why pharmacy financial affairs study is important for a pharmacy student?

Why Pharmacy Financial Affairs Study is Important for Pharmacy Student?

Submission Date: 15 June, 2013

Content Page No.

Introduction ………………………………………………………………………………………………………….………. 1

What is Financial Affairs……………………………………………………………………………………..…………… 1

Why Study Finance ………………………………………………………………………………………………….…….. 2

Functions of a Financial System in a Pharmaceutical Company ……………..………………………..…. 2

Structure of a Financial System ……………………………………………………………………………………….. 3

Finance for Business ……………………………………………………………………………………………………..…3

Finance Department in a Company …………………………………………………………………………………… 3

Financial Planning in Tune with Economic Conditions ……………………………………………………….. 3

Pharmacy Financial Study ………………………………………………………………………………………………… 4

Why is pharmacy financial study important …………………………………………………….………………… 4

What is the role of finance department in pharmaceutical company …………………………………….. 4

Finance related area in a pharmaceutical company …………………………….……………………………… 4

Pharmaceutical Industry: Market Research Reports, Statistics and Analysis …………………………. 5

Why is a Financial Analysis important to a company ……………………………………………………….….. 6

Finance for research and development ………………………………………………………………………………. 6

Financial needs for funding in a Pharmaceuticals ……………………………………………………………….. 7

The Role of Finance in Economic Development of the company: Benefits, Risks, and Politics….. 8

Pharmacy financial affairs to maintain a constant growth rate ...................................................... 8

How to improve financial literacy ………………………………………………………………………………………. 9

Is financial education effective .….………………………………………………………………………………………. 10

What more should be done ………………………………………………………………………………………………… 11

Conclusion …………………………………………………………………………………………………………….…………. 11


Content

Page No.

Introduction ………………………………………………………………………………………………………….………. 3

What is Financial Affairs……………………………………………………………………………………..…………… 3

Why Study Finance ………………………………………………………………………………………………….…….. 4

Functions of a Financial System in a Pharmaceutical Company ……………..………………………..….4

Structure of a Financial System ……………………………………………………………………………………….. 5

Finance for Business ……………………………………………………………………………………………………..… 5

Finance Department in a Company …………………………………………………………………………………… 5

Financial Planning in Tune with Economic Conditions ………………………………………………………. 5

Pharmacy Financial Study ………………………………………………………………………………………………… 6

Why is pharmacy financial study important …………………………………………………….………………… 6

What is the role of finance department in pharmaceutical company …………………………………….. 6

Finance related area in a pharmaceutical company …………………………….……………………………… 6

Pharmaceutical Industry: Market Research Reports, Statistics and Analysis …………………………. 7

Why is a Financial Analysis important to a company ……………………………………………………….….. 8


Introduction

Financial affairs study is increasingly important for a company for its financial solvency, internal and external marketing and for the growth of the company, and its importance is not just for a company and investors but also for a student to work successfully in that sector. Finance is a important part of a company, also in pharmaceutical company and other healthcare organization. The students who want to come in these sector they should a proper knowledge about finance along with other courses. The schools and universities also include the financial study in their program and teach them all subjects of finance to give them a clear concept over it. Student should study it for their own interest as now a days, finance is becoming essential for the average family trying to decide how to balance its budget, buy a home, fund the children’s education and ensure an income when the parents retire. Of course people have always been responsible for managing their own finances on a day to day basis – spend on a holiday or save for new furniture; how much to put aside for a child’s education or to set them up in life – but recent developments have made financial study and awareness increasingly important for financial well-being. For one thing, the growing sophistication of financial markets means consumers are not just choosing between interest rates on two different bank loans or savings plans, but are rather being offered a variety of complex financial instruments for borrowing and saving, with a large range of options. At the same time, the responsibility and risk for financial decisions that will have a major impact on an individual’s future life, notably pensions, are being shifted increasingly to workers and away from government and employers. As life expectancy is increasing, the pension question is particularly important as individuals will be enjoying longer periods of retirement. Individuals will not be able to choose the right savings or investments for themselves, and may be at risk of fraud, if they are not financially literate. But if individuals do become financially educated, they will be more likely to save and to challenge financial service providers to develop products that truly respond to their needs, and that should have positive effects on both investment levels and economic growth of the company.

What is Financial Affairs

Financial Affairs manages and safeguards University assets and liabilities. The division is charged with formulating, implementing and monitoring financial policies and procedures and preparing and interpreting financial reports and analyses.

