Slide 1

PHARMACEUTICLE INDUSTRYBy:Maaz-ul-BariHIGHNOONBrief introduction of the companyHighnoon Laboratories Limited was incorporated in 1984 as a Private Limited Company.

It was converted into a Public Limited Company in September 1985.

With an authorized capital of Rs. 200 million and a paid up capital of Rs. 165 million, the Company is engaged in manufacture and marketing of pharmaceuticals and within a short span of 25 years the Company has become one of the leading Pakistani Pharmaceutical Companies.

The new plant, completed at a total cost of Rs. 90.3 million is one of the finest industrial buildings equipped with the most latest machinery and quality control equipment

Business AnalysisCompanies operating in the industry 600Number of employees Over 100,000Registered Drugs 47,000Registered Molecules 1,100R&D expenditure 1% of the profitAverage growth Rate 11%Market share of Multinationals companies 45%Market share of Local companies 55%Market Leader GlaxoSmithKline

Business AnalysisNames Market ShareGSK 11.60%Sanofi Aventis 4.10%Getz Pharma 3.90%Abbott Lab 3.80%Roche 3.10%Merck 2.90%Highnoon 0.73%

Highnoon is ranked 12th in the industryLiquidity ratios

COMMENTSThe net working capital of the company is far greater than the industry. The company is following a conservative working capital management strategy.

It is satisfactory that the company has more than enough working capital available for its operations. Still the company should try to match to the level of industry by reducing its illiquid assets such as inventory, average age of inventory and prepayments and reducing short term liabilities to a reasonable level.

The current and quick ratios are telling a different story. We see that both these ratios are far less than the industry average. The company should enhance its liquid assets and short term ability to meet its obligations.Activity Ratios

COMMENTSAccount receivable turnover is much higher than the industry. It indicates that company relatively turns over its sales more frequently than the industry. Its indeed a good sign.

The average collection period is at a very low level than the industry. It indicates that the company the company receives cash from its debtors more quickly as compared to the industry. It is yet again a good sign.

Inventory turnover is a bit lower as compared to the industry average. Company turns over its inventory a bit slower than the industry.

Average age of inventory is higher than the industry. It indicates that the inventory stays longer with the company as compared to the industry average.

Total asset turnover and operating cycle both are higher than industry averages. Operating cycle is higher and so the company should try to reduce its operating cycle so that it receives cash on its sales sooner than before.

Account receivable turnover is higher than the industry so it is a good sign.Debt Ratios

COMMENTSBoth debt and debt to equity ratios are higher than the industry and TIE is lower than the industry. It means that the company has higher debt leverage as compared to the industry averages. It is visible that the company's EBITs give less coverage to the interest costs as compared to the industry averages. Although every company has its levels of debt financing but the company should give this a serious thought.

Short term borrowings have increased in 2009 where as long term loans have decreased. Although it is good that the company is relying more on short term financing sources still the financing needs to be rationalized and restricted only to important operational and expansion purposes. Profitability Ratios

COMMENTSGross profit and net profit margins are lower than the industry. Net profit margin projects a greater decrease as compared to industry.

The company should therefore work on its operating and finance expenses to reduce them in order to expand its net profit margin.

ROA and ROE both are lower than the industry. The company needs to enhance these levels and meet the pace of industry by increasing its EBTs or reducing its NON-productive assets.Market Value Ratios

COMMENTSEarning per share, price to earning ratio and book value per share of the company all are lower than the industry.

These valuation ratios are critical in investor's sight for the company's reputation. The company should try to maintain its price to earning ratio that is comparatively good at present. Earning per share needs to be enhanced in the coming years

.Dividend yield and dividend payout ratios are satisfactory as both of these are greater than the industries. It gives a good impression of the company to the investors.Findings of the financial analysis.Its sales were the historically highest and registered impressive growth, almost 20% growth. Last year (FY08) Gross Profit Margin was quite good at 35.53% which further improved to 36.24%.

The company posted net profit after taxation at Rs 65.4 million (FY08: Rs 63.12 million) registering almost 3.70% increase

The company has excellent track record of profit distribution, For the year 2009 the company announced 63% dividend 53% cash dividend plus 10% bonus stock dividendAverage price of shares has increased in 2009-10 and is 3 times the par value CONT..The short-term solvency of the company has declined but still is not at an alarming level

The company still has more than one rupee to pay back its one rupee of short term obligations. Immediate solvency position of the company needs to be improved as the cash and bank balances have shown a volatile trend over the years.

Credit policies are effective as the company has reduced its long term loans in 2009 instead relied more on short term borrowings as a means of financing

Trade debts have also fluctuated over the years but shown a reasonable decreasing trend in 2008-09.

The fixed deposits are generating other income which has contributed to the increase in net income.

Safe to buy becauseThe net profit after tax of the company is increasing for the last two years. Therefore the shareholders earning per share has also increased continuously from 2008-2009 by 3.82 to 3.96. This shows it is continuous capital appreciation per unit share. It makes the stock attractive

The analysis shows the Earning per share and Dividend per share is also increasing rapidly. Thus It is beneficial to the shareholders and prospective investor to invest the money in this company.

