Global pharmaceutical industry Essay Example | Topics and Well Written Essays - 2500 words

Global pharmaceutical industry - Essay Example As mentioned in the company's annual report (2003, p21), "In the fourth quarter of 2003, the Company reviewed its overall business cost structure, which resulted in a reduction in force at each of its segments. The Company expects this work force reduction to generate annual cost savings of approximately $10.0 million in 2004 and $13.0 million in subsequent years. The Company is evaluating other actions to reduce its cost base in 2004 and beyond". This program was designed to improve the company's ability to retain the profit gained through sales turnover by minimising the cost incurred by the company in maintaining the large number of employees. The company even raised an expense of $8.7 million in introducing and implementing this program in the organisation as mentioned in the company's annual report (2003, 8) as, "incurred an $8.7 million pre-tax charge, in connection with an employee reduction program". Alpharma Inc, as stated above, is said to be one of the giants in the international pharmaceutical industry. The company's business can be segmented into four dimensions of activities i.e., International Generics, Active Pharmaceutical Ingredients, US Human Pharmaceuticals, Animal Health etc (Annual report 2003, p7). The International Generics are basically the dosage pharmaceuticals that are provided to several countries around the world including the UK, the Middle East, China, and Indonesia etc. The Active Pharmaceutical ingredients consist of antibiotic medicines that are sold to other pharmaceutical industries in the United States, serving as the raw material for certain medicines in such industries. Human Pharmaceutical provides liquid and solid based medicine to other middle businesses in the country. Animal Health business segment provides a range of product line dealing in animal health medicine (Annual report 2003, p7). The company is engaged in doing business activities in around 60 countries around the globe. According to the company's annual report (2003, p7), "the Company conducts business in more than 60 countries and has approximately 4,700 employees at 40 sites, in 27 countries". The company reduced a considerable number of employees in the year 2003, on the rationale to combat the increasing costs and expenses affecting the company's profit margin. The company had been incurring severe losses for the past few years due to the increasing costs and expenses either incurred during the production and distribution, or during the operating activities of the business. However, the company's results for the year 2003 seem to be improving the financial position of the company as the company's management introduced a workforce reduction program, curtailing the number of employees in the company in order to minimise costs. This paper discusses the impact of workforce reduction program in Alpharma on the financial statements of the company for the year 2003. In the pursuit of discussion, financial ratios have been analysed in order to provide a better insight on every aspect of the company's financial position and performance. KEY RATIO ANALYSIS A company's financial statements are the representatives of the company's financial worth i.e., the financial position and performance in terms of facts and figures. In order to get a better picture of the key impact of the employee layoff program initiated by the Alpharma's management on the financial