Costing Matters or Not ? Case of Nepalese Pharmaceuticals Companies

10 Pages Posted: 16 Jul 2020

See all articles by Post Raj Pokharel

Post Raj Pokharel

Harvard Pharmaceuticals P. Ltd.; Kathmandu University School of Management; Boston International College

Date Written: June 12, 2019

Abstract

The growing nature of Nepalese Pharmaceuticals companies doesn't have adequate research based support on managerial and financial decision making. More specifically, the need of studying the factors affecting pharmaceuticals price is supported by this study identifying the significant effect of costing and macroeconomic factors on pharmaceuticals price of Nepal. The study used regression analysis having 655 observations over the period 2013/14 to 2018/19. Dependent variable is the invoice rate denoted as InvRateit, and independent variables are material cost (Matcostit), labor plus overhead cost (LaOHcostit),cost of production (COPit), exchange rate(ExRateit), interest rate (IntRateit) and inflation rate (InfRateit). The reported results also include the values of F-statistics (F), R Square, adjusted coefficient of determination (Adj. R2), Tolerance (TOL) and Variance Inflation Factor (VIF). The major finding of the study shows that material cost has more sensitivity on the invoice rate of the pharmaceuticals products which has 65% effect whereas labor plus factory overhead has 29.2%. The study also concludes that if company able to source materials at a lower cost then, invoice rate will be lower. An attempt has been made to identify the sensitivity of the macroeconomic variables (exchange rate, interest rate and inflation rate) on invoice rate, however the coefficients are not significant at even 5% level and hence no further explanation is entertained.

Keywords: Foreign exchange, Inflation, Interest rate, Price, Cost ratio

JEL Classification: F31, P44, E43, E31, L25

Suggested Citation

Pokharel, Post Raj, Costing Matters or Not ? Case of Nepalese Pharmaceuticals Companies (June 12, 2019). Available at SSRN: https://ssrn.com/abstract=3634472 or http://dx.doi.org/10.2139/ssrn.3634472

Post Raj Pokharel (Contact Author)

Harvard Pharmaceuticals P. Ltd. ( email )

Ratnanagar-14
Chitwan, Bagmati 44200
Nepal
9845331778 (Phone)

HOME PAGE: http://www.postrajpokharel.wordpress.com

Kathmandu University School of Management ( email )

Boston International College ( email )

Bharatpur, Chitwan, Nepal
Nepal

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