Medium Enterprises in Pharmaceuticals Manufacturing Show Strong Performance in 2023, while Small Enterprises Struggle

[NEWSMP] Last year, medium-sized enterprises in the manufacture of pharmaceuticals, medicinal chemicals and botanical products industry showed impressive performance, while small enterprises continued to struggle.

According to the "2023 Financial Statement Analysis" released by the Bank of Korea on the 23rd, large enterprises excelled in asset expansion, while medium enterprises stood out in performance.

Firstly, the total assets amount of large enterprises surged by 32.5%, from KRW 61.216 trillion in 2022 to KRW 81.1039 trillion in 2023, significantly expanding their scale.

Sales grew by only 2.9% to KRW 34.856 trillion, yet it exceeded the overall industry growth rate of 0.7% in the manufacture of pharmaceuticals, medicinal chemicals and botanical products sector during the same period.

However, the operating profits and net profits of large enterprises declined sharply, falling by 29.2% and 25.6%, respectively, compared to the previous year. Nevertheless, this was still better than the overall industry, which operating profits and net profits dropped by 32.4% and 34.8%, respectively.

In contrast, medium enterprises did not expand their total assets amount as much as large enterprises but outperformed in operational performance.

The total assets amount of medium enterprises increased by 19.2% to KRW 34.6145 trillion, though this fell short of the industry-wide asset growth rate of 25.4%.

Sales, however, increased by 12.5% to KRW 23.4674 trillion, significantly surpassing the industry average growth of 0.7% and large enterprises average growth of 2.9%.

Moreover, while operating profits and net income across the industry plummeted by over 30%, medium enterprises achieved increases of 4.4% and 28.7%, respectively.

On the other hand, small enterprises faced a tough time. Both their total assets amount and sales decreased, and they recorded losses in operating profit and net income.

The total assets amount of small enterprises in the manufacture of pharmaceuticals, medicinal chemicals and botanical products industry decreased by 3.0% to KRW 14.8834 trillion, and sales declined by 8.4% to KRW 7.0367 trillion.

Additionally, operating profits turned into a deficit of KRW 56.4 billion, and net losses widened to KRW 388.5 billion.

While medium enterprises stood out in the year-on-year growth rates based on total amount due to the impact of creation, extinction, expansion and contraction, large enterprises continued to dominated in most key management indicators, except for sales growth.

In particular, the operating profit margin and net profit margin of large enterprises were 10.63% and 8.07%, respectively, surpassing the 7.55% and 5.98% of medium enterprises.

Also the interest coverage ratio of large enterprises was 857.79%, significantly higher than the 585.62% of medium enterprises, while small companies showed a negative ratio.

Large enterprises also outperformed medium enterprises in terms of stockholders’ equity to total assets, current ratio, and quick ratio, while maintaining a lower debt ratio and total borrowings and bonds payable to total assets, indicating a more stable financial structure.

On the other hand, medium enterprises outperformed large enterprises in terms of turnover ratios, such as total assets turnover, tangible assets turnover, and inventories turnover, as well as gross value added to total assets, gross value added to tangible assets, gross value added to machinery and equipment, and gross value added to output.

In addition, dividends to capital stock and dividends to net income were lower for large enterprises compared to medium enterprises. The ratio of research and development costs to sales was also lower for large enterprises at 6.37%, compared to 7.23% for medium enterprises.