The rate of return on equity share capital has been decreasing during the year 2006-2008 to 2008-2009. This shows that the company has reducing returns available to take care of high equity dividend, large transfers to reserve, & also company has got not a very great scope to attract large amount to fresh funds by issue of equity share. It may hinder the stock performance

During the last 2 years the operating profit ratio has been stable. It indicates that the company has stabilized its efficiency in managing all its operations of production, purchase, inventory, selling and distribution and also has control over the direct and indirect costs. Thus, company has sufficient margin available to meet non-operating expenses and earn net profit.

Safe to buy because!The short-term solvency of the company is quite satisfactory.

Immediate solvency position of the company is also quite satisfactory.

The company can meet its urgent obligations immediately.

Credit policies are effective.

Over all profitability position of the company is quite satisfactory especially for the last 2 years.

Inventory turnover rate is satisfactory. Stock in trade of the company is moving fast in the market.

The company is paying promptly to the suppliers.

Findings of the Business analysis Safe to buy because!The company is principally engaged in the manufacture, import and marketing of pharmaceutical and allied products.

It has also made business alliances with some of the best known names in the pharmaceutical industry.

In just 25 years, on the basis of sales value, it has become the 12th largest pharmaceutical company in Pakistan.

Highnoon's quality system was recertified by the world renowned certification agency SGS through surveillance audit for ISO 9001:2000 Quality System.

The company has embarked Rs 120 million expansion project which will upgrade production facility to support rising sales.

CONT..In FY09-10 budget, customs duties have been reduced from 25 percent and 10 percent to just 5 percent on import of 19 types of raw materials and active ingredients as well as chemicals.

This will provide relief to the sector that was grappling with high cost of goods sold with major contributor being raw and packaging material.

This beneficial impact is eroding and will continue to do so unless the Government implements the existing notified policy of allowing price adjustments to offset inflation and devaluation. This is essential if the industry is to sustain itself for the future.contThe company is exercising strong strategic planning in achieving annual goals.

It has around 45 distributors throughout Pakistan.It captures almost the entire country including Azad Jammu Kashmir.

It has strong market position in some cities e.g. Faisalabad, Peshawar, Quetta and Multan.

It has high skilled professionals and man power.It uses above moderate production technologies.

Assumptions for Sales forecast Sales have historically shown an increasing trend but with a fluctuating percentage.

Sales increase has been forecasted at 14% on an average basis.

Pharmaceutical Price adjustments by the government will also contribute to the increase in sales.

The company had shown passive sales increase in the last year.

The company has embarked Rs 120 million expansion project which will upgrade production facility to support rising sales.

Reduction in custom duties of raw material will have a positive impact on sales

Assumptions for Sales forecast

Same as previous yearsAdjusted with net income and dividends

Forecasted with Logest function because of an increasing trendAFN adjustedForecasting the historical trend and subtracting the present value and finance costAverage because of unstable patternAverage because of unstable patternZero for the last 2 yearsWith salesZero for past 3 yearsSame no relevant information for payablesAFN AdjustedZero for last 3 yearsFixed payment of L.T.L current portion+ principal payment of current potion of A.S.T.F.L+ Average of long term advancesAssumptions for Sales forecast

With sales %Last years ending balance minus current year amortization expenseZero for the last 3 yearsFixed for the last 3 yearsZero for the last three yearsWith sales %With sales%With sales%Average0With sales

Assumptions for Sales forecast

Already discussedWith sales %

AverageWith sales %With sales %With sales %With sales %

On the basis of future mark-upsRate applicableAFN AdjustmentMaintaining current and debt ratio

. .

WYETH PAKISTAN LIMITEDBy; Mehreen Aslam

BRIEF INTRODUCTION OF WYETH

Brief introduction of WYETHWyeth is one of the worlds largest research-driven pharmaceutical and health care products companies.

It is a leader in the discovery, development, and manufacturing and marketing of pharmaceuticals, vaccines, biotechnology products, nutritional and non-prescription medicines that improve the quality of life for people worldwide.

The Companys major divisions include Wyeth Pharmaceuticals, Wyeth Consumer Healthcare and Fort Dodge Animal Health.

Brief introduction of WYETH. .

Business AnalysisPfizer Inc, founded in 1849, is dedicated to better health and greater access to health care for people and their valued animals. Every day, approximately 81,900 colleagues in more than 150 countries work to discover, develop, manufacture and deliver quality, safe and effective prescription medicines to patients

On January 26, 2009 Pfizer and Wyeth announced that they have entered into a definitive merger agreement under which Pfizer will acquire Wyeth in a cash-and-stock transaction currently valued at $50.19 per share, or a total of approximately $68 billion. The Boards of Directors of both companies have approved the combination.

Business Analysis

The combined company will create one of the most diversified companies in the global health care industry.

Operating through patient-centric businesses that match the speed and agility of small focused enterprises with the benefits of a global organizations scale and resources, the company will respond more quickly and effectively to meet changing health care needs.

The combined company will have product offerings in numerous growing therapeutic areas, a strong product pipeline, leading scientific and manufacturing capabilities, and a premier global footprint in health care. Business AnalysisUnder the terms of the transaction, each outstanding share of Wyeth common stock will be converted into the right to receive $33 in cash and 0.985 of a share of Pfizer common stock, subject to the terms of the merger agreement.

Based on the closing price of Pfizer stock as of January 23, 2009, the stock component is valued at $17.19 per share.

The transaction provides immediate value to Wyeth shareholders through the cash component, as well as continued participation in the future prospects expected to result from the combination through their ownership of approximately 16 percent of Pfizers shares.

