Determinants of Corporate Profitability: An Empirical Study of Indian Drugs and Pharmaceutical Industry

Abstract

This paper provides an empirical evidence about the determinants of profitability of selected companies in drugs and pharmaceutical industry in India. It is based on a sample of fifty firms in drugs and pharmaceutical industry drawn from PROWESS database developed by CMIE. It covers a period of ten years from J 995-6 to 2004-5. The profitability of firms has been measured in terms of average return on capital employed. In order to study the determinants of profitability, ten explanatory variables, i.e., size (total assets), past profitability (OPR, NPR), age, advertising intensity, retention ratio, liquidity, efficiency ratios (inventory turnover ratio, debtor turnover ratio, asset turnover ratio), long term finance, market share, and research and development intensity were chosen for empirical investigation . Multiple regression analysis was used to develop a model to identify the determinants of profitability of firms in this industry.The results revealed that age, efficiency ratio, past profitability, and research and development intensity are statistically significant in determining the profitability of firms in drugs and pharmaceutical industry.

The Profitability Analysis of the Logistics Industry Companies in the Balkan Countries

“…Efficient management leads to an optimal liquidity policy so that eliminating the risk of the inability to settle the short-term liabilities of the company. A positive relationship between profitability and liquidity was confirmed in the studies of Chander and Aggarwal [30]; Boadi et al [13]; and Denčić-Mihajlov [36]. The greater profitability of large companies in relation to smaller companies in certain circumstances could be the result of highly efficient management strategies and management strategies of cash policies.…”

“…The efficiency is the cornerstone to achieve higher profits [16]. The efficiency of a company as measured by assets turnover ratio positively influences its profitability, as seen in the Indian drugs and pharmaceutical industry [30]. Abey and Velmurugan [31] found that assets turnover ratio positively influenced the level of profit and noticed that the level of profitability was greater with companies which utilized their assets optimally.…”

“…Similarly, the impact of current liquidity on the profitability was researched by Goddard et al [27], Devi and Devi [28], Charumathi [29], among others. The relationship between efficiency and profitability was researched by Chander and Aggarwal [30], Abey and Velmurugan [31], Alarussi and Alhaderi [16], Pervan et al [32], among others. Lastly, the impact of growth in sales on profitability was analysed by Mijić et al [33], Maçãs Nunes et al [34], Yazdanfar [35], Denčić-Mihajlov [36], among others.…”

R&D Implementation in a Department of Laboratory Medicine and Pathology: A Systematic Review Based on Pharmaceutical Companies

“…Improved commercialization yields more revenues and more profits. Both accrued actual and expected profits encourage firms to invest more on R&D to achieve lasting growth ( Simanjuntak & Tjandrawinata, 2011 ; Chander & Aggarwal, 2007 ). Commercialization outcomes (e.g.…”

A magyar mezőgazdasági vállalatok jövedelmezőségének vizsgálata

“…Az egyes változók hatásait illetően eredményeink a következőképpen illeszkednek az eddigi empirikus kutatások létrehozta keretrendszerbe: a vállalatméretet leíró változó nem ment át az általunk alkalmazott segédregresszió próbáján, tehát nem áll szignifikáns kapcsolatban a ROA-val. Ez az eredmény összhangban van Pervan-Mlikota [2013], illetve Chander-Aggarwal [2008] eredményeivel, számos szerző eredményeitől viszont eltér. (Lásd a 2.…”