E&Y: Pharma neglects working capital

Could Big Pharma ease some of its ills if it just managed itself better? Ernst & Young says drugmakers could free up to $35 billion in working capital just by improving their management of payments and inventories. In fact, the majority of the 16 largest U.S. and European pharma firms "have a significant opportunity" to release cash to the tune of 3 percent to 7 percent of sales, or $17 to $35 billion.

We all know Big Pharma has been suffering under generic competition and pricing pressures. Companies have been cutting costs all over the globe. But, E&Y says, drugmakers haven't paid enough attention to their working capital; pharma lags other industries in working capital management. If drugmakers would just step up and start aggressively tightening  payment terms, improving credit billing and collections, and so on,  they could see full cash and cost benefits within 12 to 24 months, the firm says.

- see the release from E&Y
- read the story at Pharma Times
- check out the coverage at CNN Money

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