Critical Analysis of Ratios Liquidity RatioLiquidity RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Net Working Capital:1253335-381242011380383206173935645601ii) Current Ratio3.70.981.262.543.24iii) Quick ratio:10.40.181.121.59LiquidityIndustryi) Net Working Capital:80598679ii) Current Ratio2.58iii) Quick (acid test) ratio:1.3605AnnotationsThe net working capital of the company is far less than the industry. It may be because of the disparity between the sizes of the companies whose averages have been taken. But it is not reasonable that the company has less than enough working capital available for its operations. The company should try to match to the level of industry by increasing its current assets and reducing short term liabilities to a reasonable level.Basically Wyeth is using Aggressive Working strategy in which company is spending far more than what is available.this strategy is bit riskier.

The current and quick ratios are showing different trend. Compared to industrial averages the current ratio of Wyeth is greater,which means current assets are increasing,major contribution is of trade debts and stock in trade.Quick ratio of Wyeth is less than industrial average because of less liquid assets.company should increase its liquid assets ie cash and bank balances etcActivity RatioActivity RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Accounts receivable turnover8.3119.4463.1221.1114.76ii) Average collection period43.3118.55.717.2924.38iii) Inventory Turnover2.254.482.121.842.75iv) Average age of inventory15980169199130v) Total Asset turnover1.51.51.340.691.34vi) Operating cycle20298175216155Activity RatiosIndustryi) Accounts receivable turnover30.217ii) Average collection period19.652iii) Inventory Turnover2.6135iv) Average age of inventory141.95v) Total Asset turnover1.239vi) Operating cycle154.55AnnotationsAccount receivable turnover is much less than the industry. It indicates that company has less short term solvency.it is not a good signal.

The average collection period is at a very high level than the industry. It indicates that the company receives cash from its debtors very slowly as compared to the industry. This again indicates that the company is not performing well above its competitors with regard to the credit management and operational efficiency.

Wyeth is operating at a comparatively lower inventory turnover ratio as compared to its competitors .It means Wyeth turns over its inventory a slower than the industry.

Average age of inventory is higher than the industry. It indicates that the inventory stays longer with the company as compared to the industry average.

AnnotationsTotal asset turnover and operating cycle both are higher than industry averages. Operating cycle is higher and so the company should try to reduce its operating cycle so that it receives cash on its sales sooner than before.

Debt RatioWyeth is not doing Debt financing at all,as historical evidence shows.there are trade and other payables and deffered taxation which do not come in debt,hence debt ratio can not be calculated.Profitability RatioProfitability RatioWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Gross profit margin:2124365324ii) Net profit margin:-32.482.48166iii) Return on assets (ROA):-54.83.75118iv) Return on Equity (ROE):-812121811Profitability Ratioi) Gross profit margin:36.55ii) Net profit margin:9.5805iii) Return on assets (ROA):8.931iv) Return on Equity (ROE):16.9535AnnotationsGross profit and net profit margins are lower than the industry. low gross profit margin is because of increase in COGS as inflation and depreciation of currency had made raw material expensive.

Net profit margin projects a greater decrease as compared to industry.this is because of increase in administrative expenses and finance cost. The company should therefore work on its operating and finance expenses to reduce them in order to expand its net profit margin.

ROA and ROE both are lower than the industry. This is due to decrease in profits resulting from high cost of production and increased expenses . This again indicates the inability of the company to generate more with the money shareholders have invested .The company needs to enhance these levels and meet the pace of industry by increasing its EBTs or reducing its unproductive assets.Market Value RatioMarket value RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Earnings per share (EPS)-61173105ii) Price/Earnings ratio:-2088.21119.9iii) Book value per share:0.69134315647iv) Dividend yield 04.8814.8v) Dividend payout 04063991Market value Ratiosi) Earnings per share (EPS)10.1875ii) Price/Earnings ratio:14.265iii) Book value per share:50.9185iv) Dividend yield 4.348v) Dividend payout 55AnnotationsEarning per share, price to earning ratio and book value per share of the company, all are lower than the industry.as company has facing loss in last year. These valuation ratios are critical in investor's sight for the company's reputation. The company should try to maintain its price to earning ratio. Earning per share needs to be enhanced in the coming years.

Dividend yield and dividend payout ratios has not been calculated because company has issued no dividend as Wyeth incurred loss in last yearFRANCHISE

FINDINGS OF FINANCIAL & BUSINESS ANALYSISFindings of the Financial AnalysisNet sales has decreased by 3.24% as compare to last year.Last year 2008 Gross Profit Margin has decreased by 4.16% which further deteriorated to 28.8% .The company posted net loss after taxation at Rs 86,849 (2008: Rs 144,292 profit) registering almost 160.1% decrease. Wyeth announced 250 Rs dividend per share, but as company has faced loss,so no dividend been announced for year 2009.Trade debts shows an increasing trend from 2006-09.Other operating expenses of the Wyeth is following haphazard trend. Through analysis its clear that its has increased by 2.63% 2006-07 to 144.78% 2007-08,and then dropped by 51.56% 2008-09.

