B9AC106 Financial Analysis Assignment

Student Electronic Assignment Cover Sheet
Student (s) Number as per your student card:10332343
Course Title: MBA (FINANCE STREAM)
Lecturer Name: ENDA MURPHY
Module/Subject Code: B9AC106
Module/Subject Title: FINANCIAL ANALYSIS
Assignment Title: FINANCIAL ANALYSIS OF ASTRAZENECA AND GSK
No. of words:2956
Date of Submission: 20/03/2016
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TABLE OF CONTENTS:
INTRODUCTION.....................................................................2
FINANCIAL PERFORMANCE AND POSITION...............................4
OPTION OF PURCHASING SHARES OF COMPETITOR...................13
REASONS..............................................................................15
CONCLUSION.........................................................................19
BIBLIOGRAPHY......................................................................20
APPENDIX...........................................................................22
Figures:12
Tables:5
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Introduction:
Astrazeneca plc is one of the biggest pharmaceutical companies in the
world. It is a British-Swedish company. Astra-AB of Sweden (founded in
1913) and Zeneca group plc of the UK (founded in 1993), who were long
established with a passion for science and a clear vision of the
pharmaceutical industry which led them to merge together, and a new
company, Astrazeneca plc, which was founded on April 6 th, 1999.It’s
headquarter is situated in London while the R & D are both in Sweden
and UK. Astrazeneca’s CEO is Pascal Soriot and Leif Johansson is the
Chairman.
Astrazeneca manufactures medicines for cardiovascular and metabolic
disorders, gastrointestinal and neuroscience and infection problems,
Autoimmunity inflammation and respiratory upsets, infection and
cancer.
Astrazeneca plc has also acquired companies which are as follows:
2005-Kudos pharmaceutical company.(£120m)
2006-Cambridge antibody technology.(£702m).
2007-Arrow Therapeutics($150 m) & MedImmune($15.2m).
2010-Novexel corp (antibiotic developing co.).
2011-Guangdong Beijing (Chinese company).
The company has also had controversies where in, in the year 2010, it
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settled a lawsuit for $520m to settle allegations that the company
defrauded Medicaid and Medicare, and other government-funded
health care programs. In 2011, it settled a lawsuit of $68.5m in US.
Despite the uncertanities Astrazeneca faced in the past, it has managed
to keep up the good work and has continued effective research to cure
serious diseases.
The company operates in the UK, US, France, Sweden, Canada, Brazil,
China, Japan and India. The company’s largest single R & D site is based
at Alderly park, Cheshire, England with over 4,500 staff. All together,
there are over 50,000 people who work for Astrazeneca. Astrazeneca is
listed at #239 Global 2000.In 2014, company revenue was $26.09B and
net income was $1.23B. Today, Astrazeneca is listed in the 100 FTSE
index and it’s market capital is £54.8 billion which makes it 6 th in the
primary L.S.E.
Astrazeneca supplies medicines to over 100 countries and sells products
under brands Losec, Crestor, Entocort, Onglysa, Citanest, Atacand,
Nexium and Diprivan. It continues to do well in diabetes franchises and
has gained a lot of profit in the years compared to the other products.
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2.FINANCIAL PERFORMANCE AND POSITION:
Any company’s financial performance can be understood from the
financial statements issued by the company at the end of the fiscal year.
Current financial standings of this organisation are shown in these
statements. There is also an analysis carried out after a critical calculation
of various ratios such as Profitability, Liquidity, Effeciency ratios and so on.
Furthermore, these statements and ratios also help the shareholders and
the investors to understand the financial position of the company and
decide whether to invest or not.
We will now discuss some of these ratios to understand the financial
performance and position of Astrazeneca plc.
2.1 Profitability Ratios: These ratios help to calculate the profitability of
a company. Here, we will try and find out the ratios and the reasons for
their ups and downs during the last 4 years.
2011 2012 2013 2014
Gross profit % 82.06 80.72 79.54 77.61
net profit% 29.72 22.51 10.00 4.73
ROCE 33.35 19.47 8.20 3.02
ROA 23.41 14.28 5.84 2.13
Operating profit 36.82 27.33 12.71 4.77
TABLE 1: PROFITABILITY RATIOS
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FIGURE 1: GRAPH (PROFITABILITY RATIOS)
A. GROSS PROFIT:
We can see that the gross profit in the year 2011 was 82.06%
which is good. We see that from the years 2012 to 2014, there
has been a decline in the gross profit by 1% to 2% each year
largely because of the fall in revenue due to the loss of
individuality of it’s products such has Crestor, Atacand and
Seroquel as said by the Chairman.
(‘AZ_Annual_Report_2014_EN.pdf’, no date)Although, sales
declined by 3% in Japan,1 % in Europe and 4% in Rest of the
world, it was partially offset by the diabetes franchise sales which
had a huge increase by $644m.
B. NET PROFIT:
The net profit in the year 2011 was 29.72%. It has varied
distinctly in the years 2012-2014 due to the decreased revenues.
Also, due to the financial expenses that increased from $495m to
$963m have caused a drastic decrease in the net income from
$2571m in 2013 to $1235m in 2014 which has caused the net
profit to decline from 10% to 4% respectively. Maximising the
potentiality of the existing products and effective pricing can help
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