1. Salix
Capabilities and Efficiencies

2. Agenda
→ Executive Summary
→ Link Chart
→ Capacities
→ Third Party Manufacturers
→ Efficiencies
→ Questions
→ Contact Information

3. Executive Summary
→ Only as capable as their ability is to attract
third party manufactures
→ Focuses on a niche market
→ Efficient, but room for improvement

5. Capacities

6. Capacities
Salix has no manufacturing
capabilities, due to the fact that all their
manufacturing is contracted out to third
parties.

7. Is this Good or Bad?

8. The downside is that
they are dependent on
third party companies to
work with them and
manufacture their
products
The benefit of this
practice is that Salix is
not constrained by
internal manufacturing
limitations.

9. Salix focuses on a niche market inside
The the pharmaceutical industry
Gastroenterology Industry

10. Pharmaceutical Industry
Gastroenterology Industry
This allows Salix to compete with
larger the research andcompanies that
All pharmaceutical development
focus on broader markets solely on
done at Salix is focused within the
pharmaceutical industry
gastroenterology

11. 150 100 call on 10 sales managers
Salix has approximately 280 fullfocus on
dedicated to
roughly 16,000 who time
health care major drug
sales employees
professionals wholesalers

12. Raleigh
North Carolina
Morrisville
North Carolina

13. Lease expires in 2015
Headquarters
Lease expires in 2011
Morrisville
North Carolina
Raleigh
North Carolina
Salix also maintains a small amount of
77,000 SQFT
space in Palo Alto, California.
26,000 SQFT

14. Third Party
Manufacturers

15. All of products that Salix Produces

16. All of Salix’s third party producers
Overall, Salix has 20 Third Party Producers

17. `
Efficiencies

18. Average
Inventory
Inventory to Investment
Sales Ratio Period
Ratio
The Analysts used four different ratios to
These ratios are as listed as follows;
determine Salix’s Efficiency
Asset Accounts
Turnover Receivable
Ratio Ratio

19. This ratio can be calculated by
The Inventory to Sales Ratio determines
Inventory
how much inventory is sold inInventory to
= a month
Sales Ratio
Sales for the Month

20. Inventory to Sales Ratio
4
3.653731343
3.5
3.375 3.462365591
3 3.036966825
Inventory to Sales Ratio
2.5 2.317241379
2 1.797288573
1.548387097
1.5
1.444604317 1.161073826
1.548387097
1
0.900763359
0.5
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
years
Trending Down = EFFICIENT

21. This ratio can be calculated by
A higher investment
AThe Average Inventory Investment Period
longer average in inventory means
Ratio determines how long itcash available
inventory period takes to
Average
less Investment
requires a higher Average Inventory
The higher the
Current Inventory Balanceother into a
dollar efficient outflow cash
for Inventory
convert a the less of cash the company is flows
Period is,
investment in = Investment
dollar of sales/ accounts receivable from
(i.e. paying
inventory Daily Cost ofbills, overhead, ext.)
Average Period
the sale of the inventory
Goods Sold (COGS) Ratio

22. Average Inventory Investment Period
0.9
0.772727273 0.780701754
0.8 0.8
0.768292683 0.73853211
0.7
Average inventory investment Period
0.6
0.560386473
0.482288828
0.5
0.4 0.456363636
0.3
0.2
0.173913043
0.1
0
2000 2001 2002 2003 2004 2005 2006 2007 2008
Years
Trending Up = INEFFICIENT

23. This ratio can be calculated by
The Asset Turnover Ratio determines how
Revenue
well a business is using it’s assets to
Asset
=
generate sales Turnover
Assets Ratio

24. Asset Turnover Ratio
1.4
1.225749559
1.158068057
1.2 1.206755374
1.132309942
1 0.885714286
Asset Turnover Ratio
0.960257787
0.8
0.600536193
0.647331787
0.6
0.570866142
0.5
0.4
0.2
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Year
Trending Up = EFFICIENT

25. This ratio can be calculated by
The Accounts Receivable Ratio
Accounts Receivable
Represents the number of sales for which
Accounts
= collected
payments have not yet been Receivable
Sales Ratio

26. Accounts Receivable Ratio
0.45
0.427586207
0.4
0.35
0.295923261
Acounts Receivable Ratio
0.3
0.25 0.251129761 0.221374046
0.179104478
0.2
0.226510067
0.107142857
0.15
0.099526066
0.1
0.096774194
0.064516129
0.05
0
1999 2000 2001 2002 2003
year 2004 2005 2006 2007 2008
Trending Up = INEFFICIENT

27. Questions

28. Contact Information