Findings of the Financial AnalysisFinance cost is increasing through out from 1.89% 2006-07 to 239.24% & 2008-09 which is because of bank charges ad interest on workers profit participation fund. Distribution cost is basically means salary, wages, fuel, power, rent, insurance, dues etc.it is showing an increasing trend through out from 2006-09 Credit policies are effective as the company has no long term loans in ,instead relied more on short term borrowings as a means of financingShort term investments has decreased by 87.9% in year 2008,and in year 2009 Wyeth did no short term investment because of companys bad condition.The short-term solvency of the company has declined but still is not at an alarming levelImmediate solvency position of the company needs to be improved as the cash and bank balances have shown a volatile trend over the years. Findings of the Business AnalysisWyeth, headquartered in New Jersey, has business interests in pharmaceuticals, consumer healthcare and animal healthcare products.

The company has a diverse product portfolio and strong revenue-generating brands. Wyeths peer group comparison involving GlaxoSmithKline, Novartis, and Merck .

The global pharmaceutical industry is faced with the challenge of ensuring the viability of its high cost, high-margin, blockbuster drugs-based business model .

Wyeth engages in the discovery, development, manufacture, and marketing of pharmaceuticals, vaccines, biotechnology products, and nonprescription medicines."

Findings of the Business AnalysisThere will be tremendous competition for further growth, and only the companies with a strong management team which can produce strong fundamentals will prevail. Luckily for Wyeth, the company incorporates both of these aspects.

Wyeths management is continuously focused on taking steps to improve performance in spite of challenging business environment, Business improvement initiates undertaken in prior years and the period under review are expected to contribute towards improving operational efficiencies on ongoing basis Findings of the Business AnalysisThe company also remains focused on introducing new research products. Two products ENBREL and PRISTIQ are projected to be launched in the latter part of 2010.

The future plans can only be implemented if the Government implements the existing report policy of allowing price adjustments to offset inflation and devaluation. This is essential if the industry is to sustain itself for the future.

Pfizer and Wyeth announced that they have entered into a definitive merger agreement under which Pfizer will acquire.

ASSUMPTIOS FOR SALES FORECASTAssumptions for Sales Forecast Growth Rate: The average sales growth rate was taken for the purpose of forecasting. The company had growth rates of 8.33%, 13.10% over the past 3 years. During the latest financial year, i.e. 2008-2009 the company performed below expectations and achieved decrease in growth rate by 3.24%, it was only fair to take an average of the past figures.No further additions or subtractions were made in the growth rate as the companys financial performance is bad,hence sales predictability is also low.

Forecasted Income Statement:Based on the percentage of sales method. All accounts under the income statement have been increased by the sales growth percentage,except;Assumptions for Sales Forecast Finance cost:

For interest on worker's profit participation fund,closing balance=0,so no interest for forecasted year.

For mark-up on running finance,referred to trade and other payables as note was given.there payable of 452 (rupees 000) was due,which I put forward in next forecasted year,no running finance was availed in last 3 years I.e 2006,07,08.

Bank charges,no further note is given,because of haphazard trend so applied logest.

Assumptions for Sales Forecast Pro-forma Balance Sheet:No change in Equity.

No change in hedging Reserve as it is not attached to sales. In view of the loss (86849) for the period 2009,directors have decided not to declare any dividend for 2009.thus all loss will be retained and transferred to as loss. in forecasting I took the unappropriate loss of last year and added the net loss of forecasted income statement of year 2010

No change undertaken in the non-current liabilities as they are not relevant to sales. The entire accounts of Current Liabilities were increased by the percentage of sales growth as they are spontaneous liabilities.

For Long Term Loans,note:5 its mentioned that these loans are given to employees,which is interest free loan and not following any specific trend so took average through logestThere is a need to bring in additional fixed assets following an increase in expected sales. Hence the fixed assets were increased by the percentage of sales growth as well.All Current assets considered as spontaneous accounts except for other receivables which included pension funds,, etc. which were unlikely to increase with an increasing sales pattern but as they are showing random trend and no further information is given in Report,hence assumed to increase with sales.

Assumptions for Sales Forecast Forecasted Cash Flow Statement:Depreciation for the year has been charged on straight line method as given under the note 2.7. From the table 8.1, the average percentage of straight-line depreciation method has been calculated at approximately 15% and this rate applied to fixed assets. Remaining accounts under the cash flow statement only reflect the increase/decrease in the forecasted balance sheet and income statement of 2010 and are not necessarily factual.

Forecasted Balance Sheet:Additional Finance Needed (AFN) to be obtained from issue of new equity. The company has Authorized Capital of 5,000,000 of Rs.100 each,and issued capital is of 1,421,609 shares.so Wyeth has the potential to float more shares.As company has no debt financing hence the AFN is adjusted in share Capital by issuing more capital.AFN ADJUSTMENT

RECOMMENDATION TO INVESTOR !!

The company has faced loss in year 2009 by amount Rs.86849.the reason behind is because Wyeth Rs.2.1 million in the form of cash and medicines for Rehabilitation and Welfare of Internally Displaced Persons .

Forecasted income statement also shows the loss and all other indicators were getting bad showing the in-efficiency of company.

For Wyeth 2009 was a challenging year and witnessed modest growth in Pakistans Economy due to uncertain law and order situation and global Economic Recession.

The Economy continues to witness Double Digit Inflation. Low economic growth and continued depreciation of the Rupee against major currencies. Recommendation to Investor on basis of Financial Analysis

During this year the Pharmaceutical industry has been adversely impacted by both Inflationary trend as well as Rupee depreciation.

Also the Government has not allowed nay across the Board Price adjustments to Pharmaceutical Industry fro last nine years. Growth in pharmaceutical market is mainly Volume growth. All these factors justify the loss faced in year 2009 only by Wyeth .

