Managing Operations and Finance

This document provides an analysis of managing operations and finance in the pharmaceutical industry. It includes an industry analysis, company overview, business strategy, operational activities, evaluation of performance, financial performance, and risk analysis. The focus is on Alliance Pharmaceuticals Limited and Allergy Therapeutics Plc.

MANAGING OPERATIONS AND FINANCE

Contents
Chapter 1.......................................................................................................................................3
1. Introduction..................................................................................................................3
2. Industry analysis-............................................................................................................3
3. Company overview:........................................................................................................4
4. Business Strategy...........................................................................................................5
5. Operational activities......................................................................................................6
Chapter 2 EVALUATION OF PERFORMANCE:...................................................................6
6. Financial performance....................................................................................................7
7. Risk analysis..................................................................................................................10
8. Managerial performance..............................................................................................14
9. Market performance......................................................................................................17
10. Market movements.....................................................................................................18
REFERENCES............................................................................................................................19
APPENDIX...................................................................................................................................20

Chapter 1
1. Introduction
The analysis of financial data is extremely relevant to the business as it allows
the financial successes and deficiencies of an organization to be identified easily. In
fact, it allows one organization to evaluate its comparative success. This is important for
business entities to manage their operations and finance so that effective utilisation of
resources can become possible. In the absence of proper management of operations
and activities of companies, it may become difficult to achieve predetermined objectives
(Butler, 2016). The project report is based on analysis of performance of a company
which is Alliance pharmaceuticals limited. This company is located in London, UK and
was founded in year 1996. Company operates its operations in providing
pharmaceutical products to customers. The report covers detailed information about
chosen company, its financial performance and comparison with Allergy therapeutics
plc. Allergy Therapeutics Plc is a medication manufacturer. The organization relies on
aluminium-free goods for prevention and avoiding reactions. This company was
founded in year 2004 and it’s headquartered in London, United Kingdom. The analysis
is carried out on the basis of the financial details obtained in the 2017 financial reports.
It is important to consider which of the two firms is competitive in the healthcare industry
by this comparative study.
2. Industry analysis-
In the UK there are about 73,000 workers in the pharmaceutical sector and, in 2007, the
UK GDP were allocated EUR8.4 billion with a sum of approximately £3.9 billion spent in
R&D. In 2007, pharmaceutical shipments to the United Kingdom amounted to £14.6
billion, generating a trade gap of £4.3 billion in pharmaceuticals.
In 2017, UK Pharmacy staff is 73,000 relative to 114,000 in Germany in 2015, 92,000 in
Germany in 2014, and 723,000 in the EU as a whole. As of 2016, 281,440 workers in
the United States work in the pharmacy sector.
GlaxoSmithKline and AstraZeneca, the fifth and sixth biggest pharmaceutical firms in
the country, are home to their 2009 market share. Pfizer, Novartis, Hoffmann – La

Roche, and Eisai are multinational corporations with significant involvement in the UK
pharmaceutical business. One in five pharmaceutical drugs worldwide have been
produced in the UK.
3. Company overview:
Alliance pharmaceutical limited:
Alliance pharmaceutical limited is a leading international healthcare entity which
is inter-connected with different brands. This company is listed in London stock
exchange and started trading in year 1998. The product portfolio of this company is too
wide that consists various medical devices, therapy equipment’s and many more.
Allergy Therapeutics Plc:
Allergy Therapeutics Plc is a medication manufacturer. The Group relies on
aluminum safe goods for the diagnosis and avoidance of allergies. The branches of the
Community are Northern Europe including groups including Austria, Germany, the
Netherlands, Sweden and Southern Europe like Italy and Spain. Throughout the field of
detection, evaluation, and management of allergic diseases, this organization offers
healthcare providers with knowledge based on the vaccine of allergies, often known as
specific antibody stimulation or desensitization.

4. Business Strategy
Alliance pharmaceutical limited:
A business strategy is a collection of tactical activities and actions utilized by a
organization to gain consumers, succeed effectively, boost efficiency, and meet
organizational goals. It explains how to conduct business and accomplish the
required goals. Alliance pharmaceutical limited company’s business strategies are
as follows:
Key feature of differentiation- Alliance pharmaceutical limited is different from rest
of pharmaceutical companies located in United Kingdom. This is so because of
following reasons:
 Providing pharmaceutical products at worldwide level. While most of the
pharmaceutical companies in UK operates its operations at small level (Fine,
Padurean and Naumov, 2018).
 Along with the manufacturing and distributing of pharmaceutical products,
company deals in acquisition & licensing of pharmaceutical products that makes
it different.
So, these are the key feature of above company that makes it different from rest of
pharmaceutical companies located in United Kingdom.
Allergy Therapeutics plc:
The business model of allergy therapeutics depends around how the
organization creates revenue from organic and inorganic development for investors.
The business reinvests profits in research and growth, helping our European
businesses to flourish and extend into new markets such as the USA.

