Study On The Effectiveness Of Fosun Pharma’s Investment Strategy From A Life Cycle Perspective

With the increasing public attention to medical health and the rebound in demand in the post-epidemic era,pharmaceutical companies have ushered in a new opportunity for development.However,at the same time,with the continuous progress of healthcare reform policies,many companies are facing the double pressure of fierce market competition and policies such as consistency evaluation and centralized procurement.Under such severe challenges,many pharmaceutical companies have started to review their own development strategies and consider how to formulate scientific and effective development strategies.As an important part of an enterprise’s development strategy,investment strategy plays a vital role in promoting the rational allocation of enterprise resources and maximising enterprise value.The internal and external environments,opportunities and threats faced by enterprises at different stages of their life cycle vary,so they need to adopt appropriate investment strategies to adapt to changes in their environment.Only by aligning the investment strategy with the characteristics of the lifecycle stage of the company can the overall development strategy of the company be supported and guaranteed.In addition,enterprises should also adjust their investment strategies flexibly according to the effectiveness of their investment strategies and their own development needs,so as to avoid missing development opportunities due to inappropriate strategies or wrong decisions.This paper takes Fosun Pharmaceuticals,a representative company in the pharmaceutical industry,as the subject of this study,and examines its investment strategy and its implementation effects based on the perspective of the corporate life cycle and relevant theoretical foundations.Firstly,the cash flow portfolio method and the financial strategy matrix method are used to determine that Fosun Pharma is currently in the growth phase of its life cycle.In order to achieve these strategic objectives,Fosun Pharmaceuticals has implemented three main investment strategies,namely investment in innovation in pharmaceutical R&D and manufacturing,investment in M&A to expand the entire pharmaceutical industry chain and investment in internationalisation to enter the global market;again,the analysis of both the scale and structure of investment shows that Fosun Pharmaceuticals’ investment strategy is expansionary and integrated,which is in line with the requirements of its growth stage.Further,Fosun Pharma’s investment strategy from 2014 to 2021 was evaluated and analysed based on the average value of Hengrui Pharma and the pharmaceutical industry in the same industry and at the same growth stage.First,based on the financial dimension,the financial effect of Fosun Pharma’s investment strategy was evaluated in four aspects: earnings,operations,debt servicing and growth;second,based on the non-financial dimension,the three aspects of its investment strategy,namely R&D and innovation,human resources and market value,were evaluated and analysed;third,the hierarchical method of indicators,the entropy value method and the mutation level method were used to integrate all evaluation indicators into a comprehensive evaluation value,so as to evaluate the comprehensive effect of Fosun Pharma’s investment strategy.The study found that Fosun Pharma’s investment strategy has been effective.The study found that Fosun Pharma’s investment strategy has produced good results in various aspects and has basically achieved the objectives of its investment strategy,with its combined effect showing a fluctuating upward trend during the period 2014-2021.However,there are some potential risks associated with Fosun Pharma’s investment strategy: firstly,insufficient internal investment and weak independent R&D capabilities;secondly,long-term reliance on investment income and poor core profitability;thirdly,high goodwill and liabilities and high impairment risk and debt servicing pressure;and fourthly,too rapid external investment and lagging synergy effects.In response to these risk issues,this paper proposes corresponding optimisation recommendations,which are to increase internal investment to enhance independent R&D capability;focus on the development of main business to enhance profitability;choose investment and valuation wisely to reduce or avoid financial risks as far as possible;and moderate the speed of investment to promote the best use of synergy effect.Through the above research process and conclusions,it can help Fosun Pharma to gain an in-depth understanding of the implementation effect,risk issues and optimization direction of its investment strategy,which is of reference significance for its future investment decisions;at the same time,it can also provide useful reference for other enterprises in the industry or enterprises in the same growth period or of the same type in the formulation and adjustment of their investment strategies.