Recommendation to Investor on basis of Financial Analysis

Pfizer has recently acquired Wyeth in 2009,which is the market leader with highest market share. After the acquisition Wyeths shareholders value has increased because Wyeth is now part of Pfizer.

Now it would be a near ideal time to become a shareholder of this company by buying shares at less price and as there is great potential of growth in Pfizer being the market leader, investor can get huge profits out of it.

Thus, after going through the given fundamentals and comparison to both the industry and its rivals, as an investor, you should absolutely feel much more confident to garnering some of your capital into Pfizer.

Recommendation to Investor on basis of Business Analysis

THANK YOU !!By;HIRA DAUD

64Brief introduction of GSKGlaxoSmithKline (GSK) is a world leading research-based pharmaceutical company.Headquartered in the UK, the company is one of the industry s leading companies with leadership in four major therapeutic areas antibiotics, central nervous system (CNS), Respiratory,gastro-intestinal/metabolic. In addition, it is a leader in vaccines and also has a growing portfolio of oncology products.

GlaxoSmithKline Pakistan Limited came into existence after the merger of Smith Kline and French of Pakistan Limited and Beecham Pakistan (Private) Limited with Glaxo Wellcome Pakistan Limited in 2002. Listed in Karachi and Lahore stock exchangeNine of its products are amongst the top 15 brands in the country. It also exports it good quality products, which make around 2% of GSK s sales. Major export markets include Afghanistan, Sri Lanka, Syria and Greece. HISTORY OF GSK

1830John K. Smith opens adrugstore in Philadelphia1842Thomas Beechamlaunches Beechams pills in England

1880Burroughs Wellcome &Company was founded

1891SmithKline & Co.acquires French,Richards & Company1906Glaxo is registered byJoseph Nathan & Companyas a trademark for dried milk1929SmithKline & Frenchbecomes researchfocused1989SmithKline & Beechammerge1995Glaxo & Wellcomemerge2001GlaxoSmithKlineBUSINESS ANALYSISCompanies operating in the industry 600Number of employees over 100,000Registered Drugs 47,000Registered Molecules 1,100R&D expenditure 1% of the profitAverage growth Rate 11%Market share of Multinationals companies 45%Market share of Local companies 55%Market Leader GlaxoSmithKlineBUSINESS ANALYSISNames Market Share

GSK 11.60%Sanofi Aventis 4.10%Getz Pharma 3.90%Abbott Lab 3.80%Roche 3.10%Merck 2.90%Highnoon 0.73%

GSK is the market leader.Liquidity ratios

56456013.241.59

ANALYSIS:

The net working capital of the company is far less than the industry. It shows that the company has adopted aggressive working capital policy i.e. the company should increase its current assets to build confidence in creditors.

The current and quick ratios are far more than the industry average. the company is performing efficiently and its current assets in possession are over more than the current liabilities that might be needed to be repaid at any point in time. Even the company has more liquid assets to finance its liability which is good thing.Activity Ratios

ANALYSIS:

Account receivable turnover for the industry is higher, whereas for GSK is way lesser which is not good because company is recovering it receivables in frquency loweras compared to industry average.

Due to an decreased accounts receivable turnover, the average collection period of the company is naturally increasing over time which shows inefficiency in receiving the payments from creditors.

ContdInventory turnover and average age of inventory show a favorable result as compared to the industry average which is a good signal for the company that means it doesnt carry inventory for a longer period of time, i.e. the company bears less carrying cost.

ContdAsset turnover is more than that of industry which means that the companys assets are being used efficiently and effectively.

Operating cycle is almost same as that of industry which is good but it has more room to improve as the account receivable turnover is less and can be enhanced.Profitability Ratios

ANALYSIS:All profitablility ratios decreased as compared to that of industry. The downward trend in the gross profit margin serves as a negative indicator for the company. The decreased GP margin is an indication of less amount of money left over from revenues after accounting for the cost of goods sold.

The net profit margin decreased because of rise in expenses due to inflationary pressures.

ROA of the company remained stable showing its smooth asset base for the purpose of generating earnings.

Market Value Ratios

ANALYSIS:Earning per share is lower than the industry. as company cost of manufacturing was higher in last year due to which overall profit was affected. This gives a very bad impression to the investors. The company should look forward to improve its earning per share to maintain its reputation.

Price to earning ratio is more than the industry average. The increase in PE ratio is due to a low EPS and a rather stagnant market price.

Both the dividend ratios are the highest for GSK when compared with the industry averages, hence proving that the companys stock is at a very desirable position as of the latest market scenario.Findings of the financial analysis.Sales revenue for 2009 was Rs. 10.7 billion showing an overall increase of 9.1%. GSK s margins reduced by 4.5% due to a freeze in prices and increased raw material and packaging material costs along with higher utility charges

The PAT faced downward pressure despite an increase in other operating income and a decline in financial charges.

The company has excellent track record of profit distribution, for the past years it has been paying dividend.Findings of the financial analysis:Other operating income has doubled to Rs. 1,280 million in 2007-2008 This was due to gain on sale of land in Korangi. however the income decreased in year 2009 due to improvement and up gradation of plant and equipment.

Trade debts have also fluctuated over the years but shown a reasonable decreasing trend in 2008-09.