Financial Affairs performs a variety of functions to support the academic, research and public service efforts of the University. Financial Affairs supports the University by:


Maintaining the accuracy and integrity of financial information

Maintaining a strong campus-wide financial control and accountability environment

Practicing good financial stewardship in handling financial transactions

Providing high-quality financial services to students, faculty, and staff

Collaborating with others to facilitate the use of effective financial management practices

Enabling Financial Affairs staff members to use their skills to fully contribute to pursuing our

mission

Financial forecasting & planning within the pharmaceutical & healthcare industries is no easy task in today's economic environment. Recently there has been a greater focus on: strategic collaborations, outsourcing, cost management & cost containment in an effort to successfully achieve sustainability & growth.

For the FP& A team, this requires the ability to access, collect and analyze both financial data and forward-looking non-financial measures in order to successfully rise above the competition.

Why Study Finance

Corporate life:o How does a firm finance its operations?

o How can a firm use financial techniques to improve decision

o making (strategy, portfolio planning, manufacturing, etc.)

Personal life:

o How should you invest your money?

What this course provides:

o a framework to understand the role of finance

o an understanding of key concepts in finance

o an introduction to financial instruments

o exposure to financial techniques

Functions of a Financial System in a Pharmaceutical Company

Provide an efficient payment system for the exchange of goods and services.

Provide mechanisms that allow for the transfer of economic resources

o Life-cycle allocations (consumption vs. saving)

o Efficient allocation (specialization)

Pool funds to undertake large-scale projects


Manage uncertainty (allocate risk-bearing)

Structure of a Financial System

Fig: Structure of a Financial System

Finance for Business

Finance for a business can't be undervalued and it can be regarded as the lifeline of a business which is required for its well-being. It acts as a lubricant helping to keep the business running. Whether you have a small, medium or large business, you will always need finance, right from promoting and establishing your product, acquiring assets, employing people, encouraging them to work for the development of your product and creating a brand name. In addition to that, a current business may need finance for expansion or making changes to its products as per the market requirements.

Finance Department in a Company

This department is of utmost importance as it is responsible for financial planning, thus ensuring that adequate funds are available for achieving the objectives of the organization. Moreover, it is the finance department which makes sure that the prices are controlled, besides looking after the cash flow and controlling profitability levels. One of the most important jobs of the finance department of a company is to identify the necessary financial information (like return on assets, return on capital employed or the net profitability which reveal the outcome of efforts made by the company and its employees) which should be revealed to managers so that they can make informed decisions and judgments. The department is also responsible for making financial documents and preparing the final accounts so that they can be presented in the annual general meetings of the company.

Financial Planning in Tune with Economic Conditions


Governments Non-financial Corporations

Financial Intermediaries

Individuals

Planning involves insight into the economic condition of your country and its future. Be it a developing or developed country, finance can be used as a tool to shape a country's economic well-being. For developed nations it can help to stabilize the growth at the maximum level, and for an underdeveloped economy it can change the face of overall financial condition by effectively applying the tools of finance. Moreover, personal finance should also be planned looking at the overall economic condition of the country. If the country is going through an inflationary phase it's better to save more and spend less, but if the economy is in the deflationary phase it is advisable to invest and do productive expenditures.

Finance is such a thing that can't be substituted by anything, so make sure you use your finances in the proper order, so that you can secure your future.

Pharmacy Financial Study

Knowledge of pharmacy finance, for the pharmacist, is crucial; there's equipment and funding requirements that are particular to the industry. Cash flow and the major drug companies need to be handled properly. It can be too much for a small pharmacy to manage. The company that have pharmacy finance specialists that can step in and assist a pharmacy, including equipment acquisition and finance.

Why is pharmacy financial study important

In pharmacy practice, to help the student to these concerns, the university authorities have to take the lead in examining financial study in the universities and suggesting how to improve it. It has released the first major international study on financial study (entitled Improving Financial Literacy) as well as the world’s first practical guidelines on good practices in financial education and awareness. These are addressed to all countries, developed and developing, that are interested in financial study and are designed to help the university and students to design and implement effective financial study programs. These guidelines, in the form of a non-binding recommendation, are drawn from the experience on best practice in this area. They have to promote the role of all the main stakeholders in financial education: governments, financial institutions, employers, trade unions and consumer groups. The Recommendation calls for a number of actions to improve financial study, from basic savings and private debt management to assessing whether total savings of the organizations are adequate. They also draw a clear distinction between public information provided by government and regulatory authorities, and that provided by private sector investment advisors such as banks and brokers. So pharmacy financial study is very important for the pharmacy students for well understanding of the drug market, price, investments, purchase, sales and other expenditure of the pharmaceutical company.

What is the role of finance department in pharmaceutical company

To have a separate financial department in a company is very important. Finance Departments, which play a vitally important role in the growth of all establishments as well as the achievement of business goals, is generally consists of the divisions of Collection and Client Credit, Payments, Accounting, Production Costs, Financial Process Development, Reporting and Budgeting.


Finance related area in a pharmaceutical company

Inspite of having a separate financial department, there are many other departments which have a close contact to the financial affairs of the company. The areas that are associated with finance are mentioned below-

Purchase Department Sales Department International Marketing Product Planing and Inventory Control Product Management Department

Fig: Finance related area in a pharma company

Pharmaceutical Industry: Market Research Reports, Statistics and Analysis

Global Pharmaceutical Industry


Pharma Industry

Sales

Product Managment Department

(PMD)

Product Planing and Inventory control (PPIC)

Intrenatinal Marketing

Purchase Department

The global pharmaceutical industry is expected to be worth more than $1 trillion in 2014, marking a 5% compound annual growth rate according to research from Urch Publishing.

The industry is comprised of companies that make, patent and sell drugs that have therapeutic effect. The market is highly competitive and entry is difficult due to a combination of strict regulations and the need for extensive research and development, involving time-consuming clinical trials.

In addition, high research and development costs, lengthy clinical trial processes, expiring patents and difficulty in gaining product approval from the appropriate regulatory bodies all mean that companies must produce blockbuster drugs and continue to do so to remain in good standing.

Other challenges facing the industry include pressure from purchasers, such as hospitals, who negotiate discounts with wholesalers or manufacturers when buying in bulk – thereby increasing pressure on pharmaceutical companies to produce cost-effective drugs to remain competitive and gain approval for new drugs. According to the Center for Drug Evaluation and Research, on average there have been less than 23 approvals annually over the past decade. Industry observer Pharma lot states there was a fall in the number of applications for approval received by the US Food and Drug Administration from just fewer than 40 in 2009 to 23 in 2010.

Though patents protect the intellectual property rights of specific drugs, usually for approximately 20 years, pharmaceutical companies face increasing pressure related to generics, which are drugs comprised of the same ingredients as patented drugs but sold under a drug’s chemical name rather than the pharmaceutical brand name.

Medical professionals can prescribe drugs under their chemical name without specifying a brand. The pharmaceutical market spans a spectrum of drugs and medication, including prescription, generic and over-the-counter drugs. The scope also includes drug delivery technology, drug discovery and development, vitamins and supplements, pathology, therapeutics, and pharmacies and drug stores.

Why is a Financial Analysis important to a pharmaceutical company

Without a financial analysis a pharmaceutical company cannot grow. Financial analysts provide guidance to businesses and individuals making investment decisions. Financial analysts assess the performance of stocks, bonds, commodities, and other types of investments. Also called securities analysts and investment analysts, they work for banks, insurance companies, mutual and pension funds, securities firms, the business media, and other businesses, making investment decisions or recommendations. Financial analysts study company financial statements and analyze commodity prices, sales, costs, expenses, and tax rates to determine a company's value by projecting its future earnings. They often meet with company officials to gain a better insight into the firms' prospects and management. A pharmacist can be financial analyst if he have enough knowledge about finance as well as conventional pharma knowledge and successfully work for the company.

Finance for research and development

The pharmaceutical industry has two distinct functions: research and development (R&D), and manufacturing. The largest and best-known pharmaceutical firms do both functions while some small companies do either of them. Another remarkable characteristic of the pharmaceutical industry is its vast investment in R&D to keep product innovation. The high rates of innovation in pharmaceutical industry result from high rates of return on investment in R&D also conversely create


http://www.reportlinker.com/p0324841-summary/Pharmaceutical-Market-Trends--Key-market-forecasts-growth-opportunities-Edition.html

the incentives necessary to conduct this research. Consumer is sensitive to drug prices. If generic substitute is available it creates high pressure on pricing of product. On other side company is able to charge high premium on patented unique drug. As a whole, the industry is highly competitive, but individual products are less so due to the number of products that are substitutes for one another is constraint by different therapeutic classes. What’s more, the threat of new entrants is not significant. As it was discussed above R&D requires large funding and to compete in generic drug production you need large start up capital to reach required economies of scale. Bigger companies can allow investments in more research and development projects that diversify their future drugs portfolio and make them much more stable. In this regard the pharmacists who work in R&D they should learn financial affairs that’s why they can control the research work.

