Pharmaceuticals may not seem like the worst culprit for late payments, as other sectors like construction and retail tend to dominate the news. However it is an area that is attracting more attention for unpaid invoice problems. Add in unpredictability and market fluctuations, and the risk of large pharma businesses facing insolvency is growing ever greater.
Take Teva as an example. An incredibly successful Israeli giant, the company has long been a success story as one of the world’s biggest producers of generic drugs. It seemed safe. But now the company is going through testing and turbulent times, having laid off tens of thousands of staff, and its value has more than halved. It is closing plants at home and abroad, cutting staff bonuses and making redundancies, in the hope to save over $3 billion over the coming years.
But why does this matter? And what impact could this have on you and your business?
Large corporations can often survive seismic hits. Smaller businesses can’t. They’re the ones that suffer. Teva can make choices about where to cut costs and bring in experts on how to adapt in the hope this leads to survival. But for smaller suppliers, making snap decisions isn’t so easy. Staff need to be paid and costs need to be met. You can’t just hire in a new, expensive brain to try to turn things around. You also can’t control mistakes made by management in large pharma businesses you’re working with.
But you can choose to do business better, and make the right decisions. One clear choice is to make sure you have invoice insurance. Having comprehensive cover protects your company from client insolvency and protracted default, in case it does come to that. Invoice insurance cover means you’ll be paid for the work you do, reducing the risk late payments can pose to your business. It also helps to secure further borrowing, allowing you to expand rapidly but safely.
One key factor in Teva’s recent downfall was losing a major patent for multiple sclerosis medication – Copaxone. Loss of patents will have a big impact.
Particularly when this drug accounted for roughly 40% of Teva’s annual profits. Competition from other markets that undercut pricing can also shake a business. But if you’re prepared for these tougher times with invoice insurance cover, you won’t need to worry as much. Plus, our team will keep you up to date with any of these sector-specific developments so that you know all about the health of your clients.
Things are undoubtedly tough for Teva at the moment. Jobs cut, bonuses cancelled and net worth slashed. The inability of large companies to discover new drugs has also proved costly in recent years. Its why experts are predicting a shift to smaller companies and labs being the torch bearers for new discoveries. These will be integral to keeping the industry healthy and profitable. Make sure you’re a part of that shift. Don’t carry on doing risky business – take out invoice insurance today.
We’d be delighted if you get an invoice insurance quote for by clicking the link below – it’s a simple process and won’t take long.
Giulia Macgarr