IMPACT OF TOTAL COST OF PRODUCTION ON PROFITABILITY: A STUDY ON SELECTED LISTED PHARMACEUTICAL COMPANIES IN GUJARAT

Abstract

This study examines the impact of Total Cost of Production (TCP) on the profitability of a few pharmaceutical firms in India during the ten-year period from 2015-16 to 2024-25 will be considered. This research considers the following pharmaceutical firms located in Gujarat: Zydus Lifesciences, Torrent Pharmaceuticals, Alembic Pharmaceuticals, Dishman Carbogen Amcis, and Lincoln Pharmaceuticals. To analyze the effect of TCP on profitability, the researcher applies ratio analysis and correlation approaches.

The findings an increasing tendency in production costs in all the firms, but profitability varies from one firm to another. A negative correlation coefficient between TCP and Net Profit Ratio was found, indicating that an increase in the level of production costs leads to a decrease in profitability. Besides, the research emphasizes that various exogenous factors have impacted production costs and profitability, including the COVID-19 pandemic.