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Drugmakers 'could free $33 bln of working capital'-analysts
September 11, 2012 / 12:30 PM / 5 years ago

Drugmakers 'could free $33 bln of working capital'-analysts

LONDON, Sept 11 (Reuters) - Leading pharmaceutical companies could release $33 billion of cash by improving working capital management, with Pfizer, Roche, Sanofi and Merck & Co having the biggest opportunities, Citi analysts said on Tuesday.

Historically, drugmakers have not focused as rigorously on working capital as other industries but the topic has received more attention in recent years as patent expiries and pricing pressures squeeze profit margins.

Nonetheless, most companies in the sector still pay cash nearly a month faster than they receive it, with only Bristol-Myers Squibb getting cash in before it pays out.

Citi said Pfizer could realise $6.1 billion, Roche $6.0 billion, Merck $4.1 billion and Sanofi $4.0 billion by moving to best-in-class standards and limiting excess cash tied up at suppliers, customers and in inventories.

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