INVENTORY MANAGEMENT AND PROFITABILITY OF LISTED PHARMACEUTICAL COMPANIES IN NIGERIA

This study examined the effect of inventory management on profitability of listedpharmaceutical companies in Nigeria. However, the specific objectives were to examine theeffect of inventory turnover on gross profit margin of listed pharmaceutical companies inNigeria, to access the effect of inventory holding cost on gross profit margin of listedpharmaceutical companies in Nigeria and to determine the effect of economic order quantityon gross profit margin of listed pharmaceutical companies in Nigeria. The study adopted anex-post facto research design and utilized a panel data of seventy (70) pooled observationsgathered from seven (7) listed pharmaceutical firms in Nigeria over ten (10)-year period(2014-2023) and employed a panel multiple regression technique to analyze the data via Eviews 10.0 statistical package. The study findings revealed that inventory turnover has asignificant positive relationship (Coeff. = 0.414078 {0.0005}) with gross profit margin of listedpharmaceutical firms in Nigeria while inventory holding cost has a significant negativerelationship (Coeff. = -3.100747 {0.0298}) with gross profit margin of listed pharmaceuticalfirms in Nigeria. It also revealed that economic order quantity has a non-significant negativerelationship (Coeff. = -0.000525 {0.4067}) with gross profit margin of listed pharmaceuticalfirms in Nigeria. The study provided conclusive evidence on the importance of effectiveinventory management in driving profitability in the pharmaceutical industry. Therecommendations made included that listed pharmaceutical firms in Nigeria should implementcost-saving measures to reduce their inventory holding costs. This can be achieved byrenegotiating storage contracts, implementing just-in-time inventory systems, and reducinginventory obsolescence.