Introduction
The paper compares the financial performance of Abcam and Novozymes for the FY 2015. The company (Abcam) spends a lot of cash on research and development. Therefore, it provides easy access to products, high development on the platform of e-commerce. The sales of Abcam increased significantly between FY 2015 and 2016. That is it almost made 90% of sales in other currencies such as the Japanese Yen, and Euro. The change in these foreign currencies during the recession period is favorable for the firm. Moreover, revenues of the product increased by over 15% on the reported basis during FY 2015 (Abcam, 2017, p. 2). However, the overall revenues increased by 19%, and on the basis of CER, these increases represent about 16%. The reported EPS was 18 pence. This reflects the previous announcement of the investment system as well as the processes, acquisition, and integration costs. Consequently, the adjusted EPS increased by about 13% as the closing cash and term deposit were about £70 million. Additionally, the proposed full year dividend increased by 8.5% to 8.9 pence for every share.
On the other hand, the financial results of Novozymes for 2015 indicated a double digit growth concerning the earnings and substantial improvement in earnings before interest and tax (2015 Annual Report, 2017, p. 10). Therefore, the financial figures of the Novozymes are more than satisfactory. However, the organic sales growth was difficult to attain in 2015. But due to good performance in Food and Beverages, Novozymes delivered organic sales growth of about 4%. Novozymes also experienced how quick both markets and buyers can adjust their choices due to sharp changes in value of commodity prices, exchange rates, and growth in sales in Household care such as the Bioenergy.
It is obvious that the competitive bid for the contract is an appropriate move for Novozymes in the sense that Abcam is a successfully changing from small high growth firm to substantial, and suitable growth business. Abcam has achieved this through a continuous leveraging of the market leadership position in major antibody products while increasing the share of the market in non-antibody products. Lastly, Abcam and Novozymes contract is an ideal contract because both firms have significant financial and operational growth as they deliver against their challenging goals. Thus, this will give them confidence while strategizing on their long-term financial objectives (Five- year contract).
Overview
Abcam is an international life science corporation. It is a developer of reagents of tools where it proposes to serve life science researchers around the globe. By providing the clinical communities with tools and scientific support, Abcam plc offers authorized biological blinders to address essential targets in critical biological pathways. It is engaged in data sharing and e-commerce in the life sciences. Therefore, it focuses on assisting advanced global in understanding the biology and causes of diseases. This in turn energizes the treatments and improving health. Consequently, most global life science researchers apply the affinity blinders, reagents, and biomarkers of Abcam. This has made the products of the company to be mentioned in over 20,000 peer-reviewed articles that are published every year concerning life sciences. It has about ten (10) locations around the globe via life science research hubs. Thereby, allowing local services as well as the multi-language support.
Key performance indicators (KPI)
Based on the above KPI, the market research has confirmed that Abcam is the top brand for research and antibiotics (Abcam, 2017, p.6). Therefore, the company continues to gain the market share across all other categories.
Internal Analysis
Market and Customers
Abcam mainly operates in the United Kingdom, United States, Europe, and Japan. The company sells antibiotics to academic and commercial users all over the world with a collection of facilities that are available at its website. It also distributes a third party produced antibiotics. However, all antibiotics are sold under the brand name of Abcam. Similarly, Abcam has several branches in India, United States, Brazil, China, Hungary, Israel, Taiwan, and the Republic of Korea. These affiliate companies of Abcam acts as a network of sales. Regarding the global market research, Abcam is divided into three geographical parts, namely: The United Kingdom, Japan, and United States. Together with its subsidiaries, it engages in developing, marketing, and selling research antibodies and other related products around the world. Therefore, about two-thirds of the antibodies that are sold by Abcam are company produced, and this represents over 10% of the company sales.
External Analysis
Abcam plc is the leader in the market of antibodies. It provides all information online regarding the products and this is a big advantage to other companies.
Competitive Rivalry
Abcam has several competitors such as Abbot Laboratories, Siemens Medical Solutions, Santa Cruz Biotechnology, and Promega. But currently, it is still growing without too much pressure from the direct competitors.
Bargaining power of suppliers
The business of Abcam is like an online catalog with rich and dynamic information. Moreover, the right team of Ph.D. scientists has direct link with the users. Therefore, they provide real-time technical support. The company manages to assess the market via the collaboration of the scientists and a purpose-built system to obtain records from publications, and product sales. The suppliers can contact the expert of the company for technical assistance. Hence, if there is a faulty product, it will be either replaced or refunded by the company in case it was reported within 120 days after purchase.
Bargaining power of customers
The main clients of Abcam are research scientists who are in need of high-performance products with detailed technical specifications. Abcam is an information-rich product with expert customers that support fast delivery. This makes the firm to be the choice of researchers. Thus, the bargaining power of customers is lower since Abcam enjoys strong brand recognition.
Threat of new entrants
This global research firm is facing geographical diversity risk. Several factors such as changes in economic conditions, tax structures, political climate, and diplomatic relations in regions where Abcam operates will influence terms of payment as well as its ability to collect foreign receivables.
Threat of substitute products
Abcam is facing a threat from different factors such as the introduction of innovative technology which might influence the needed market of the company for updating products and services. Therefore, if this is ignored by Abcam, the revenues of Abcam may be affected in future. Since the company has little influence over the above changing factors, it will have a material and adverse impact on the business of Abcam.
Calculation of ratios
Discussion of ratios
The gross profit margin for Abcam was high during the two fiscal years. Despite that there was a slight change in the ratio between 2015 and 2016, the company remained profitable.
The asset turnover ratio indicates how efficient a company has been using its assets to generate sales. Similarly, ROCE provides an important metric for the comparison of profitability across firms upon the amount of capital they used. Both companies are liquid. However, Abcam is more liquid as compared to Novozymes due to high current ratio. That is it can meet its short-term financial obligations than Novozymes.
The quick ratio shows the value of liquid assets that are available for every dollar of current liabilities. Therefore, the quick ratio of 3.0 means that Abcam has about $ 3 of liquid assets to cover $ 3 of the current liabilities. Both companies have good values for the acid test ratio. However, Abcam is more liquid than Novozymes due to higher quick ratio. The P/E shows a normal price of shares upon its earnings. The EPS of the companies are rising as their market value per share. Abcam is indicating a positive future performance because it has high P/E ratio. Therefore, its investors are capable of paying more shares for the company.
Conclusion
Novozymes recorded strong earnings with moderate sales growth in 2015. Similarly, the growth of long-term organic sales was revised to show the negative impact on sales of the uncertainties that stems from low prices of the commodities. This led to low economic growth in the emerging markets with all other long-term targets held constant.
References
2015 Annual Report. (2017). The Novozymes Report 2015. [Online] Available at: http://www.novozymes.com/en/investor/financial-reports/annual-reports [Accessed 27 Jan. 2017].
Abcam. (2017). Abcam Plc Annual Report and Accounts 2016. [Online] Available at: http://www.novozymes.com/en/investor/financial-reports/annual-reports [Accessed 27 Jan. 2017].
Appendices
Abcam plc
Novozymes Company
