Quick ratio of the largest pharmaceutical companies of Russia

Information agency Credinform prepared a ranking of the largest pharmaceutical companies of Russia.

The TOP-10 list of enterprises was drawn up for the ranking on the volume of revenue, according to the data from the Statistical Register for the latest available period (for the year 2014). These enterprises were ranked by decrease in turnover; the data on the dynamic of revenue related to the previous period, quick ratio and solvency index GLOBAS-i® are represented (see the Table 1).

Quick ratio is an indicator, which characterizes the solvency of a company in the short/medium term; the ratio makes it possible to determine whether an enterprise will be able to repay its short-term liabilities due to the most liquid assets: cash, short-term receivables, short-term investments.

Recommended value is from 0,5 up to 0,8.

For getting of the most comprehensive and fair picture of the financial standing of an enterprise it is necessary to pay attention not only to the average value of indicators in the industry, but also to all presented combination of financial indicators and company’s ratios.

The quick ratio of the largest pharmaceutical manufacturers (except Khimiko- farmatsevtichesky kombinat AKRIKHIN NJSC) does not stay within the recommended lower limit interval: current liabilities of companies exceed the most liquid part of the balance, that, under certain conditions, could lead them to a non-payments crisis.

Picture 1.  Quick ratio and revenue of the largest pharmaceutical companies of Russia (TOP-10)

The annual revenue of the participants of the TOP-10 list amounted to 177,3 bln RUB at the end of 2014, that is higher by the symbolic 1,0% than the consolidated figure of the same enterprises in the previous reporting period (mainly this is due to a drop in revenue of the group of companies Pharmstandard). Taking into account the inflation, the industry is stagnating. The policy of import substitution, which is realized via imitative «shake-out» from the market of foreign players, has to change the trend of the development of the pharmaceutical industry. 

Since the 10th of December the restrictions on the public procurement of imported drugs come into force. The new rules will affect purchases «for provisioning governmental and municipal needs with drugs included in the list of vital and essential medicines». If an imported drug can be replaced by Russian equivalent (generic) or analogs from the member countries of the Eurasian Economic Union, a customer shall reject all applications, containing proposals for the supply of drugs, which come from foreign countries. The list includes 608 medicines.

It is said also in the document, that before the end of 2016 the restrictions do not apply to medicines, for which the package is made in the territories of the states - members of the Eurasian Economic Union.

Earlier, it was pointed out in the Cabinet of Ministers, that the measure «is aimed at the development of domestic production of drugs». According to the officials, two-thirds of essential medicines have already been produced in Russia.

However, any restrictions are of problematic nature: it is noticed, that the Russian equivalents have more side effects and less quality than original imported drugs. Moreover, there is a risk that during public procurement our suppliers will split the difference and dictate the prices. And the «elimination» of unnecessary competitors will not contribute to investments in developments.