AN EMPIRICAL STUDY ON THE FACTORS OF THE PROFITABILITY OF PHARMACEUTICAL COMPANIES IN INDIA

The aim of the empirical study is to identify the factors that influence the profitability of the companies in the pharmaceutical sector listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) of India. The research is based on purely secondary data from top 6 pharmaceutical companies listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) of India over 15 years from 2010-2024. To fulfill the objective of the study Quick Ratio (QR), Inventory Turnover Ratio (ITR) Working capital Ratio (WC), and Debt-Equity (DE) are considered independent variables, Price Book Value Ratio (PBV) is regarded as the control variable and Return on Assets (ROA)(Profitability) considered as dependent variable. To identify the factors, that influence the profitability of pharmaceutical companies, the study employees Pearsons Correlation test, Hadri LM Test, Kao and Pedroni test, Hausman test, Breusch-Pagan/Cook-Weisberg test and for the final result apply Random Effect model with the help of Statistical tool Stata-17.00. The result depicts that Inventory Turnover Ratio (ITR), Debt- Equity (DE), and Price Book Value ratio (PBV) are the factors that have a significant impact on the profitability (ROA) of the pharmaceutical companies listed in India. The empirical result also suggested that Inventory Turnover Ratio (ITR) and Price Book Value ratio (PBV) have a positive influence on the profitability (ROA) but Debt- Equity (DE) has a negative influence on the profitability (ROA) of the pharmaceutical companies listed in India.