Findings of Business analysisThe group operates primarily in 117 countries and its products are sold in over 140 countries. GlaxoSmithKline Pakistanis one of the leadingpharmaceuticalcompanies inPakistanand the it's the world's second largest company with high ranking stands for Employee Cares. GSK employs over 99,000 people in114 countriesOver 150 projects in clinical development are in pipelineAssumptions for Sales forecast:

Growth Rate: The average sales growth rate was taken for the purpose of forecasting. Forecasted sales have increased at 14% for year 2010 on an average basis.

Proforma Income statement: all income statement items would increase with the same proportion as of sales except for finance cost which is taken as average of last years.Proforma balance sheetEquity:Reserve would remain the same.After paying the dividend, remaining amount would be added in unappropriate dividend.No as such changes in equity

Liabilities:The long term liabilities would remain the same as they are non spontaneous in natureCurrent liabilities have been increased by the same proportion as of sales. Except for provision of tax, as it was zero for last year so I have taken it same.

Proforma balance sheetAsset side:

Fixed assets were increased by the percentage of sales growth

Except forLong term loan for employee and long term deposit: they showed a fluctuating trend so I took average of the previous years.

Investment were kept constant.

Proforma balance sheet: Current assets considered as spontaneous accounts except for other receivables which were unlikely to increase with an increasing sales patternshort term investments(T-bills) have been increased by the rate given in the report 2009 i.e. 12.42%

AFN Adjustment Forecasted Balance Sheet: As the company rely in equity financing so the additional Fund Needed (AFN) to be obtained from the issuance of new equity. company has Authorized Capital of 250,000,000 of Rs.10 each,and issued capital is of 170,671,844 shares. so the company has the capacity to float more shares.Recommendations to the investor:I suggest the investor to invest in the company

Reasons: Over the past years, GlaxoSmithKline Pakistan Limited has exhibited consistent growth in sales

customs duties have been reduced from 25 percent and 10 percent to just 5 percent on import of 19 types of raw materials and active ingredients as well as chemicals. This will provide relief to the sector that was fighting with high cost of goods sold with major contributor being raw and packaging material.

Recommendations:The investor expectations are down compared to the last few years. The stock prices are generally low due to economic recession in the country and weak trading at the stock exchange. But overall the company is performing well.

It is expected that cost of manufacturing would decrease due to which profit margin would increase and hence high return to the investors.Recommendation:The liquidity condition of the company is goodIt has a strong asset base.Inventory turnover rate is satisfactoryFor the past 3 years the companys overall performance was good except for year 2009,when profit margins declined. but it is expected that the companys profit would increase in year 2010.Analysis of Financial Statements

Company: Sanofi AventisBy: Hira Iftikhar

Sanofi Aventis : An IntroductionIncorporated in 1967 Karachi PakistanSells and manufactures PharmaceuticalsProducts of Sanofi AventisProduct Area includes:Thrombosis Cardiovascular diseasesDiabetes Vaccines Oncology Central nervous system disorders Neurodegenerative diseasesMetabolic disorders&allergiesFinancial AnalysisRatio Analysis

Liquidity Ratios2006200720082009Industry AverageCurrent ratio1.481.310.980.982.58Quick ratio0.510.410.350.421.36Net working capital413844383265-27776-3812480598679Financial AnalysisRatio Analysis

Activity Ratios2006200720082009Industry averageAverage Collection period13.8612.7412.5818.5119.65Accounts Receivable Turnover25.9628.2528.6019.4530.2Inventory turnover3.202.612.984.492.6Financial AnalysisRatio Analysis

Activity Ratios2006200720082009Industry averageAverage age of inventory112.37137.97120.8780.25141.9Total assets turnover1.921.601.451.951.2Fixed assets turnover5.444.923.644.83Financial AnalysisRatio Analysis

Profitability Ratios2006200720082009Industry AverageGross profit margin3328242436.55Net profit margin5.942.1924249.58Operating profit margin11.36.043.945.71Financial AnalysisRatio Analysis

Profitability Ratios2006200720082009Industry averageReturn on Assets11.413.521.284.868.9Return on Equity20.347.673.4312.9516.9Financial AnalysisRatio Analysis

Solvency Ratios2006200720082009Industry AverageDebt ratio0.430.540.620.620.39Debt to Equity0.781.171.671.660.91TIE5.682.151.962.9353.0Financial AnalysisRatio Analysis

Market value Ratios2006200720082009Industry averageEarnings per share23.538.863.9617.3530.15Dividend payout30.1649.6335.2840.3355Financial AnalysisRatio Analysis

Market value Ratios2006200720082009Industry averageDividend yield2.821.590.664.824.34Book value115.7115.5115.713450.91Price earning ratio10.7131.1353.178.3614.26Investor HighlightsSAPL has been listed since 197770% dividend was declared in 2009Sales: 6,568,789,000 (Year Ending Jan 2010Market Cap: 1,323,748,800 Outstanding shares: 9,644,800

Assumptions of forecastingApplied LOGEST function to forecast sales increaseUsed interest rates and kibor to forecast finance cost

Irtiza noor

IntroductionCompany ProfileExchanges: Karachi, Lahore & IslamabadSymbol: FerozCountry: PakistanCity: Rawalpindi

Industry: the company is primarily engaged in the manufacturing and sale of pharmaceuticals and soap products

Number of Employees: over 570Year ended 30th JuneCompany History

The Ferozsons Laboratories Limited, incorporated as a Private Limited Company in 1954, became Pakistan's first local pharmaceutical company to be listed on the country's stock exchanges in 1960. It commenced production in 1956. Ferozsons Laboratories' head office is located in Rawalpindi, Pakistan and their manufacturing plant is located in Nowshera, Pakistan.

