Analyzing financial statements of Sanofi

Résumé du document

Sanofi is a French multinational pharmaceutical company that was formed in 2004 with the merger of Sanofi-Synthélabo and Aventis. The company is specialized in research and development, manufacturing and marketing of pharmaceutical products. It is the world's fourth larger company by prescription sales and the fifth in the generic pharmaceutical industry. The company covers several therapeutic areas like cardiovascular, diabetes, thrombosis, vaccines and others. The pharmaceutical industry is considered as one of the most important and profitable industry in the world.

With a population that is constantly growing and people that are living longer the pharmaceutical industry is very prosperous. There are also a lot of emerging market like China, Russia, South Korea and Mexico that are very interesting for the big pharmaceutical companies. Today we estimate the global spending on prescription drugs at more than €650 billion .

The problem with this industry is that it is saturated. There are many big companies on the market like Sanofi, Bayer, or Pfizer. The competition is very harsh and doesn't give any place for new entrants. The industry is also not very innovative because of all the regulations pharmaceutical companies have to face. It is very difficult for them to launch new products because they necessitate many years of research and development. The test phase is very long for medication. Companies tries to compete with each other by trying to be more efficient and productive and secure all their patents in order to keep and advantage on the competition.

Extraits

[...] Analyzing financial statements of Sanofi A. Introduction 2 B. Financial statement analysis 3 Liquidity Ratios 3 Profitability Ratios 4 Leverage Ratios 5 Efficiency Ratios 5 C. Financial Statement Analysis 6 D. Common Size Analysis 9 a. Common size analysis 9 b. What I learned by performing such an analysis 11 E. Trend Analysis 12 b. The value of performing such an analysis 14 c. The different in trend between the $ figures and the % figures 14 F. Conclusion 14 a. [...]

[...] It needs to find a way to commercialize its products quicker. Asset Turnover Sanofi 40% Pfizer 34% Industry Median 51% Sanofi is below the average in terms of Asset Turnover on the industry but is better than its main Pfizer Sanofi uses its assets more efficiently than its main competitor. Net Receivables Turnover Flow Sanofi 4,36% Pfizer 4,62% Industry Median Sanofi is doing worse than Pfizer and the industry in terms of receivables turnover flow. The company might not have a good control over the credits it generates. [...]

[...] Shareholder viewpoint As a future shareholder of the Sanofi Company, I would look in the financial statements what are the trends of the company, if it's growing and if it's profitable. I would see if there is a good current ratio, as a high current ratio is bad for shareholders because current assets do not generate high return percentages. I would look more closely at the shareholder's equity of the company and see what is the frequency of the dividends. [...]

[...] What I learned by performing such an analysis By performing this analysis I was able to see clearly how was composed the Assets and the Liabilities of the company (using the balance sheet), and what each elements represented for the company in terms of percentage. With the Income Statement analysis I was able to see how was performing the company and what influenced its revenue. It can also use this analysis to study the development of the company. I can see that Sanofi is not doing as well in 2011 than in 2007 because in 2011 it was able to make a 16,24% of Net Profit compared to the 18,02% in 2007. [...]

[...] Sanofi is more financed by dept than before. Trend Analysis From 2007 to 2011 the amount of sales have been fluctuating a lot. Even if the revenue grew 5,73% from 2007 to 2011, we can't be sure it will continue to grow in the following years. During the last 5 years the evolution wasn't constant at all. We can see that the cost of goods solds has been quite stable from 2007 to 2010. In 2011 we can see a huge increase meaning that Sanofi decided to invest more in production and raw materials but it didn't have a significant impact on the sales. [...]