A Research Proposal On FINANCIA PERFORMANCE ANALYSIS OF PHARMACEUTICAL INDUSTRY IN INDIA

IN PARTIAL FULFILLMENT OF THE REQUIREMENT OF THE AWARD FOR THE DEGREE OF MASTER OF BUSINESS ADMINISTRATION In Gujarat Technological University

UNDER THE GUIDANCE OF Mr.Nilesh Movalia

SUBMITTED BY Vala Punit M. Paneliya Vishal G. Enrolment No.:117220592023 Enrolment No.:117220592002

K.K.Parekh Institute of Management Studies Amreli Affiliated to Gujarat Technological University, Ahmadabad

INTRODUCTION

The Indian pharmaceutical industry is the world's fourth-largest by volume and is likely to lead the manufacturing sector of India. The earliest pharmaceutical companies in India are Bengal Chemicals, East India Pharmaceutical works limited, which still exist today as one of 5 government-owned drug manufacturers. For the next 60 years, most of the drugs in India were imported by multinationals either in fully formulated or bulk form. The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. However, economic liberalization in 90s by the former Prime Minister P.V. Narasimha Rao and the then Finance Minister, Dr. Manmohan Singh enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market, and while they streamed out. Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs. Although some of the larger companies have taken baby steps towards drug modernization.

INDIAN PHARMACEUTICAL SCENARIO

The Indian pharmaceutical industry is one of the worlds largest and most developed in terms of production volume and domestic consumption. Over the last 30 year India has emerged as a major leader in generic drug production starting from almost nonexistence. Indian drugs are coveted all over the world for its high quality and low cost generic drug manufacturer. The Indian pharmaceutical industry is characterized by the twin benefit of strong domestic consumption growth on the one hand and robust export opportunities on the other

Over the years the market has developed gradually, govt. reforms, change in international markets, had led the industry as what we see today. Indias drug industry is one of the fastest growing segments of the economy with an average 7-8 percent growth over the years. As per the forecast this growth momentum will continue to move on and will touch 15% by the year of 2012.The top pharmaceutical in India are below

RANK 1 2 3 4 5 6 7 8 9 10

NAME Ranbaxy Dr. Reddys laboratories Cipla Sun pharma industries Lupin Labs Aurobindo Pharma GlaxoSmithKline pharma Cadila Healthcare Aventies Pharma IPCA Laboratories

REVIEW OF LITERATURE

1. Nagarajan and Burthwal (1990) in their research work entitled profitability and structure: A firm level study of Indian Pharmaceutical Industry, intensively examined the relationship between profitability and structure, using a sample of thirty-eight pharmaceutical firms in India for the period 1970-1982. Two measures of profitability i.e., ratio of net profit to total sales revenue and the ratio of net profits to total assets have been used to find out the determination of profitability. The coefficient of growth rate of sales was positive and significant, suggesting that factors on the demand side of a firm had greater impact o profitability than on the supply side.

2. Debasish Sur and kaushik Chakraborty (2006) in his study financial performance of Indian Pharmaceutical Industry: The Indian Pharmaceutical Industry has been playing a very significant role in increasing the life expectancy and in decreasing the mortality rate. It is the 5th largest in terms of volume and 14th largest in value terms in the world. The comparative analysis the financial performance of Indian pharmaceutical industry for the period 1993 to 2002 by selecting six notable companies of the industry. The comparison has been made from almost all points of view regarding financial performance using relevant statistical tools.

3. Prasad K.V.N, Ahmed Mubasheruddin & Dr. Reddy D. Maheshwara (2012) financial health of a company is a matter of concern for every stake holder of the business. It is in fact the financial position of the company that drives the decision making process of any stake holder. The present study attempts to analyze the financial performance of three major pharmaceutical companies in India: Cipla Ltd, Ranbaxy Laboratories and Dr. Reddy's Laboratories for the period 2006-10. The study is based on fourteen parameters of the variables, Operational & Financial Ratios, Performance Ratios, Growth Ratios and Financial Stability Ratios. The study brings out the comparative efficiency of sample pharmaceutical companies.

