The document discusses conducting a feasibility study for Orion Pharmaceuticals Limited to produce oncological and hormonal drugs locally. The key points are: 1) The anti-cancer and hormonal drug markets in Bangladesh are growing at 20% annually with potential to reduce prices by producing locally. The feasibility study will analyze the market and financial prospects of entering these markets. 2) Primary and secondary research will be conducted including interviews and reviewing market data. Financial analysis will forecast revenues under different growth scenarios, estimate expenses, and calculate financial metrics to determine project viability. 3) Based on the analysis, the project is only financially feasible under a "boom market" scenario with aggressive revenue growth assumptions. However, Orion

2. Background
• Anti-cancer drug market in Bangladesh is growing at 20% Annually.
• Drugs are expensive
• Local Production will reduce the price by 50%-75%
• 60% of the country’s population suffers from various hormone related problems and
diseases
• Current potential market for hormone drugs is estimated at USD 30 million (BDT
240 Crore)

3. Problem Identification
• Local Companies like Beacon and Techno have already entered
into the production of Cancer and Hormonal drugs.
• Orion can’t lag behind if it has to maintain its competitive position in
the market and ensure sustainable profitability

4. Broad Objective
• To conduct a feasibility study on Oncological and Hormonal
Products of Orion Pharmaceuticals Limited

5. Specific Objective
• To understand and analyze the market prospects of related drugs
- To understand the existing market condition, current market demand and intensity
of competitiveness
- To identify the Influencers and Inducers of Consumer Purchase
• To determine the financial feasibility of the project
- To calculate the capital requirements
- To estimate the future sales based on different growth assumptions
- To prepare pro-forma income statement and cashflow statement
- To suggest the acceptance or rejection of the project based on calculated NPV
and IRR
• To study the operational viability of the project (civil costing, machineries and equipment
costs, process flow)

6. Research Type and Scope
• Applied Research- Related to organization specific situation and
decision making process
• The research has been conducted from the perspective of Orion
Pharmaceuticals limited. The scope is limited to Oncological and
Hormonal drugs.

7. Methodology
• Primary data
• Primary Data has been collected from interviews with the industry experts, relevant
officials in Orion Pharmaceuticals Limited and independent consultants.
• Secondary data
• Secondary data has been collected from the Drug Administration Center Bangladesh,
National Institute of Cancer Research and Hospital (NICRH), International Marketing
Survey for Health Services (IMS Health). Some information have been collected from
various books, Internet and websites of Pharmaceuticals companies.

8. Limitations
• This project has been conducted under client-consultant agreement
between Orion Pharmaceuticals and Navigators Consultancy
Group. Most of the project implementation data related to sales and
operation have been provided by the client. Transparency of actual
data might not be achieved from the company due to confidential
reasons.
• Due to limited access to rival companies who are producing
oncological and hormonal drugs, most of the demand and revenue
related information had to be based on IMS Health Data. The
actual demand for these medicines might be higher than these
anticipated by these revenue information.

9. Navigators Consultancy Group
• Started its journey in 2014
• Has worked with —
• Unilever
• Cocacola
• Grameenphone
• Robi
• Airtel
• Grey Dhaka
• Care Bangladesh
• E-gen
• Maverick Studio
• Bangladesh Cricket Board
• Light Castle Partners

10. Navigators Consultancy Group
• We provide services like —
• Digital Marketing & Content Development
• Market Research
• Marketing Strategy Development & Execution
• Feasibility Study
• Brand Activation
• Corporate Identity Enhancement
• Other Business Solutions

11. Client Profile: Orion Group

12. Client Profile: Orion Pharmaceuticals
• One of the premier pharmaceutical companies for manufacturing and marketing branded-generic primary and
chronic care medicines
• Strict Compliance with WHO CGMP standards
• Wide array of therapeutic areas including lifesaving anticancer drugs and injectable having more than 80
generics in almost 250 presentations.
• Enliven (Imatinib Mesylate) capsule, Betacal (Atenolol plus amlodipine) tab, Vertex injection (Ceftriaxone
sodium), Clognil plus (Clopidogrel+ Aspirin) tab, Pep (Zinc Sulphate) Tab/Syrup, Deslor (Desloratadine)
Tab/Syp, Axet (Cefuroxime) Tab/inj, Pedicef (Cefpodoxime) susp, Azalid (Azithromycin) Tab/Sus, Truso
(Cefixime) Cap/sus

13. Pharmaceutical Industry
• Practically non-existent R & D activity in Bangladesh
• Approximately 258 manufacturers producing around 8000 branded generics at the moment.
• Production limited to Synthesis stage (final stage) only along with some API production
• Drive to Self Sufficiency (75% import 20 years ago, now only 2%)
• Since the promulgation of Drug Policy in 1982, the sector has grown from BDT 1730 mn to more than BDT
113 bn ($1.5 bn)
• Largest white-collar intensive employment sector of the country employing around 115,000 workers.

14. Competitive Scenario in the Industry

15. Industry Prospects
Export Growth

16. Industry Prospects
Drive To Self Sufficiency

17. Industry Prospects
Global Growth
• The revenues from generics in 2016 are expected to reach USD 400-430 billion
• Approximately 70% of which will be outside developed markets
• Highest growth is being observed in Asia-Pacific
• Leading emerging countries will account for 28% of global spending on
pharmaceuticals by 2015, compared to 12% in 2005

18. Industry Challenges in Bangladesh
• Lack of API Support
• Lack of Standard Bioequivalence Test Facility
• Lack of Modern Drug Testing Laboratory
• Regulated Markets
• TRIPS

19. Market Segmentation
• High End Generics:
o Products specific to market niches, i.e. Anti cancer, Diabatic products, Vaccines etc.
o High Profit Margin
o MNC's were the key provider; Local firms are coming up
o Competition driving the price and import dependency down
• Branded Generics:
o Broadest segment of the market
o Relatively stable profit margin
o Dominated by local manufacturers & High brand loyalty
o Dominant Product Category: Anti-Gastric and Anti-Biotic
• Low End Branded Generics:
o Small Segment often for products with low branding possibility
o Price Based Competition
• Contract Manufacturing:
o Business Usually comes from SMC, UNICEF
o Significant Growth Opportunities
o Requires CGMP compliance

20. Porter’s Five Forces for Oncological and Hormonal Drug Producers

21. Porter’s Five Forces for Oncological and Hormonal Drug Producers
• Rivalry among Existing Competitors- HIGH
o For Oncology, four-firm market concentration is 71%, while for hormone it is 70.26%.
o Markets are oligopolistic in nature, with high degree of competition between the top firms
• Threat of New Entrants- LOW
o New entry is difficult and a long-term process
o Lot of capital has to be invested and investors have to be thoroughly convinced that they will get
sufficient return from the venture.
• Bargaining Power of Buyers- LOW
o Relatively demand inelastic
o Consumers are unlikely to switch brands or stop using due to increase in price.
• Threat of Substitute Products- HIGH/LOW
o For oncological treatments, there are multiple options available to the consumer.
o Middle and upper class consumers to forego chemotherapy treatments and go for herbal treatment
o For hormone products, the threat for substitutes is much less pronounced.
o For diseases related to thyroid and insulin, for instance, there are no substitutes for hormones.
• Bargaining Power of Suppliers- MODERATE/LOW
o For oncological products, the APIs are sourced mainly from five countries- USA, UK, China, Germany
and France.
o For hormone products, APIs are sourced from China, India, Hong Kong, