Financial Performance of Public Sector Drug & Pharmaceutical Enterprises In India

With the de-licensing of pharmaceutical industry and complemented by scientific talent and research capabilities and Intellectual Property Protection Regime, Indian pharmaceutical industry in all set to take on new challenges in the international market. The Indian Pharmaceutical Industry today is in the front rank of India's science-based industries with wide ranging capabilities in the complex field of drug manufacture and technology. Indian pharmaceutical industry has played a key role in promoting and sustaining development in the vital field of medicines. The ability of an organization to analyze its financial position is essential for improving its competitive position in the marketplace. Financial analysts often assess firm's production and productivity performance, profitability performance, liquidity performance, working capital performance, fixed assets performance, fund flow performance and social performance. The financial performance analysis identifies the financial strengths and weaknesses of the firm by properly establishing relationships between the items of the balance sheet and profit and loss account. Through a careful analysis of its financial performance, the organization can identify opportunities to improve performance of the department, unit or organizational level. Thus, the present paper is of crucial importance to measure the firm's liquidity, profitability, and other indicators that the business is conducted in a rational and normal way; ensuring enough returns to the shareholders to maintain at least its market value. In this context researcher has undertaken an analysis of financial performance of pharmaceutical companies to understand how management of finance plays a crucial role in the growth. The present study covers two public sector drug & pharmaceutical enterprises listed on BSE. The study has been undertaken for the period of twelve years from 1997–98 to 2008–09. In order to analyze financial performance in terms of liquidity, solvency, profitability and financial efficiency, various accounting ratios have been used. Statistical measures i.e., linear multiple regression analysis and test of hypothesis - t test has been used.