STATEMENT OF THE PROBLEM

A research problem in general refers to some difficulty which a researcher experience in the context of either a theoretical or practical situation or wants to obtain a solution for the same. Our research problem is Financial Performance Analysis of Pharmaceutical Industry in India

RESEARCH OBJECTIVES
The objective of research is to discover answers to question through the application of scientific procedures. The main aim of the research is to find out the truth which is hidden and which has not been discovered as yet. Following are over research objectives.......

To find out Financial performance of Pharmaceutical industry in India over the year. To find out Performance of company within industry. To provide better source of Pharmaceutical industry in India. information to investor for invest in

For Our knowledge creation.

HYPOTHESIS

Hypothesis is usually considered as the principal instrument in research. Its main function is to suggest new experiments and observation.

H0: NULL HYPOTHESIS HA: ALTERNATIVE HYPOTHESIS

H0: There would be no significance difference in the profitability performance of Pharmaceutical industry. HA: There would be significance difference in the profitability performance of Pharmaceutical industry.

H0: Top 5 Pharmaceutical companies profit are not affect Pharmaceutical industrys performance. HA: Top 5 Pharmaceutical companies profit are affect Pharmaceutical industrys performance.

RESEARCH DESIGN

There are three main research design described as 1) Exploratory Studies 2) Descriptive Studies 3) Casual Studies

We will use here exploratory research design because the main purpose of such studies is formulating problem for more precise investigation or developing working hypothesis from operational point of view.

SOURCES OF DATA / DATA COLLECTION

Collection of the data is an essential part of the whole project work, only the data collection is not sufficient but to analyzed and interpret and present them in meaningful manner. There are two sources of data

1) primary data 2) Secondary data

Secondary Data
We will use Secondary data of 5 years till 2012.

DATA COLLECTION METHOD

Journals ( Business standard, Business Today ) Annual Reports Government publication Publication of professional and research organization Encyclopaedia News paper article Investor annual report Websites

POPULATION

Population Our population for this study is Pharmaceutical industry of India.

Parameter of interest Population parameters are summary descriptors of variable of interest of population they are

1) Mean 2) Return 3) Revenue 4) Profit

SAMPLING METHOD

There are two types of sampling methods 1) Probability sampling 2) Non-probability sampling

We will use Non-probability sampling method there are three methods 1) Convenience sampling 2) Snow ball sampling 3) Purposive sampling a) Judgement sampling b) Quota sampling

In Non-probability sampling method we will use Convenience sampling method.

SAMPLING FRAME

Sampling Frame There are three sampling frame in our research 1) Top pharmaceutical companies 2) Middle pharmaceutical companies 3) Bottom pharmaceutical companies

We will use Top pharmaceutical companies as a sampling frame

Sampling Size On basis of profitability, Top 5 Pharmaceutical Companies in India is our sample size 1. Ranbaxy 2. Dr. Reddys Laboratories 3. Cipla 4. Sun Pharma Industries 5. Lupin Labs

RESEARCH TOOLS

We will use follow Research tools for data analysis they are given under:

1) ANOVA Test 2) Trend Analysis

TIME BUDGET

SR.NO. 1. 2. 3. 4. 5. 6. 7.

Work Literature review Data collection Analysis of data Interpretation of Data Preparing a rough draft Final Project report Total

Duration 14 Days 23 Days 18 Days 15 Days 10 Days 10 Days 90 Days

LIMITATIONS OF THE STUDY

Following limitations were encountered while preparing this project: Limited Data:o This project has completed with annual reports; it just part constitutes one

of data c o l l e c t i o n i . e . Secondary. There w e r e

limitations

for primary data collection because of confidentiality.

Limited Period:o This project is based on annual reports. Conclusions and

Recommendations are based on such limited data. The trend of last some year may or may not reflect position of the company.

Limited Area:o Also it was complex to collect the data regarding the competitors and their financial information. Industry figures were also difficult to obtain.

Limited Time:o The Survey was conducted within the limited time frame because of the short Time program so few short coming may be expected.

BIBLIOGRAPHY

Websites: www.bseindia.com www.nseindia.com www.sebi.gov.in www.rediffmoney.com www.moneycontrol.com

Magazines: Business standard Business Today