5. Operational activities
Alliance pharmaceutical limited:
Alliance pharmaceutical limited company's key operational activities are
acquisition and licensing of key pharmaceutical products. As well as marketing of those
products. In addition, capital intensive activities like production, warehousing and
logistics are processed to class leading specialists in fields (Babich and Kouvelis, 2018).
This company allocate its products by wholesalers, retail pharmacies, hospitals and key
global network of distributors.
Allergy Therapeutics plc:
Allergy Therapeutics plc firmly commitments itself in its practices and operations
to corporate ethics, strong ethical standards, and expertise. The Board of Directors (the
"Board") of the Organization endorses the best expectations of corporate management
and is responsible to the owners as an integral part of this dedication.
Chapter 2 EVALUATION OF PERFORMANCE:

6. Financial performance
1. Profitability ratio- Under it, there is different types of ratios which are calculated in
order to assess actual financial position of a company (dellaBadia Simon, 2019).
Herein, underneath some types of ratios are mentioned below in such manner that are
as follows:
(a) Gross profit ratio = Gross profit / Net sales * 100
Alliance pharmaceutical
limited Allergy therapeutics plc
2017 2018 2017 2018
GROSS
PROFIT 57.28% 61.86% 73.43% 75.00%
Allergy therapeutics plc Alliance pharmaceutical limited
0
10
20
30
40
50
60
70
80 73.43
57.28
75
61.86
2017
2018
Analysis- On the basis of above presented graph this can be find out that Allergy
therapeutics plc's gross profit ratio is higher in both years as compare to Alliance
pharmaceutical limited. Such as in year 2017, Allergy therapeutics plc's ratio was of
73.43% that raised and became of 75%. While Alliance pharmaceutical limited

company's ratio was 57.28% and 61.86% for year 2017 and 2018. It shows that Allergy
therapeutics plc 's performance is better in terms of gross profitability.
(b) Net profit ratio:
Alliance pharmaceutical
limited Allergy therapeutics plc
2017 2018 2017 2018
NET
PROFIT
RATIO 28.15% 15.25% -3.87% 11.20%
Allergy therapeutics plc Alliance pharmaceutical limited
-15
-10
-5
0
5
10
15
20
25
30
35
-3.87
28.15
-11.2
15.25
2017
2018
Analysis- On the basis of above presented graph this can be find out that Alliance
pharmaceutical limited' s net profit ratio is too higher in both years as compare to Allergy
therapeutics plc. Such as in year 2017, Allergy therapeutics plc's ratio was of -3.87%
that reduced and became of -11.2%. While Alliance pharmaceutical limited company's
ratio was 28.15% and 15.25% for year 2017 and 2018. This is showing that Alliance
pharmaceutical limited has positive ratios and able to generate higher income from its
operations while Allergy therapeutics plc is unable to do so and facing loss in both
years.
(c) Operating profit ratio:
Alliance pharmaceutical Allergy therapeutics plc

limited
2017 2018 2017 2018
Operating
profit ratio 27.18% 19.49% -2.96% -9.85%
Allergy therapeutics plc Alliance pharmaceutical limited
-15
-10
-5
0
5
10
15
20
25
30
-2.96
27.18
-9.85
19.19
2017
2018
Analysis- Similar as the net profit ratio, the operating profit ratio of Allergy therapeutics
is in negative. The above presented graph shows that that Alliance pharmaceutical
limited' s operating profit ratio is too higher in both years as compare to Allergy
therapeutics plc. Such as in year 2017, Allergy therapeutics plc's ratio was of -2.96%
that reduced and became of -9.85%. While Alliance pharmaceutical limited company's
ratio was 27.18% and 19.19% for year 2017 and 2018. This is showing that Alliance
pharmaceutical limited has positive ratios and able to generate higher income from its
operations while Allergy therapeutics plc is unable to do so and facing loss in both
years.

