Proposal For Y Company’s Pharmaceutical Production Base Construction Project

As our economy and living standard are improving, people are more aware of health. The medical needs is increasing. Along with the 12 th five-year plan of pharmaceutical industry and Yunnan bridgehead strategy, the medicine industry in Yunnan province is facing great opportunities. Yunnan provincial government has taken the medical industry as another pillar industry after tobacco industry.First, the text introduces project background, project site, project construction plan, project progress plan and so on. Then, we use PEST model and Michael Porter’s Five Force Model to analyze macro-environment and the competitive environment of the industry. In addition,we analyze the internal strengths, internal weaknesses, external opportunities and external threats through the SWOT model. From the above analysis, we find that Y company’s internal strengths exceed internal weaknesses, and external opportunities are more than external threats. After that, based on market segmentation, choosing target market and market orientation, we analyze marketing strategy from product, price, place, promotion. Finally, we use NPV, IRR and Investment Payoff Period to evaluate financial viability.Through the above analysis, we know that this project’s total investment is 500 million, of which 300 million is own capital and 200 million has to borrow from bank and external investor. The Cost of Capitals of the project is 11.3%. According to the Total Investment Cash Flow Statement, the NPV is 376.02 million, the IRR is 26%, the Static Investment Payback Period is 6.23 years(including construction), the Dynamic Investment Payback Period is 7.38 years(including construction), and the ROI is 33.20%. Also, in the Capital Cash Flow Statement, the NPV is 418.65 million, the IRR is 30%, the Static Investment Payback Period is 5.95 years(including construction), the Dynamic Investment Payback Period is 6.80 years(including construction), and the ROI is 55.33%. Therefore, we can see that the project has high investment value, and the economic benefit is quite well. What is more, the risk analysis shows that the risk of the project is low. We can take appropriate precautions to control the risk of the project to a very low level.