Financial Analysis Of Bai Pharmaceutical Company Based On Harvard Analytical Framework

With the improvement of national standard of living and the advancement of medical and health system reform,China has vigorously promoted the Research and Development(R&D)of innovative drugs in order to improve national health level.The development of biological drugs as a major breakthrough in solving difficult diseases and chronic diseases,is to comply with future economic growth and social development needs.Therefore,a number of pharmaceutical companies are competing in bio-pharmaceutical industry.However,it is not easy for a company to transform from traditional pharmaceutical company to bio-pharmaceutical company.Due to high R&D costs and long R&D cycle of biological drugs,and the imperfection of industry policies as well as peripheral supporting facilities,enterprises have to improve their management skills to support company growth.Also,the transformation process would bring a lot of uncertainties,which increase company’s operating risks and financial risks.Financial statements which most intuitively reflect business situation could help finance staff to realize existing and potential problems,and then provide decision-making advice as well as formulate future financial targets for management team.Consequently,financial analysis becomes an increasingly important function in many organizations.Finance is a tool to support corporate strategy,thus financial analysis should not only include the analysis of historical data from financial statements,but also combine various non-financial elements,such as external opportunities and challenges,company’s internal strengths and weaknesses,and strategy change.Those non-financial factors help to give an in-depth view of the root causes of company’s problems,thus help to find more accurate and effective solutions for company’s sustainable development.This paper selects Harvard Analysis Framework which combines both financial factors and non-financial factors and chooses Bai Pharmaceutical Company that is currently transforming from traditional pharmaceutical company to bio-pharmaceutical company,aiming to analyze Bai Pharmaceutical Company’s performance from 4 aspects: strategic analysis,accounting analysis,financial analysis,prospect analysis.For strategic analysis,the PEST Model was used to analyze external macro-environment of the industry,and Michael Porter’s Five Forces Model was adopted to evaluate industry profitability.Then SWOT analysis matrix was given to show possible strategic choices for the company.In accounting analysis,three major accounting items were selected to evaluate the overall quality and credibility of financial statement.In financial analysis,company’s solvency,profitability,operational capacity,cash flow will be analyzed based on financial indicators.For prospect analysis,the company’s future strategy and financial situation would be predicted accordingly.Through comprehensive structure of Harvard analysis framework,it is much easier to identify the root causes of existing problems and to give suggestions for decision-making.The study not only helps to promote the company’s sustainable development,but also provides valuable reference for other companies within the same industry,therefore the use of such framework has practical significance.