Financial needs for funding in a Pharmaceuticals

A pharmaceutical industry needs financial aid to fund the following –


Funds needed for

VAT Funding

Pharmaceutical equipment and technology

Practice relocations, acquisitions or expansion costs

Tax Funding

Annual premium

Staff training

Computer hardware and software

Practice Refurbishment

Rents and rates

Recruitment fees

Partner buy-ins/buy-outs

Pharmaceutical stock

The Role of Finance in Economic Development of the company: Benefits, Risks, and Politics

This article explores the role of the financial sector for economic growth, the causes and consequences of financial fragility, and the politics behind financial deepening and fragility. In doing so, it identifies the critical role of the financial sector within capitalist economies, a role with bright and dark sides. Specifically, it surveys the large theoretical and empirical literature that links a sound financial system to the process of economic development. It discusses the theoretical and empirical literature on bank fragility and banking crises and surveys the literature on the political economy of financial deepening. Importantly, it relates these three strands of the literature to each other and to the current crisis.

Pharmacy financial affairs to maintain a constant growth rate

Pharmaceutical industry is characterized by high level of concentration. There are about dozen of multinational companies that dominate in industry. Most of companies are not widely diversified and more than 50% of revenues come from sales of pharmaceutical products. There are few companies in industry that have other large sources of income, for example Johnson & Johnson.

World pharma market is not a small one and it is very competitive to sustain and maintain constant growth rate. Every year there lots of new molecules are discovered. The company who discover the molecule they lead the market for a several years. But those companies produce the generic one they have to create their own market, compete to other company and earn their profit as well as maximize their wealth. So it is very important to have fair financial concept over pharmacy financial affairs to maintain a constant growth rate.


Fig: Constant growth and wealth maximization

How to improve financial literacy

The “Recommendation on Principles and Good Practices for Financial Education and Awareness” includes the following advice to governments:

Governments and all concerned stakeholders should promote unbiased, fair and coordinated

financial education.

Financial education should start at school, for people to be educated as early as possible.

Financial education should be part of the good governance of financial institutions, whose

accountability and responsibility should be encouraged.

Financial education should be clearly distinguished from commercial advice; codes of

conduct for the staff of financial institutions should be developed.

Financial institutions should be encouraged to check that clients read and understand

information, especially when related to long-term commitments or financial services with

potentially significant financial consequences: small print and abstruse documentation should

be discouraged.

Financial education programmes should focus particularly on important life-planning aspects,

such as basic savings, debt, insurance or pensions.

Programmes should be oriented towards financial capacity building, where appropriate

targeted on specific groups and made as personalised as possible.


Future retirees should be made aware of the need to assess the financial adequacy of their

current public and private pensions schemes.

National campaigns, specific Web sites, free information services and warning systems on

high-risk issues for financial consumers (such as fraud) should be promoted.

These financial institutions clearly have a role in providing financial education, but it needs to be more clearly defined. One OECD recommendation that could help make choosing a savings plan less of a nightmare is that they should provide clear information and stop adding abstruse small print to their documents. The G8 Finance Ministers’ meeting in St. Petersburg in June 2006 recognised the importance of financial education, welcomed “the ongoing work in the OECD on the Financial Education Project and call(ed) for further development of financial literacy guidelines based on best practices.”

Research conducted on financial education indicates that the level of financial literacy is low in most countries, including in developed countries. In Japan, for instance, 71% of adults surveyed knew nothing about investment in equities and bonds, while surveys in the US and Korea found that high school students failed a test designed to measure students’ ability to choose and manage a credit card or save for retirement.

Perhaps more worryingly, consumers often overestimate how much they know. In an Australian survey, 67% of those taking part claimed to understand the concept of compound interest but only 28% could find the correct answer to a problem using the concept. So before they can even start work on providing financial education to their citizens, governments need to persuade them it is needed.

The level of financial literacy tends to vary according to education and income levels, but the evidence shows that highly educated consumers with high incomes can be just as ignorant about financial issues as less educated, lower income consumers. Countries are increasingly aware of the importance of financial education and are already providing a variety of financial education programmes, ranging from Web sites and pamphlets or brochures to training courses and media campaigns. They cover issues such as credit, insurance, investment and retirement saving. But interesting consumers in financial education is no easy task. People taking part in a survey in Canada said they thought choosing the right investment for a retirement savings plan was more stressful than a visit to the dentist.