Ferozsons Laboratories Limited was created in 1956 as one of the first pharmaceutical manufacturing facilities in the fledgling state of Pakistan, to ensure a constant and reliable source of quality medicines for the people of the nation. Company History (cont.)Brand-building and customer relationship management are the key strengths of Ferozsons. Our sales and marketing infrastructure provides a solid platform for launching brands licensed from Quality manufacturers seeking to make inroads into the $1 Billion Pakistani Healthcare Market. We are actively seeking licensing-in opportunities for technical products in the following area:CardiologyCancer Care Hepatitis Management Critical Care

Company History (cont.)Though now an independent entity and a public limited company listed on the country's three stock exchanges, the founder's spirit still courses through the company's veins. In our quest for maximizing returns to our shareholders and increasing market share, we have not lost sight of the fact that we exist first and foremost to improve the quality of life in the markets we serve.We seek also to ensure that our products are made available at prices that are relevant to the local population in our chosen markets

BUSINESS AnalysisBusiness AnalysisIndustryCompanies operating in the industry 600Number of employees Over 100,000Registered Drugs 47,000Registered Molecules 1,100R&D expenditure 1% of the profitAverage growth Rate 11%Market share of Multinationals companies 45%Market share of Local companies 55%Market Leader GlaxoSmithKline

Business AnalysisCompanyThe pharmaceutical market exhibited signs of improvement during the year under review, with an increased growth rate of more than 11%.

This improved trend was spoiled to some extent by the sudden imposition of GST on retail prices on pharmaceutical products by the Government of Pakistan, which resulted in large scale confusion and stuck-up inventory at the distributor, wholesale and retail levels during the last year.

In February 2009, Ferozsons of Pakistan and the Bago Group of Pharmaceutical Companies of Argentina entered into a joint venture to build country's first biotech pharmaceutical manufacturing plant.

Business AnalysisCompanyThe Company holds 80% of equity of the subsidiary and the remaining 20% is held by Laboratories Bag S.A., Argentina.Company have invested 98% share in Farmacia, a subsidiary partnership duly registered under the Partnership Act, 1932 and in an unlisted BF Biosciences engaged in operating retail pharmaceuticals, with large prospects to earn profit.

Ratio AnalysisLiquidity RatioLiquidity RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Net Working Capital:1253335-381242011380383206173935645601ii) Current Ratio3.70.981.262.543.24iii) Quick ratio:10.40.181.121.59LiquidityIndustryi) Net Working Capital:80598679ii) Current Ratio2.58iii) Quick (acid test) ratio:1.3605AnalysisThe net working capital is highest in the industry. The company is following a conservative net working capital management policy. The company should reduce its illiquid short term assets.The current and quick ratios are slightly lower than the industry. It means that the company relative liquidity position is lower than industry average. It needs to employ more liquid assets and reduce its current obligations.(trade debts, inventories, cash, A/P)Activity RatioActivity RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Accounts receivable turnover8.3119.4463.1221.1114.76ii) Average collection period43.3118.55.717.2924.38iii) Inventory Turnover2.254.482.121.842.75iv) Average age of inventory15980169199130v) Total Asset turnover1.51.51.340.691.34vi) Operating cycle20298175216155Activity RatiosIndustryi) Accounts receivable turnover30.217ii) Average collection period19.652iii) Inventory Turnover2.6135iv) Average age of inventory141.95v) Total Asset turnover1.239vi) Operating cycle154.55AnalysisAccounts receivable turnover is lower than industry, it is still on 2nd position among all the industries. The sales of the company are increasing with decreasing trend but A/R are increasing with increasing trend that makes the turnover to decrease. That means the turnover frequency of the company is less than other comapaniesAverage collection period is slightly better than the industry that shows the company receives its account receivable in short period of time than other companies in industry.Inventory turnover for the industry is 2.6 whereas our company's ratio is 1.84 which is less and age of inventory is higher than industry that means you keep inventory for longer period and have to bear its cost.Asset turnover is less of the company than industry. We should reduce our assets so that we can improve our ratio.(inventories)Operating cycle of our company is 216 days which is more than average of industry this is because of high age of inventory.

Solvency/Debt RatioSolvency/Debt RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Debt ratio0.620.590.230.26ii) Debt/equity ratio:1.661.940.370.36iii) Times interest earned (TIE)2.931.2867.852.48Solvency/Debt RatiosIndustryi) Debt ratio0.3906875ii) Debt/equity ratio:0.918125iii) Times interest earned (TIE)53.054375AnalysisDebt ratio of the company is 0.2 and the industry is 0.3 that means we are on the positive side. We have more assets on back to pay debt.Debt to equity ratio of the company is 0.37 but industry average is 0.9 which is very high that means industry rely more on debt but we rely more on equity. Company have enough internal financing that it does not have to pay interest cost.TIE ratio is 53 for the industry and 67.85 for the company therefore it is very good for the company as it can easily pay its interest liabilities.

