Pharma Inventory Swells: Cash Conversion Cycle Hits 186 Days

In 2025, pharmaceutical companies experienced a notable increase in the cash tied up in inventory, pushing their cash conversion cycle up by 10% to nearly 186 days. This marks a substantial jump of about 17 days from the previous year.

The primary driver of this extended cycle was a nearly 16-day increase in days inventory outstanding, bringing it to 251.5 days. This indicates that inventory has become the largest contributor to the working capital challenges within the industry.

This buildup is closely linked to the growing demand for specialty drugs, especially biologics, and significant investments in manufacturing capabilities. Capital expenditures rose by 15.3% as companies funded research and development for biologics, GLP-1s, oncology treatments, and capacity expansions.

Despite inventory pressures, the pharmaceutical sector achieved robust financial results in 2025. Revenue grew by approximately 7.7% to around $480 billion, while net income saw an impressive surge of about 77.5%.

This growth and profit recovery were largely attributed to the sustained demand for patented drugs and innovative specialty pharmaceuticals, including gene therapies which require longer lead times and thus higher inventory levels.