an addition in fixed assets as the company is traveling to necessitate edifices and this is the ground why fixed assets growing is about doubled. It is besides estimated that gross revenues growing rate will increase by 6.50 % sing the demand in the new entered state.

If this scenario happens, so the NPV of the company will go a‚¬985,454,204.64 and its value of portions is expected to be a‚¬18.82. Even though the company ‘s hard currency flows are expected to significantly fall and stay negative.

Decisions

As it is presented in the scenarios analyzed above, net present value of the company will stay positive, but its hard currency flows are in all instances expected to be negative. This is a really important observation, of import for the viability of Lavipharm. The market experience and its presence, non merely in the Grecian market but the US and Cyprus every bit good, can non alter the already bad fiscal place of the company. At this current clip, Lavipharm should be good prepared and ready to manage any state of affairs which may take to unpleasant and hazardous for it state of affairs. Its capital should be expeditiously and efficaciously managed.