Highest operating result in pharmaceutical industry

14/04/2017 15:00
In 2015, the pharmaceutical industry achieved relatively the highest operating result within the manufacturing industry at 17.5 percent of total turnover. This is three times higher than the average result (5.8 percent) across the entire manufacturing industry, as the latest figures released by Statistics Netherlands (CBS) indicate.

Following closely behind are the tobacco and beverage industries with 15.6 and 14.6 percent of turnover respectively. The petroleum industry accounted for the lowest operating result in 2015 at just under 1 percent.

Sectors of industry, highest and lowest operating results, 2015

Highest gross profit margin 2015 in tobacco industry

The pharmaceutical industry employs about 15 thousand people, distributed over approximately 200 companies. Together, they realised a turnover of 5.8 billion euros in 2015. After deduction of direct production costs, the gross profit margin was over 55 percent of turnover. Only the tobacco, beverage and paper and printing industries presented higher margins, ranging between more than 65 percent for the tobacco industry and approximately 58 percent for the beverage and paper and printing industries.

After deduction of wages and other operational costs from the gross profit margin, the operating result in the pharmaceutical industry was 1 billion euros, i.e. 17.5 percent of turnover. The pharmaceutical industry produces mainly (raw materials for) medicaments. Development of these medicaments often involves high research costs while market introduction of new medicaments requires official approval, a process which can take years. Pharmaceutical producers often apply for patents on newly developed products. Once a patent is granted, the company has the exclusive right to produce and sell the product during a fixed period of time.

Operating result as a percentage of turnover in pharmaceutical industry, 2015

More than seven years in the lead

It is no coincidence that the pharmaceutical industry takes up first place in terms of operating results. In the period 2009-2015, it achieved the best operating result (expressed as a percentage of turnover) four times and occupied second place three times. The average over this seven-year period was 18 percent. The beverage industry follows at a distance with an average of 13 percent.
Although the operating result in the pharmaceutical industry has been at a relatively high level for years, market prices have fallen over the past four years. On average, they declined by 0.2 percent in the period 2009-2015, against a 0.2 percent rise for the entire manufacturing industry. Market prices rose most rapidly in the tobacco industry, by 3.5 percent on average. The most substantial price drop (by an average 1.2 percent) was seen in the paper and printing industry.

Price developments manufacturing industry
y
3,6
1,2
4,1
3,6
0,7
-1,1
-0,6
1,8