Evaluation of the effect of the economic crisis on the pharmaceutical sector. Financial statement analysis techniques: A case study of Greece

OBJECTIVE To assess the effects of the economic crisis on pharmaceutical companies in Greece during the period 2008-2014. METHOD Analysis was made of the financial records of 72 pharmaceutical companies belonging to the two largest Greek pharmaceutical associations, the Pan-Hellenic Union of the Pharmaceutical Industry and the Hellenic Association of Pharmaceutical Companies. RESULTS Analysis of the financial statements of the 72 pharmaceutical companies showed that they were all influenced negatively and intensely by the economic crisis. The turnover of the 72 companies decreased from (sic) 3.9 billion in 2008 to (sic) 2.9 billion in 2014. The domestic pharmaceutical companies, however, experienced less pressure from the economic crisis than the foreign pharmaceutical companies. From 2011 onwards, however, the general and specific liquidity indicators have shown continuous improvement for both domestic and foreign pharmaceutical companies, and the indicators also depicted improvement in the claims collection and financial leverage of the companies. CONCLUSIONS The turnover and profits of pharmaceutical companies in Greece decreased in the period of financial crisis 2008-2014. The main reasons for decline in profits were the fall in prices of medicines and reduction in consumption of medications.