Exploration of the Profitability Path of Listed Pharmaceutical Enterprises in China Based on DuPont Anal-ysis / 中国药房

ABSTRACT

OBJECTIVE:To investigate the profitability of listed pharmaceutical enterprises in China,and to investigate the ba-sic profitability path. METHODS:With the help of DuPont financial analysis system,the financial data of the listed companies and other manufacturing industry during 2007-2013 were collected and compared in terms of the return on equity(ROE),profit margin (PM),asset turnover (ATO) and equity multiplier (EM),etc. RESULTS & CONCLUSIONS:During 2007-2013,average ROE and PM of listed pharmaceutical companies both were higher than those of other manufacturing industry(10.00% vs. 6.40%, 11.50% vs. 6.49%);while average ATO and EM were lower than other manufacturing industry (0.65 vs. 0.73,1.90 vs. 2.19), with statistical significance(P<0.05). It has advantages in core earnings and product profitability while disadvantage in asset turn-over and financial leverage for the listed pharmaceutical companies. Listed pharmaceutical companies’gross margin was higher (42.87% vs. 22.07%),but was offset by the higher ratio of expenses to sales(18.24% vs. 5.61%)and insufficient utilization ratio of circulating assets. To change this situation,listed pharmaceutical enterprises should focus on circulation cost saving and the im-provement of assets operation ability,especially enhancing the utilization ratio of current assets.