ECONOMIC ASPECTS OF THE FUNCTIONING OF THE MACEDONIAN BUSINESS MARKET: AN ANALYSIS THROUGH THE CASE STUDY OF ‘ALKALOID’ LTD. SKOPJE

Abstract

This research paper provides an extensive overview of the most dominant participant in the pharmaceutical industry in Macedonia, offering valuable economic insights into the pharmaceutical market in this Balkan country. By connecting such data with research based on the state of the domestic business market, it is evident that Macedonia as a country is characterized with significant challenges for conducting business. Additionally, economic challenges that arose from the covid-economic crisis were identified. This research includes an analysis of the overall economic situation in the country of Macedonia. The factors identified that are hindering business operations include: high inflation, slow growth, low living standards, and increased product prices. The financial indicators that are present in the financial reports of a specific company are an extremely important factor that provides internal insight into the profitability, efficiency, and financial stability of such a company. In this study, through the analysis of financial indicators, we explored the performance of the company Alkaloid AD Skopje, a pharmaceutical company, as a case study. In Macedonia, there are ten drug manufacturers, three of which belong to the Alkaloid AD Skopje company. The company traces its origins back to 1936 as an opium processor and operates in four key business segments: Pharmacy, Herbal Medicine, Cosmetics, and Chemical Production. The market cap analysis in this study shows that Alkaloid AD Skopje is a profitable company that pays a stable growing dividend, following a previously established, planned company policy. The total market cap of the company is over 24 billion Macedonian denars. Characterized by favorable financial parameters, it can be seen that shareholders are willing to pay a significant premium for this stock. The price-to-earnings ratio per share in 2021 was over 20, while the price-to-book value ratio per share in 2021 was 2.26. This indicates that shareholders in Macedonia are willing to pay over 20 times more for Alkaloid's earnings, signaling that the company is overvalued. A significant factor highlighted by this research is the lack of investment analysis. Additionally, the Macedonian stock exchange where Alkaloid's shares are listed is illiquid, representing a slow market. The local stock exchange has limited financial instruments. In the future, increasing the volume of such studies could positively impact trading volume on the stock exchange. The data generated in this research should be combined with a broader analysis covering multiple companies from different industry sectors to obtain a more realistic picture of the economic situation in the Macedonian business market.