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Working Capital Management in the North American and European Pharmaceutical Industry

Working Capital Management in the North American and European Pharmaceutical Industry

Need for Effective Working Capital Management

Decreasing profitability

Fizzling innovation model

Access to new markets

Price premium pressure

Key Trends

The analysis of Year-on-year (YOY) revenue growth shows that the growth in both North American and European industries declined between 2009 and 2013.

In big pharma, US companies successfully reduced the days inventory outstanding by 􂀀% between 2009 and 2013, while European companies were able to reduce it by only 􂀀% in the same period.

In 2013, mid-size companies were not able to reduce their days sales outstanding compared to previous years. Days sales outstanding for US companies increased by 􂀀% between 2009 and 2013.

In smaller companies, the analysis of days sales outstanding reveals that US companies have a better receivable performance compared to European companies.

About this report

This study analyzes the various working capital components in the pharmaceutical industry. The analysis has been done across the North American and European regions. Companies have also been analyzed for their working capital efficiency and year-on-year growth during the study period 2009 to 2013. The analysis includes various components of working capital management such as days inventory outstanding, days payable outstanding, days sales outstanding and cash conversion cycle. The study also analyzes the participants in the pharmaceutical industry based on their revenue ranges. It also covers the various trends that impact working capital performance of the participants in the pharmaceutical industry.


  • Executive Summary
    • Key Terms Used in the Study
  • Introduction
    • Objectives of the Study
    • Research Objective
    • Research Methodology
  • The Key Rationale for Effective Working Capital Management
    • Decreasing Profitability
      • Table Pharmaceutical Industry: Net Margin, Global, 2011 and 2012
    • Fizzling Innovation Model
      • Table Pharmaceutical Industry: Impact of Patent Expiry on Sales, Global, 2012
      • Table Pharmaceutical Industry: R&D-to-Sales Ratio, Global, 2008 and 2013
    • Access to New Markets
    • Price Premium Pressure
  • Revenue Range Classification: Revenue Greater Than $10.00 Billion
    • Revenue Growth
      • Table Pharmaceutical Industry: Year on Year Growth, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Year on Year Growth, Europe, FY 2009-FY 2013
    • Days Inventory Outstanding
      • Table Pharmaceutical Industry: Days Inventory Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Inventory Outstanding, Europe, FY 2009-FY 2013
    • Days Payable Outstanding
      • Table Pharmaceutical Industry: Days Payable Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Payable Outstanding, Europe, FY 2009-FY 2013
    • Days Sales Outstanding
      • Table Pharmaceutical Industry: Days Sales Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Sales Outstanding, Europe, FY 2009-FY 2013
    • Cash Conversion Cycle
      • Table Pharmaceutical Industry: Days Sales Cash Conversion Cycle, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Sales Cash Conversion Cycle, Europe, FY 2009-FY 2013
  • Revenue Range Classification: Revenue Between $1.00 Billion and $10.00 Billion
    • Revenue Growth
      • Table Pharmaceutical Industry: Year on Year Growth, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Year on Year Growth, Europe, FY 2009-FY 2013
    • Days Inventory Outstanding
      • Table Pharmaceutical Industry: Days Inventory Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Inventory Outstanding, Europe, FY 2009-FY 2013
    • Days Payable Outstanding
      • Table Pharmaceutical Industry: Days Payable Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Payable Outstanding, Europe, FY 2009-FY 2013
    • Days Sales Outstanding
      • Table Pharmaceutical Industry: Days Sales Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Sales Outstanding, Europe, FY 2009-FY 2013
    • Cash Conversion Cycle
      • Table Pharmaceutical Industry: Days Sales Cash Conversion Cycle, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Sales Cash Conversion Cycle, Europe, FY 2009-FY 2013
  • Revenue Range Classification: Revenue Between $50.0 Million and $1.00 Billion
    • Revenue Growth
      • Table Pharmaceutical Industry: Year on Year Growth, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Year on Year Growth, Europe, FY 2009-FY 2013
    • Days Inventory Outstanding
      • Table Pharmaceutical Industry: Days Inventory Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Inventory Outstanding, Europe, FY 2009-FY 2013
    • Days Payable Outstanding
      • Table Pharmaceutical Industry: Days Payable Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Payable Outstanding, Europe, FY 2009-FY 2013
    • Days Sales Outstanding
      • Table Pharmaceutical Industry: Days Sales Outstanding, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Sales Outstanding, Europe, FY 2009-FY 2013
    • Cash Conversion Cycle
      • Table Pharmaceutical Industry: Days Sales Cash Conversion Cycle, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Days Sales Cash Conversion Cycle, Europe, FY 2009-FY 2013
  • Conclusions
    • Conclusion
  • Appendix
    • Revenue Range Classification: Revenue Greater Than $10.00 Billion
    • Revenue Range Classification: Revenue Between $1.00 Billion and $10.00 Billion
    • Revenue Range Classification: Revenue Between $50.0 Million and $1.00 Billion
    • Key Liquidity Ratios
      • Table Pharmaceutical Industry: Key Liquidity Ratios, North America, FY 2009-FY 2013
      • Table Pharmaceutical Industry: Key Liquidity Ratios, Europe, FY 2009-FY 2013

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