7. Risk analysis
Liquidity ratio- It is a type of ratio which is used to calculate and analyse liquidity
position of companies (Shang, Wang and Yang, 2017). Under this, mainly two types of
ratios are included that are as follows:
(a) Current ratio = Current assets / Current liabilities
Current ratio:
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Current ratio 0.80 times 0.64 times 2.64 times 2.11 times
Allergy therapeutics plc Alliance pharmaceutical limited
0
0.5
1
1.5
2
2.5
3
2.64
0.8
2.11
0.64
2017
2018
Analysis: This ratio shows liquidity position of companies in order to make payment of
short term debts (Deng, Gu, Cai, 2018). The above mentioned graph shows that both
companies have different volume of ratios in both years. Though companies are unable
to meet the criteria of ideal ratio that is of 2:1. Like Allergy therapeutics plc has current
ratio of 2.64 times in year 2017 and 2.11 times in year 2018. On the other hand,
Alliance pharmaceutical limited has current ratio of 0.8 times and 0.64 for above
mentioned time period. In comparative manner, this can be stated that Allergy

therapeutics plc 's liquidity position is better as they have higher amount of current
assets to pay their current liabilities.
Quick ratio:
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Current ratio 0.57 times 0.43 times 2.11 times 1.47 times
Allergy therapeutics plc Alliance pharmaceutical limited
0
0.5
1
1.5
2
2.5
2.11
0.57
1.47
0.43
2017
2018
Analysis- On the basis of above presented graph this can be commented that both
companies are not able to meet with the ideal quick ratio criteria which is of 1.5:1 times.
In the context of Allergy therapeutics plc, this can be find out that their ratio is of 2.11
times in year 2017 and 1.47 times in year 2018. On the other hand, Alliance
pharmaceutical limited company’s ratios are of 0.57 times and 0.43 times. Same as the
previous ratio, this Allergy therapeutics plc ‘s position is better as compare to Alliance
pharmaceutical limited.

Working Note:
Quick assets= Current assets – inventories
For year 2017:
Quick assets= 49-14
= 35
For year 2018:
= 59-19
Debt to equity ratio-
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Debt to
equity ratio 0.65 0.60 0.1 0.1
Allergy therapeutics plc Alliance pharmaceutical limited
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.1
0.65
0.1
0.6
2017
2018

Analysis- The ideal debt to equity ratio is considered between 1 to 1.5. In the context of
above mentioned companies, this can find out that both are unable to meet this
criterion. Such as Allergy therapeutics plc has ratio of 0.1 in both of years 2017 and
2018. While Alliance pharmaceutical has ratio of 0.65 and 0.60 for both years. In
comparative manner, Alliance pharmaceutical limited is better as their ratio is higher.
Total debt to total assets ratio:
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Total debt to
total assets
ratio 0.39 0.37 0.47 0.55
Allergy therapeutics plc Alliance pharmaceutical limited
0
0.1
0.2
0.3
0.4
0.5
0.6
0.47
0.39
0.55
0.37
2017
2018
Analysis- The ideal total assets to debt ratio is considered as 0.4 or 40%. In
comparative manner, this can be find out that Allergy therapeutics plc has ratio of 0.47
and 0.55 which is showing that company is meeting with ideal ratio. On the other hand,
Alliance limited is unable to meet criteria of ideal ratio as they have ratio of 0.39 and
0.37 in year 2017 and 2018.

8. Managerial performance
Efficiency ratio- This ratio is being calculated and analysed in order to know efficiency of
business entities so that corrective action can be taken out (Hussain, Shahmoradi and
Turk, 2016). It consists below mentioned ratios which are as follows:
Accounts receivable turnover ratio
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Accounts
receivable
turnover ratio 9.36 times
10.72
times
14.23
times
16.84
times
Allergy therapeutics plc Alliance pharmaceutical limited
0
2
4
6
8
10
12
14
16
18
14.23
9.36
16.84
10.75
2017
2018
Analysis- On the basis of above mentioned diagram this can be find out that accounts
receivable turnover ratio of both companies is different from each other. In the aspect of

Allergy therapeutics plc, it can be stated that their ratio is of 14.23 times in year 2017
and 16.84 times in year 2018. On the other hand, their competitive company has ratio of
9.36 times and 10.75 times for similar time period. In comparison manner, this can be
stated that Allergy therapeutics plc is taking less number of days in order to recover its
debts. While Alliance plc is taking more time. Thus, Allergy therapeutics plc is better.
Inventory turnover ratio:
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Inventory
turnover ratio 3.14 times 2.42 times 2.21 times 2.09 times
Allergy therapeutics plc Alliance pharmaceutical limited
0
0.5
1
1.5
2
2.5
3
3.5
2.21
3.14
2.09
2.42
2017
2018
Analysis- The above presented graph shows that stock turnover ratio of both companies
is almost similar. Such as Allergy therapeutics plc has stock turnover ratio of 2.21 times
in year 2017 and 2.09 times in year 2018. While Alliance pharmaceutical has of 3.14
times and 2.42 times for year 2017 and 2018. In the comparative manner, this can be
stated that Alliance plc’s efficiency is better in order to manage their inventory level.

