PHARMATRIAL

Business Game - 2022

Universe 2: Team Pink

Professors: SILVESTRE and GARCIA

Team members
Elias-Said Hanna ZEINOUN
Seif ORABY
Pratham Rajmal JAIN
Eva BERNARDET
 CEO Introduction
We committed as a team to achieving desirable levels in each round, intending to
maximize earnings and shareholder value. Our company focuses more on quality
control. We firmly believe that quality medication involves providing the care the
patient needs in an affordable, safe and effective way. In addition, our objective is
to maintain the pricing strategy and enhance sales growth by producing more
medications to benchmark Pharmatrial against its competitors. However,
Pharmatrial had anticipated stiff rivalry from other producers, to outperform our
competitors and make our products more apparent, we had to devise a variety of
techniques. This entails ensuring that we have accurately identified market needs in
Finland, France, and the United States, as well as prioritizing them in the correct
sequence. Although dealing with high competition, our company has grown in
terms of more new assets and has paid-out high dividends to the shareholders.
 Situation at Round 8
Company Overview
Name: Pharmatrial
Created: 1987
Main Products: Rubbana, AndyOx (anti-oxidants)

Market Presence
Global Markets: Finland, France, United States of America
Market share: 16.16%
Main competitors: Red, Grey & Blue

Company Financials
Turnover: € 85,960
Net Income: € 12,994
Return on Capital Employed (ROCE): 12.4%
 Situation at Round 8

Our company's main focus was to maintain the same pricing strategy and improve quality control. The
pricing strategy focused on being higher than a few competitors which led to a fall in sales growth but
remained consistent with the profits. Though Pharmatrial was not the market leader, it had the highest
profitability that benchmarked them against the competitors.

During round 8, we increased our marketing as the demand for AndyOx was reducing. We believed the
increase in marketing would lead to a hike in sales and eventually our sales increased for that product in the
market. Initially, Pharmatrial didn't focus much on marketing which experienced a lower profit and units
remaining unsold.
 Pharmatrial - Sales
During the nine years, units sold have increased and so is the
demand everywhere. Indeed, they have been more sales in the
United States, the market is more substantial there. Initially, we
did not place so much emphasis on advertising and marketing;
over the years we have invested more in advertising as well as
customer care as this is crucial for sales. As Pharmatrial focuses
more on quality over quantity, the pricing strategy remains the
same as last round. Our company has a higher price with an
increase in quality control and high global market valuation than
the competitors. The global market share of our company is
16.16% making it the 4th largest. Despite being 4th largest our
company makes highest profits amongst the competition. During
this year, we increased our marketing costs in AndyOx due to
reducing the demand for the product and however, generated the
highest sales with this medication.
 Pharmatrial - Operations
In this round 8, we produced fewer Antioxidants due to a decrease in demand. Similarly, we produced more
units of Rubbana as the growth in worldwide demand increased. To meet the demand in Finland, Rubbana
was produced more by 12% while Antioxidants was
produced 10% less. Following the demand in
USA and France, Rubbana was produced 11%
while Antioxidants were produced 10% less.

In addition, the bidding price for Russian

painkillers were set to €145 per unit and a small
investment of €25,000 was placed for selling
efforts. Our company invested in machinery and
buildings in Finland and USA as the demand and
production increased in Rubbana.
Moreover, we invested more due to the discounted
price of the building and machinery.
The capital investment for Round 8 represents €9.7 million which is financed through the company’s cash
flows and earnings achieved over the period. Due to high competition, Pharmatrial sold 70% of Rubbana
units and 30% remain unsold in closing inventory. Similarly, it sold 89% of AndyOx units and 11% remain
unsold. In addition, we increased our production efficiency due to an increase in demand for Rubbana.
 Pharmatrial - Finance
Pharmatrial is focused more on profitability rather than
sales growth. Nevertheless, the company’s net sales during
the last round amounted to €85.96 million with a massive
profit margin of 15.12%. Pharmatrial has the highest
market valuation of €368 million.
The debt-equity ratio of the company during the last round
increased from 0.85 to 1, which indicates the company is
profitable and able to pay off its debt from earnings.
However, the debt increased due to excessive purchase of
discounted assets (buildings and machinery) and paying out
huge dividends.
Further, the company’s Return on Equity (ROE) was at
15.5% close to competitor Team Grey with 16.62% which
proves to achieve a proper balance of profitability, leverage
and asset acquisition.
 Pharmatrial - Finance (contd.)
During Rounds 5 & 6, the company repurchased their
stocks to 300k following high profits and sales which
indicated a positive signal to the market investors and led
to an increase in earnings per share.
Therefore, the company was increasingly paying out
dividends each round and paid out €25 million during
Round 8. Despite a large dividend pay-out, it was able to
retain sufficient liquid assets at the end of Round 8.
The cumulative shareholder return of the company at the
end of Round 8 was 12.99% outperforming the
competitors for all the rounds.