Factors affecting profitability of pharmaceutical company: an Indonesian evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Harianto Lim ◽  
Rofikoh Rokhim
Keyword(s):  
Growth Rate ◽  
Pharmaceutical Company ◽  
Universal Health Coverage ◽  
Sustainable Growth ◽  
Pharmaceutical Companies ◽  
Health Coverage ◽  
Content Type ◽  
Factors Affecting ◽  
Sustainable Growth Rate ◽  
Universal Health

PurposeThe purpose of this paper is to examine the factors affecting profitability of pharmaceutical company in Indonesia. While research and development has been the main discussed issues in pharmaceutical sector development, scant attention has been paid to profitability factors determined by financial ratio specifically. The industry itself faces significant disruption with the implementation of universal health coverage in Indonesia. This study investigates the factors affecting profitability in an Indonesian pharmaceutical company after the national health insurance policy implementation.Design/methodology/approachThis research is based on five independent variables (IVs) with six measurements that were empirically examined for their relationship with profitability. These variables are firm size (as measured by total sales), company efficiency (assets turnover), liquidity (current ratio), market power (the Lerner index) and a firm's growth (as measured by sales growth and sustainable growth rate). Data of ten pharmaceutical companies listed on the Indonesia Stock Exchange covering the period of 2014–2018 were extracted from companies' annual reports. Pooled ordinary least squares regression and fixed effects were used to analyze the data.FindingsThe findings show strong and positive relationships between liquidity and sustainable growth rate with profitability as measured by return on equity (ROE), return on assets (ROA) and earning per share (EPS), except EPS for liquidity. Further, both firm size and market power show positive significant relationships with ROA but negative significant relationships with EPS. Sales growth and company efficiency (as measured by assets turnover ratio) have no significant relationship with profitability.Research limitations/implicationsDue to data availability, the data include only listed pharmaceutical companies in the Indonesia Stock Exchange.Practical implicationsThese results benefit internal users (such as managers, shareholders and employees). They can realize the determinants of enhancing the profitability of their company after the implementation of universal health coverage from the Indonesian government (JKN – Jaminan Kesehatan Nasional) since 2014. On the other side, other external users (such as investors, creditors, newly established pharmaceutical companies and tax authorities) also may get advantages of these results. It is clear that a significant impact happened upon this new policy implementation, and how an Indonesian pharmaceutical company will be profitable in the future. The relevance of company's business strategy (product and customer portfolio, competitor intelligence, etc.) with the profitability factors from this study can be further scrutinized as further consideration for both internal and external users.Originality/valueThis study differs from previous studies in many ways; first, it focuses on pharmaceutical companies in Indonesia. Previous studies have concentrated on different countries and companies in other sectors, such as services, banking and financial institutions or on industrial organizations. Second, this study analyzes the data from pharmaceutical companies' annual reports since 2014. There was a significant event of universal health coverage (national health insurance) implementation from the Indonesian government. Third, the study used ROE, ROA and EPS as indicators of profitability. Last but not least, the results of the study provide empirical evidence that firms with significant market power, good liquidity and well-managed sustainable growth rate improve operating income and ultimately enhance profitability.

The effect of intangible assets on sustainable growth and firm value – Evidence on intellectual capital investment in companies listed on Bucharest Stock Exchange

Kybernetes ◽  
2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Catalin Ionita ◽  
Elena Dinu
Keyword(s):  
Growth Rate ◽  
Intellectual Capital ◽  
Firm Value ◽  
Intangible Assets ◽  
Stock Exchange ◽  
Listed Companies ◽  
Sustainable Growth ◽  
Content Type ◽  
Sustainable Growth Rate ◽  
The Impact

PurposeThe present study investigates the connection between company investments in intellectual capital (IC) and how they translate into financial value. The aim is to test the impact of intangible assets on the firm value and its sustainable growth.Design/methodology/approachThe research employs computation models to determine the sustainable growth rate (SGR) and the firm value (FV), and by using the ordinary least squares (OLS) model through a linear regression assesses the relationship between the dependent variables and expenditures on intangibles like R&D, IT programs and patents. A sample of 42 companies has been selected out of the 78 listed at Bucharest Stock Exchange (BSE), based on the appropriateness of the information disclosed in the financial reports for the period 2016–2019.FindingsThe results show that intangibles classified as innovative competences (R&D and Patents) do not have a positive impact on SGR and FV in listed companies from Romania. Moreover, R&D has a negative and significant effect on FV, while IT Programs have a positive and significant impact on FV, but not on the SGR. Variables categorised as economic competencies (Brands, Shares held in associates and jointly controlled entities) and firm structure-specific variables (Leverage, Firm Performance) seem to have a significant effect on SGR and FV. Shares held in associates and jointly controlled entities is the variable that can have the biggest impact when it comes to FV for companies listed at BSE.Research limitations/implicationsDue to non-disclosure of specific information by some companies, or lack of investments in intangibles the sample had to be reduced and does not cover all listed companies.Practical implicationsCompanies listed on the Regulated Market from the Bucharest Stock Exchange should maintain their scale of liabilities at a reasonable level when financing intangible assets in order to ensure corporate long-term and sustainable development. Also, these companies should maintain awareness about the importance of intangible assets and invest more in specific sub-components, in order to sustain competitive advantage. Recognizing the roles of intangibles, managers need to develop strategies to invest in profitable intangibles by reasonably allocating their limited resources, in order to achieve sustainable growth and increase company success.Originality/valueStudies concerning the relation between investments in intangibles and sustainable growth rate and firm value of listed Romanian companies are very scarce. This paper reveals new research, never before undertaken, concerning expenditures on intangibles by Romanian companies and the valuation of such investments on Bucharest Stock Exchange.

