Research On The Effectiveness Of Equity Incentive In Pharmaceutical Industry Takes Hengrui Pharmaceutical As An Example

Since the reform and opening up,great changes have taken place in the economic system of our country.The conflicts of interest between the owners and the managers of enterprises are becoming more and more obvious,and the principal-agent problem gradually appears.Equity incentive is an effective measure to solve this problem.Therefore,many listed pharmaceutical companies begin to implement equity incentive plan.The position of the pharmaceutical industry in the national economy is self-evident.Facing the continuous growth of the world population and the increasing degree of social aging,the global pharmaceutical market presents a rapid development trend.And with the improvement of per capita consumption,their demand for health care is increasing.In order to meet the growing demand,China’s pharmaceutical industry is also accelerating its development speed,which has also attracted a lot of attention from the people and the government.However,due to the high-tech,high-income and high-risk characteristics of the pharmaceutical industry,the pressure of competition in the industry is great,and the mobility of personnel is large,so the development of the pharmaceutical industry needs to implement the equity incentive mechanism,through which senior executives and core technical personnel are encouraged to improve the performance of the company,so as to promote the long-term development of the company.This paper uses case analysis method to analyze the effectiveness of equity incentive in the pharmaceutical industry with Hengrui pharmaceutical as the research object.As a leading enterprise in the pharmaceutical industry,Hengrui pharmaceutical has a certain representative role.Based on the basic theory of equity incentive,this paper first analyzes the current situation of equity incentive in China’s pharmaceutical industry,introduces the implementation of three equity incentive plans of Hengrui pharmaceutical in 2010,2014 and 2017,and analyzes the implementation of equity incentive in Hengrui pharmaceutical from three aspects of horizontal,vertical and market response.This paper analyzes the effect of Hengrui pharmaceutical’s equity incentive from horizontal and vertical aspects,selects Kang Hong pharmaceuticals and Zhifei biological as the comparative listed pharmaceutical companies,eliminatesthe impact of industry factors,and analyzes the impact of equity incentive plan on the financial indicators of Hengrui pharmaceutical.Vertical analysis analyzes the effect of equity incentive through the changes of profitability,solvency,operation ability and growth ability before and after the implementation of equity incentive,and analyze the short-term market response of the implementation of equity incentive through the event study method,concludes that the implementation of equity incentive has a certain positive effect on the development of Hengrui medicine.Finally,it summarizes the advantages and disadvantages of the third phase restricted stock equity incentive plan of Hengrui pharmaceutical,and puts forward suggestions for improvement in combination with the development trend of the pharmaceutical industry and the characteristics of the enterprise itself.