The Economic Impact of COVID-19 on the Pharmaceutical Industry: Towards Profitability Framework in Disruptive Times

Abstract

This study was designed to examine the economic impact of Covid 19 on the pharmaceutical industry toward formulating a profitability framework in disruptive times. The study has employed the quantitative approach focusing on the annual reports of the Top Five Pharmaceutical firms in the Philippines.

Data was collected using secondary sources ranging from the firms' annual reports, PSE, the SEC, and other documents available in the library, on the internet, and memoirs. Financial ratio analysis, descriptive statistics, and goodness of fit tests were calculated. The pharmaceutical companies performed well in sales and profitability, most of which are above industry benchmarks. The trade and domestic sales have increased from the year 2019 to 2020. The noted increase in profitability ratios is impressive for both years. Based on the findings, the final conceptual profitability framework is constructed where Gross Profit Margin depends on sales and cost of sales; Net Profit Margin depends on net income from operations, Return on Assets depends on Net Income Before Tax to Total Assets, Return on Equity depends on Net Income After Tax to Equity.

In terms of the pandemic, raw materials are essential in the production of pharmaceutical products. It is recommended that stock of these raw materials be made available to avoid out-of-stock scenarios, especially life-saving drugs, vaccines, etc. The study would like to suggest that for further research, especially those who will examine Profitability (ROA), examine further the factors that influence the increase in ROA itself are even more profound, especially factors that have not been examined in this research.