American Home Products A Pharmaceutical Empire Essay — страница 3

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ability to pay current liabilities with current assets. A high current ratio means that the company has plenty of current assets to pay current liabilities. AHP?s current ratio is 1.59 compared to an industry average of 1.49 and a market average of 1.37. Inventory turnover, though different for each industry, is a valuable measure of how rapidly inventory is sold. AHP has an inventory turnover of 3.0 compared to an industry average of 1.3. One last ratio to recognize is AHP?s P/E ratio of 29.89 compared to and industry average of 34.55 and a market average of 35.17. Investors use this ratio frequently because the higher a stock?s P/E ratio, the higher its downside risk, or the risk that the stock?s market price will fall. While sales in early 1999 started out slowly, they are

projected to accelerate as the year progresses, driven by the new products AHP had introduced in 1998 and by new product launches expected in late 1999. Sales in 2000 are expected to grow at a faster rate as the benefits of these new products are realized. Considering AHP?s steady increase in profits and revenues, there is no sign of slowing down for this pharmaceutical empire. ?Their growth strategies are directed in large part at achieving several principal objectives: Accelerated earnings-per-share growth and increased market share in our categories; the development of innovative products that become market leaders by contributing to the well-being of people worldwide; and the strengthening of our company in ways that continue to be reflected in shareholder value? (Haschak

28). AHP is estimated to grow at an average of 13% over the next 5 years. The expansion of AHP?s agricultural sector will boost future EPS growth and broaden their P/E ratio. All in all, AHP?s profit outlook is favorable, as are most of the pharmaceutical industry?s outlooks. As analyst David Saks states, ?they?ve (pharmaceutical stocks) passed the bottom and their back on their way to new highs.? Also, Dan Ascani, President of Global Market Strategists, states, ?we have got certain sectors, namely health care and retail, that are leading the market.? Distribution American Home Products has a number of distributors under the AHP name and reputation. One of those is Wyeth-Ayerst Laboratories. Wyeth-Ayerst concentrates its efforts on the distribution and sale of pharmaceutical and

vaccine products and the distribution of Whitehall-Robins consumer products in the United States. Wyeth-Ayerst provides more prescription products to Americans than any other pharmaceutical company and offers one of the broadest and most diverse product lines in the industry (Tardiff 112). Wyeth-Ayerst is also among the largest manufacturers of generic oral and injectable products in the United States and is a leading supplier of injectables to hospitals (ahp.com). Headquartered in Philadelphia, Pennsylvania, Wyeth-Ayerst employs more than 40,000 people worldwide, who bring to the company a full range of talent in research, marketing, sales, and manufacturing. Another of AHP?s leading distributors is Whitehall-Robins, a dominator in the research and development, manufacturing,

and marketing of a broad range of consumer health care products. They are one of the largest over-the-counter health care companies in the United States and are headquartered in the hometown of AHP; Madison, New Jersey. Whitehall-Robins manufacturers top selling products such as Advil, Robitussin, and Centrum. Twelve of the their products are number one or number two in their respective categories, showing that they are a huge benefit to the AHP family. Fort Dodge is another distributor and member of the AHP family. They are a leading manufacturer and distributor of prescription and over-the-counter animal health care products for the livestock, companion animal, and swine and poultry industries in North America and international markets (ahp.com). The partnership of Fort Dodge

with AHP creates a more diverse company and, therefore, a broader product range. One last AHP distributor is Cyanamid Agricultural Products Group, the eighth-largest crop protection chemical company in the world and the third-largest crop protection company in the U.S. Cyanamid?s Crop Protection Department manufactures and markets herbicides, insecticides, and fungicides to help protect the world?s crop and food supply. Cyanamid also adds an edge of diversity to the AHP family by introducing agricultural products to their production line. Information Systems American Home Products has the ability to respond quickly to shifting market conditions and changes in the pharmaceutical industry. AHP?s large family of companies allows for the quick development and marketing of new