Pharmaceutical Company Analysis

PHARMACEUTICALMANUFACTURING

INDUSTRY

Financial analysis of the 5 largest companies in the pharmaceutical industry

Characteristics of Industry The companies in this industry develop

and manufacture drugs that treat a number of medical issues and diseases

This industry is a defensive industry, no matter the state of the economy people will still need their medicine and healthcare

•Roche•Novartis•GlaxoSmithKline•SanofiAventis•Teva

Roche Holdings AG $194.7 Billion $45.499 Billion

69.34% of Roche’s sales are outside of the U.S. Pharmaceuticals and Diagnostics

Key figures January-June

In millions % changeof CHF

2013 2012CER* CHF USD

Group Sales 23,295 22,423 5 4 3Pharmaceuticals Division 18,162 17,409 6 4 3Diagnostics Division 5,133 5,014 3 2 2Core operating profit 9,488 8,641 10 10Operating free cash flow 7,445 7,244 4 3IFRS Net income2 6,047 4,312 41 40Core earnings per share - 7.58 6.88 12 10 diluted

Sanofi-Aventis

139,072.80M $47,406,000,000

31% of net sales were in the United States 24%

31%

45% Western Europe

United States

Other

Teva

34.33 B Market Cap 20.32 B Sales Revenue Generic Pharmaceuticals 21% of its sales come from

Copaxone

Trouble……

GlaxoSmithKline Market Cap - $128,520,000,000 Revenue 2012 - $26,431,000,000 Consumer Health Care, Vaccines, Prescriptions Headquarters in London and Philadelphia Traded on NYSE and LSE

Japanese energy drink, Asthma cure

42.8

23.3

21.7

12.2

Percent of Total Sales by Regions

North America

Europe

EMAP

Japan

Novartis $195.14 Billion market cap $57,561,000,000 Novartis is based in Basel, Switzerland and operate in 140

countries Alcon is the largest and most profitable in eye care Sandoz second largest in generic drug companies Major products include: Diovan, Lotrel, Gleevec, Zometa,

and Neoral

Du-Pont Analysis

Asset Turnover

Debt Cushion & Liquidity

Operating and Financial Leverage

Roche Novartis GlaxoSmithKline

Sanofi- Aventis

Teva

DOL 2.74 3.37 2.51 3.92 4.83

DFL 1.26 1.06 1.12 1.10 1.21

DTL 3.44 3.59 2.82 4.29 5.86

DPS

2008 2009 2010 2011 20120

0.5

1

1.5

2

2.5

3

Roche Holdings AGNovartisGSKSanofiaventisTeva

COST OF CAPITAL

Roche NovartisN/A

GlaxoSmithKline

Sanofi Aventis Teva

COST OF EQUITY 9.32% 8.55% 9.3% 12% 10.72%

WEIGHTED AVG YTM 2.75% 0 2.609% 1.881% 3.09%

PERCENT EQUITY 92.6% 100% 88.27% 91.52% 82.23%

PERCENT DEBT 7.4% 0 11.73% 8.48% 17.77%

WACC 12.75% 8.55% 8.400% 11.123% 9.257%

Earnings Per Share

2008 2009 2010 2011 20120

0.5

1

1.5

2

2.5

3

3.5

4

4.5

Roche Holdings AGNovartisGSKSanofiaventisTeva

Value of Firm

Roche Holdings AG Novartis GSK Sanofiaventis Teva0

50

100

150

200

250

300

350

Current price

Calced Price

CONCLUSION

Roche Holding appears to be the healthiest company.

Teva Pharmaceutical Industries Limited is currently poorest performer