Performance Analysis Of Glaxosmithkline Plc

Return on Equity measures how much net income is generated per dollar invested in the company by stockholders and investors. Again we see the same downward trend. It went down by 6% from 18% in 2011 to 12% in 2012.

7. Overall, the increase in net loss was primarily due to the lower-than-expected sales price and the increase in both marketing and fulfillment expenses.

the company’s margins have shrunk by 10% in the past year due to rising costs and growing competition.

The return on equity (ROE) has also shown an increase in 2009 over the previous year suggesting a successful investment by shareholders. This increase, coupled with the fact that the basic earnings per share (EPS) has increased significantly from 61.78 cents in 2008 to 88.26 cents in 2009 (143%) shows great improvement in the profit per share. Please note that the basic EPS has been used in this analysis as the diluted EPS includes employee options (JBH Annual Report, 2009), skewing and reducing the value of the EPS.

Change in revenue criteria increased both sales and cost of sales by $ 28 Million. The profit margin was decreased from 1.55% to

So while the company increased its net income, it has done so with diminishing profit margins.

The ROE is actually very good in comparison to other market participants especially in 2003, but dropped significantly in 2004. Likewise the ROA dropped. Due to the fact that there was no decline in sales, the constantly rising operating expenses can be seen as a reason.

During this period, the Return on Assets increased from 5.7% in 2012 to 34.6% in 2013. This implies the number of cents earned on each dollar of assets increased from 2012 to 2013. This shows that the business has become more profitable. Equally, the Return on Equity also increased from 12.0% in 2012 to 46.5% in 2013. This similarly implies that the company in 2013 was more efficient in generating income from new investment. This, also can be attributed to the sale of the Digital Business Brand which enabled the company appraise its strategic plan.

Operating profit margin figures in the table above show the return from net sales[13]. However profit margin ratios are high enough for the 3 years, there is a fall from 12.86% to 11.26% during 2011-12. Sales revenue increases with a higher rate than gross profit so there is a poor

3. The deterioration in profitability resulted from a decrease in cost of goods sold as a percentage of sales, and from a decrease in operating expenses as a percentage of sales. The only favorable factor was the decrease in the income tax paid.

The return on equity conveys the profits of the company as a rate of return on the amount of owners' equity. ROE uses average owners equity over the specified time period and net income. Historically a ROE of between 10% and 15% were considered average. Recently higher rates in growth industries have been greater.

Interest Expense Rate is continuously increasing from 1992 to onward. It shows that company is paying high financial charges over short term and long term borrowings.

“GlaxoSmithKline (GSK) is a global healthcare company specialized in the discovery, development, manufacturing and marketing pharmaceutical and consumer health-related products. GSK has operations in about 114 countries, with products being sold in over 150 countries”.

GSK is the 2nd largest pharmaceutical firm in the world, and the largest in the UK by sales and profits, it is responsible for 7% of the worlds pharmaceutical market, and has its stocks listed both in UK and US (O 'Rourke, 2002). The origin of the so called blockbuster model, is partly linked with Glaxo (as it was previously known). In the early 80’s, then Glaxo brought to light their first blockbuster drug, Zantac, which was an anti-ulcer drug, which was very similar to the a pre existing drug Tagamet (first ever blockbuster) sold by Smith Kline & French, their completion at the time (MONTALBAN and SAKINÇ, 2011). The introduction of this drug, brought about an increasing sales force in the US, the company soon became dependent on the drug, because it represented a large part of their profit. In 2002, 8 blockbusters of GSK contributed to $14.240 million sales revenue, taking up 53% of its total ethical sales (Froud et al 2006). However, due to the nature of the pharmaceutical industry, the patent began to expire, in other to avoid the patent cliff, Glaxo merged with Wellcome in 1995, which ensured a growing number of sales force, and with Beecham in 2000 (Froud et al., 2006) this merger, boosted the confidence of investors, by growing the business inorganically. For Big Pharma, this block buster model is very profitable, because with the high cost of R&D, the drugs are able to generate ample profit, to cover the sunk costs

This is a strategic analysis of GlaxoSmithKline that examines the key factors that influence the company and its activities. The strategic analysis will examine key factors in the company’s internal and external environment and their influence on the company’s strategies. GlaxoSmithKline is a global healthcare company that offers pharmaceutical, vaccines and consumer products. The company is a product of various mergers, the latest occurring in 2001 between GlaxoWellcome and SmithKline Beecham. The company started in London United Kingdom in 1715 as Plough Court pharmacy and has evolved to become one of the leading global healthcare companies. The healthcare company operates in more than 150 countries with 89 manufacturing locations and research centers in the USA, China, UK and Belgium. In 2015, the company’s sales grew to £23.9 billion from £23.0 billion in 2014 (GlaxoSmithKline plc. 2015).