Profitability RatioProfitability RatioWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Gross profit margin:2124365324ii) Net profit margin:-32.482.48166iii) Return on assets (ROA):-54.83.75118iv) Return on Equity (ROE):-812121811Profitability Ratioi) Gross profit margin:36.55ii) Net profit margin:9.5805iii) Return on assets (ROA):8.931iv) Return on Equity (ROE):16.9535AnalysisGross profit margin of the industry is 36 and company is 53, this is very good for the company and we are doing our production efficiently with low COGS.Net Profit Margin: 9.5 is the industry average and 16 is company's average that again shows that the finance cost and all other expenses are lower than industry.ROA and ROE both are higher than industry average that shows the company have produced efficiently and make an effective use of companys assets.

Market Value RatioMarket value RatiosWYETHSANOFI AVENTISHIGHNOONFEROZSONSGSKi) Earnings per share (EPS)-61173105ii) Price/Earnings ratio:-2088.21119.9iii) Book value per share:0.69134315647iv) Dividend yield 04.8814.8v) Dividend payout 04063991Market value Ratiosi) Earnings per share (EPS)10.1875ii) Price/Earnings ratio:14.265iii) Book value per share:50.9185iv) Dividend yield 4.348v) Dividend payout 55AnalysisEPS is equal to the industry average that shows we are competitive in the industry and all our share holders are enjoying being the part of the company.Book value per share is 56 for the company and 50 is the average therefore it shows an edge to investors.Dividend yield is 3 for industry and 1 for our company which is less and the shareholders may get upset.Dividend payout ratio of the company is 9 which are far more less than industry average that is 55. Company should increase the dividend to the share holders.

Highlights of Financial AnalysisNet sales increased in 2007 by 22.62 then it increased slightly by 1.08% and then again increased with 16% which is still high as compared to other companies. The gross profit increased but with decreasing trend which is mainly because the COGS is continuously increasing due to high cost and inflation.Finance cost decreased in 2008 but increased substantially in 2009 to 147% as they increase LTD. EBT of the company was 18% in 2007 but the % decreased in the next year and goes negative in 2009. This is because of increased cost of production.Net profit and gross profit margin of the company is highest among the competitors but payout ratio is less as it is reinvesting in 98% owned subsidiary Farmacia and BF Biosciences.Highlights of Financial Analysis(cont.)Company is working on very good solvency position as compared to industry. It have 1 unit of assets available for paying back 0.23 units of debt.The companys share in the profit of the farmica increased as well as you can see in the figures stated hence the overall Equity increased due to the reason. So the companys investments can be termed as profitable and the Equity financing is in good shape. The debt to equity ratio shows that company have enough internal financing that it does not need to increase the debt of the company.EPS of the company is equal to industry average even when the industry has faced worst overall financial scenario.

RecommendationsRecommendations to InvestorsFerozsons Laboratories Limited is a publicly listed company with shares quoted on the Karachi Stock Exchange (KSE), as well as the Lahore and Islamabad Stock Exchanges.Despite a challenging regulatory environment with rigid price controls and a depreciating local currency, we have consistently rewarded our shareholders through cash and stock dividends since 1993.The Company was also a recipient of the KSE top Companies award in 1997.

Recommendations to Investors (cont.)The Gross Profit of all the companies has been in decline but Ferozsons has got somewhat stable Gross Profit Ratio. Wyeth, Sanofi aventis and even GSK faced the constant decline in the ratio of Gross profit and for Highnoon the record has been fluctuating.While these other four companies had the decreasing gross profit Ferozsons has been continuously seeing the somewhat stable gross profit ratios.The EBIT Ratio is highest in case of the Ferozsons and has increased contantly.The return on equity for Ferozsons is the highest as compared to the other competitors.132Recommendations to Investors (cont.)The return on assets of Ferozsons is far beyond comparison with the other companies and it suggested the strong financial condition of the company.Feroz Sons is the best company to Invest in with the its current financial health and its performance over the time period of 5 yearsFerozsons have invested in subsidiaries that are expected to earn high yeildsRecommendations to FerozsonBased on our analysis, below are few recommendations for the company which may help increasing the financial position of the company FEROZSONS:The average collection period for the company has decreased, which is a good sign. However, keeping such a tight repayment policy may lead to loss of customers.The company should focus on its management, to improve the efficiency to convert the inventories into cash fast.Recommendations to Ferozson (cont.)From the ratio analysis we conclude that the companys positioning in the investors mind may be strong.The company is relatively good for the long term investment as the financial risk associated with the company is relatively low.From the balance sheet and income statement analysis, we have come to the conclusion that overall financial health of the company is good.The company has strived to increase the share holders wealth.AssumptionsSales are increasing with growth % that we calculated by considering its trend.Effect of increase in assets and approval of manufacturing license which is expected in this year has also caused increase in sales.Provision for taxation remained same.Income from share in profit of Farmacia 98% owned partnership firm, remained unchanged as we did not have the complete information regarding their operations.Assumptions (cont.)Interest rate was calculated on 6 months KIBOR plus 1.5%, as was given in policy.Sale proceeds from sale of property plant and equipment were considered zero in cash flow as no information was given.

Additional Fund AvailableAdjustmentsLong Term Investment2010Farmacia (unlisted subsidiary)Companys share in profit of subsidiary1,209,394BF Biosciences Limited (unlisted subsidiary)1,209,3942,418,789Additional funds available were invested in Long term investment in the subsidiary Farmacia and BF Biosciences. The allocation is equal in both heads.

Thank you!!!