Factors Influencing Financial Access by Phamaceutical Distributors in Kenya (A Case Study of Laborex Kenya Limited)

Abstract

Capital is an integral part of any sound business and so is the case in pharmaceutical industry. The purpose of this research was to establish the factors influencing financial access by pharmaceutical distributors in Kenya, a case study of Laborex pharmaceutical limited. Specifically, the research focused on the following four objectives: To determine the influence of banking history on financial access by pharmaceutical distributors, to examine the extent to which the company customers' net worth influences financial access by pharmaceutical distributors in Kenya, to investigate the role of financial controls on  financial access by pharmaceutical distributors in Kenya, and finally to establish the extent to which a firm's capital base influences financial access by pharmaceutical distributors in Kenya. The study targeted 233 employees of Laborex Pharmaceutical limited in Coast region. The sample size was 30% of the target population 70. A modified Likert scale questionnaire was developed divided into three parts. A pilot study was carried out to refine the instrument. The quality and consistency of the survey was further assessed using Cronbach's alpha. The overall Cronbach's alpha for the four categories which was 0.752. Data analysis was performed on a computer using Statistical Package for Social Science (SPSS Version 22) for Windows. The response rate of this study was 71.4%. Male respondents were the majority standing at 62% and majority of respondents in the organization were managers at 72%. Most of the respondents were from the operations department represented by 46% and they have worked for between 3 and 5 years with 38%. 40% of the respondents have a bachelor's degree. 80% of respondents admitted that there have a credit policy but 72% of the respondents agreed that there are challenges in implementing the credit policy. According to the findings, it was clear that there was a positive correlation between banking history, company customer net worth, financial controls and firm's capital base shown by a correlation value of 0.966, 0.955, 0.881, and 0.943 respectively. This indicates that independent variable and dependent variable move in the same direction, that is, as one increase the other one also increases. From the finding R2 has a value of 0.947 meaning that the 94.7 % of the dependent variable can be explained or attributed to combination of the four independent factors investigated in this study. According to the regression equation established, taking all factors constant at zero, investment decision making as a result of these independent factors will be 0.251. The study revealed that banking history is important in accessing finance and that without good banking history a pharmaceutical distributor cannot succeed in accessing finance. The study further revealed that nothing can go on effectively and efficiently in pharmaceutical business without good banking history however, the opinion that banking history does not matter so much in accessing finance had a low mean score implying that there are many factors that are at play in order to access finances. A company's customer's net worth is important in accessing finance and pharmaceutical company net worth helps a pharmaceutical distributor to access finances. Having good financial controls in the pharmaceutical distributors assures them access to finances and firm's capital base assures lenders that this company's assets can cover for liabilities as and when they fall due. The study concluded that banking history is important for accessing credit from the banks. The study recommended that a firm's capital base and net worthiness and firm's financial controls are sufficient ingredients' for accessing credit from banks.