Is financial education effective

Finding ways to measure whether financial education has achieved its aims, such as increased consumer awareness or changed behaviour, is not easy and is costly for governments, so not all programmes have been evaluated. But when programmes have been evaluated, they have been found to be effective.

Research in the United States shows that workers increase their participation in 401(k) retirement savings plans funded by employee and employer contributions when employers offer financial education programmes, whether in the form of brochures or seminars. Mortgage counselling before people take on their loan has been found to be effective in reducing the risk of mortgage delinquency. Consumers who attend one-on-one counselling sessions on their personal finances Why Pharmacy Financial Affairs Study is Important for Pharmacy Student?

have lower debt and fewer delinquencies. But while financial education is important, it is only one pillar of an adequate financial policy to improve financial literacy and access to financial services. Financial education can complement, but can never replace, other aspects of successful financial policy such as consumer protection and the regulation of financial institutions. Financial education should also go hand-in-hand with improving access to financial markets and services. Access to financial services is a significant issue in many emerging economies – as well as for significant groups in the countries, such as minorities or low income consumers who do not have bank accounts.

Finally, financial education might also need to be complemented by other approaches to ensure an improvement in consumer financial well-being. For example, some experts recommend that workers, when they become eligible, be automatically enrolled in defined contribution pension plans that include pre-determined contribution rates and investment allocations.

Governments are clearly aware of the need to improve financial literacy, but the OECD recommendations are only a first step. One key element for the future is persuading consumers that they need financial education and enabling them to access it. Also important is better financial education in schools. Today’s school-leavers need to be a lot more financially literate than even their parents were if they are to manage their personal finances successfully through life. The role of financial institutions in providing financial education, not only to clients but also to their own staff, needs to be better defined and further promoted. More information is needed at both international and national levels on good programmes and practices and on ways to

What more should be done

promote access to financial services. Sharing information on successful experiences can be helpful to all. If governments are to win consumers over to financial education, more needs to be learned about what their financial education needs are at various stages in their lives. How to deliver this education is also important – governments need to know how to attract the attention of people busy with jobs and families. More work is clearly needed to develop ways of measuring the success of financial education programmes, and governments need to invest time and money in evaluating them. The country is deepening its work on financial education, particularly in the area of insurance and retirement saving. It will examine in more detail the important role of financial education in increasing consumers’ awareness and understanding of insurance issues, including the benefits of insurance coverage. It will also focus on the role of financial education in both defined benefit and defined contribution pension schemes and the development of appropriate guidelines on financial education for retirement savings.

Conclusion

Finance plays a very important role in the day-to-day lives of each individual or corporation. It is a very wide term and it can be said to be the study of the science of managing funds. Usually finance includes the areas of public, personal and business finance. It includes things related to lending, spending and saving money. An important aspect of finance is that individuals and corporations deposit money in a financial institution, especially banks, who in turn lend out money and charge an interest for their services.


To look at the importance of financial education, one key challenge is convincing people that they are not as financially literate as they think they are. Individuals are increasingly being asked to take on sole responsibility – and assume the burden of risk – for complex savings tasks which were previously at least shared with governments or employers, such as investing for a pension or for higher education for their life. But how can individual workers or parents be expected to weigh the risks and make responsible choices in an ever more sophisticated financial market? This is true even in countries where consumers generally are familiar with financial instruments such as credit cards, mortgage loans and perhaps private saving to “top up” company pension plans. It is all the more difficult in emerging economies whose rapid development has given access to financial services to a large number of consumers, many of whom have only a limited experience with formal financial systems. For emerging economies, financially educated consumers can help ensure that the financial sector makes an effective contribution to real economic growth and poverty reduction. But financial literacy is also crucial for more developed economies, to help ensure consumers save enough to provide an adequate income in retirement while avoiding high levels of debt that might result in bankruptcy and foreclosures. The information available on consumer financial literacy is worrying for two reasons – not only do individuals generally lack an adequate financial background or understanding to navigate today’s complex market, but unfortunately they also generally believe that they are far more financially literate than is really the case. As a student of pharmacy, one should learn about financial affairs for his personal life and for corporate life.


why pharmacy financial affairs study is important for a pharmacy student?

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