Costing Matters or Not ? Case of Nepalese Pharmaceuticals Companies
10 Pages Posted: 16 Jul 2020
Date Written: June 12, 2019
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
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