scholarly journals Universal Health Coverage (UHC)

2018 ◽  
Vol 32 (4) ◽  
pp. 322-324
Author(s):  
Samlee Plianbangchang
Keyword(s):  
Health Care ◽  
Health Insurance ◽  
National Health Insurance ◽  
National Health ◽  
Universal Health Coverage ◽  
Health Care Systems ◽  
Good Health ◽  
Health Coverage ◽  
Content Type ◽  
Universal Health

Purpose The WHO Health for All goal of the year 2000 was unreachable due to a number of irreconcilable factors. However, governments agree that a resolution must be found to effectively cope with increasing health care costs. Furthermore, national health insurance schemes must be properly refined to suit local situations. Workable health policies and strategies for caring and treating sick people through reduced or cost effective methods must be developed as part of a Universal Health Coverage scheme. A review of progress made toward achieving the WHO goal of health for all. The purpose of this paper is to explore the government’s role and responsibilities to educate and support society to achieve optimum health. Design/methodology/approach This is a commentary piece. Findings Participation and involvement of all people of all walks of life in the development and management of their nation’s health care programs is an important requisite of good health for all. This should include financial participation and co-payment into the national health insurance scheme. Furthermore, national health care systems should involve or include the traditional/local and alternative systems of medicine in the most appropriate manner. Health care has to encompass the total range of comprehensive health interventions, inclusive of at least preventive, curative and rehabilitative care. Originality/value This paper provides a review of the current health system constraints and assesses the effectiveness of available options by way of ensuring that a country-specific UHC system may be successfully implemented.

scholarly journals Corporate Sustainable Growth Rate: The Potential Impact of COVID-19 on Malaysian Companies

2020 ◽  
pp. 25-38
Author(s):  
Fauzias Mat Nor ◽  
Nur Ainna Ramli ◽  
Ainulashikin Marzuki ◽  
Norfhadzilahwati Rahim
Keyword(s):  
Growth Rate ◽  
Financial Distress ◽  
Retention Rate ◽  
Sustainable Growth ◽  
Estimation Model ◽  
Return On Equity ◽  
Factors Affecting ◽  
Business Context ◽  
Sustainable Growth Rate ◽  
Potential Impact

The COVID-19 pandemic and the economic slowdown have negatively impacted various industries and will cause losses, defaults in debt obligations, and significantly increase the risk of insolvency. An excessive level of debt could lead to unsustainable growth, financial distress, and insolvency. Sustainable growth rate (SGR) may have a significant impact on corporate financial distress. Sustainable growth in a business context is the maximum limit for a company to increase its revenue without depleting its financial resources. Sustainable growth rate depends on the earnings retention rate (R) and the return on equity (SGR = R × ROE). The purpose of this research is to investigate the factors affecting the SGR by segregating the positive and negative profitability of Shariah-compliant companies in Malaysia. Using STATA software, we conducted a static estimation model to analyse data from 181 Shariah-compliant companies in Malaysia collected from 2007 to 2016. The research based on ROE analysis by segregating positive and negative ROE as the potential impact of COVID-19 in Malaysia. For companies of positive ROE, the decrease in the dividend payout and the company’s efficiency, and an increase in profitability will increase the sustainable growth rate. The company with negative ROE shows that the decrease in leverage and an increase in the company’s profitability and the company’s efficiency will result in the increased company’s sustainable growth rate. This research can be a guide for companies to the potential or experimental impact of the COVID-19 pandemic either for the company that gains profit or faces the financial losses. This paper also provides an understanding of the corporate sustainable growth rate facing negative and positive profitability in Malaysia.

Viral marketing content for Universal Health Coverage campaign in Indonesia

2019 ◽  
Vol 14 (1) ◽  
pp. 21-36
Author(s):  
Nuzulul Kusuma Putri ◽  
Ernawaty Ernawaty
Keyword(s):  
Health Insurance ◽  
Universal Health Coverage ◽  
Social Health Insurance ◽  
Media Framing ◽  
Viral Marketing ◽  
Social Health ◽  
Health Coverage ◽  
Content Type ◽  
The Media ◽  
Universal Health

Purpose Today, viral marketing is popular as a highly effective marketing strategy with a low cost for mass targeting. This is suitable for the Universal Health Coverage campaign which seeks to attract the whole nation’s population to voluntarily register with social health insurance. It uses the target market itself as a weapon and the marketing content as a bullet. This study aims to determine the exact viral marketing content for the Universal Health Coverage campaign in Indonesia. Design/methodology/approach Viral marketing content is formulated based on the feelings of the target market toward social health insurance. Qualitative content analysis was conducted to identify the media framing and the audience’s response. Two of the biggest online news websites were analysed to determine the media framing. The audience’s response was identified through a Facebook group discussion. Findings This study shows that negative media framing makes people question the benefit of participating in social health insurance. Considering the local wisdom of Indonesia, helping poor people through social health insurance would be the best viral marketing content. Research limitations/implications Because of the limited number of sources focused on the audience’s responses that have been analysed, the variations in the audience response could not be captured completely. Researchers should also analyse other audience channels (social media and messenger application) besides Facebook. Practical implications The paper includes implications for the future marketing agenda of insurance providers in relation to engaging the community. Originality/value This study operationally introduced how to use the media channel selected and audience framing in designing an effective viral marketing content in health-care marketing.

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