The Strategy of Pharmaceutical Companies and the Economic Value Added

Searching for a prevailing index in evaluating companies is one of the prominent features of the financial researches in the present era. Accordingly, the managers of the companies are trying to establish a new economic framework in their companies for both a better reflection of value and profitability. Hence, choosing an optimal strategy by the managers leads to create a sustainable competitive advantage. Therefore, the aim of this study is to investigate the relationship between the strategy of the pharmaceutical companies listed on the Tehran Stock Exchange and the economic value added. This study is an applied research, and it uses a quasi-experimental design by means of ex-post-facto approach. The sample of the research includes 190 observations of the year-end of the company from 2004 to 2013. The data of the research have been tested by Eviews Software Version 8 and by the ordinary least square regression method. The results of the research state that there is a direct and significant relationship between cost leading strategy and economic value added. But, there is not a significant relationship between differentiation strategy and economic value added. The results of the research suggest that the cost leading strategy has a significant effect on the improvement of economic value added of the pharmaceutical companies listed on the Tehran Stock Exchange. In other words, the managers of the pharmaceutical companies intend to increase the sale by reducing the costs of production.