It makes sense that the depreciation percentage of Glaxo (5%) is similar to Bouygues (4%) because it’s a group that consists of many companies that aren’t very manufacture intensive, such as media and television for example. And lower than Nederlandse (10%) seeing that a national railway industry entails a higher degree of depreciation. The reasons for the 5% of depreciation cost of Glaxo are: • Mostly due to the manufacturing process, that is the machines used to produce and package the products; • As well as the vehicles used in the distribution process.
When compared with the other two companies, the percentage of Glaxo’s raw materials is very low simply because the other industries rely more on them, mainly Bouygues (26%) regarding the building and road construction area. Therefore, the cost of raw materials correspond 4% because: • Glaxo’s raw materials consist primarily on the ingredients to make the drugs and water, electricity, packaging, among others.
Glaxo has the lowest percentage of labour cost among the three companies with a percentage of 10%, compared with Bouygues (25%) and Nederlandse (38%). This could be because: • It is common to witness in the pharmaceutical industry mergers and acquisitions which usually has as a result the saving in labour costs, seeing that there are too many plants and workers; • Industries such as the railway and construction are more labour intensive.
Regarding the research and development department, Glaxo has the highest percentage of 19%, and the motives for this are: • It is an industry that relies mostly on this department to come up with innovative and successful drugs to be able to compete. That is, the company needs to come up with new drugs to overcome the threat that generic drugs pose and, consequently, maintain their higher profit...