Working capital turnover ratio:
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Working
capital
turnover ratio 8.58 times 3.57 times 2.78 times 4.25 times
Allergy therapeutics plc Alliance pharmaceutical limited
0
1
2
3
4
5
6
7
8
9
10
2.78
8.58
4.25
3.57
2017
2018
Analysis- The above mentioned graph shows the working capital turnover ratio is quite
impressive of Alliance pharmaceutical plc. This is so because they have higher ratio in
year 2017 of 8.58 times. Though in year 2018, their ratio decreased in huge manner.
While in the context of Allergy therapeutics plc, this can be find out that their ratio is
increasing in year 2018. In year 2017, the ratio was of 2.78 times which increased and
became of 4.25.

Assets turnover ratio:
Alliance
pharmaceutical limited Allergy therapeutics plc
2017 2018 2017 2018
Assets
turnover ratio 0.30 times 0.29 times 1.13 times 1.26 times
Allergy therapeutics plc Alliance pharmaceutical limited
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.13
0.3
1.26
0.29
2017
2018
Analysis- In terms of assets turnover ratio, this can be stated that Allergy therapeutics
plc’s condition is better as compare to Alliance pharmaceutical limited. It is so because
their ratio was higher in both years such as in year 2017, it was of 1.13 times that raised
and became of 1.26 times. On the other hand, Alliance pharmaceutical limited
company’s ratio was too lower in both of years. Such as in year 2017, it was of 0.3
times which reduced and became of 0.29 times
9. Market performance
Earnings per share:
Alliance
pharmaceutical limited Allergy therapeutics plc

2017 2018 2017 2018
Earnings per
share 0.06 0.03 - -0.01
On the basis of above table, this can be find out Alliance pharmaceutical limited has
Earnings per share ratio of 0.06 and 0.03 for year 2017 and 2018. On the other hand,
Allergy therapeutics plc has negative ratio that is of -0.01 for year 2018. While in year
2017, their ratio was null. This is indicating that Alliance pharmaceutical limited has
better efficiency to generate return on earnings.
10. Market movements
On the behalf different types of ratios, this can be indicated that Alliance pharmaceutical
limited has better financial performance and able to beat to their competitors. While
Allergy therapeutics plc, performance is not so effective.
CONCLUSION
On the basis of above project report it can be concluded that evaluation of financial
performance is essential for companies. For this purpose, there are different types of
techniques such as ratio analysis which is applied in report. In regards to comparison of
both pharmaceutical companies, it can be concluded that Alliance pharmaceutical
limited company is much better.

REFERENCES
Books and journal:
Butler, K. C., 2016. Multinational Finance: Evaluating the Opportunities, Costs, and
Risks of Multinational Operations. John Wiley & Sons.
Babich, V. and Kouvelis, P., 2018. Introduction to the special issue on research at the
interface of finance, operations, and risk management (iFORM): Recent
contributions and future directions.
dellaBadia Simon, M., 2019. Effectively Managing Operations to Achieve Compliance
With Safety Programs. Journal of Healthcare Management. 64(1). pp.10-14.
Shang, K., Wang, J. and Yang, Y., 2017. Managing Inventory for a Multidivisional Firm
with Cash Pooling. Foundations and Trends® in Technology, Information and
Operations Management. 10(3-4). pp.324-337.
Hussain, M., Shahmoradi, A. and Turk, R., 2016. An overview of Islamic
finance. Journal of International Commerce, Economics and Policy. 7(01).
p.1650003.
Rindova, V. and Srinivas, S., 2017. Managing Meaning—Culture. In The Oxford
Handbook of Management.
Deng, S., Gu, C., Cai, G. and Li, Y., 2018. Financing multiple heterogeneous suppliers
in assembly systems: Buyer finance vs. bank finance. Manufacturing & service
operations management. 20(1). pp.53-69.
Fine, C., Padurean, L. and Naumov, S., 2018. Managing Operational Capabilities in
Start-up Companies. Academy of Management Global Proceedings, (2018),
p.179.

APPENDIX
ALLIANCE PHARMA PLC (APH) INCOME STATEMENT