Financial Performance of Indian Pharmaceutical Companies A Study on Correlation and Regression Analysis of Aurobindo, Biocon, and Cadila Pharma Ltd

Abstract

Abstract: This study examines the financial performance of three major Indian pharmaceutical companies - Aurobindo Pharma, Biocon, and Cadila Healthcare - using regression and correlation analysis. The research investigates the relationships between key financial variables and profitability metrics, including gross profit margin (GPM), return on capital employed (ROCE), and return on assets (ROA). The study employs multiple regression models to assess the impact of various financial ratios such as long-term debt to total assets (LTDTA), current assets to total assets (CATA), current liabilities to total assets (CLTA), and others on the companies' profitability indicators. Correlation analysis is also conducted to explore the interrelationships between these variables. Findings reveal significant variations in the financial determinants of profitability across the three companies. For Aurobindo Pharma, the regression models show high explanatory power for all three profitability measures, with CATA having a particularly strong positive influence. Biocon's analysis indicates a strong impact of financial variables on GPM, but less significant effects on ROCE and ROA. Cadila's results highlight the complex interplay of financial factors, with capital turnover showing a significant negative correlation with GPM. This research contributes to the understanding of financial performance drivers in the Indian pharmaceutical sector and provides insights for financial management and decision-making in these companies. The study's limitations and areas for future research are also discussed.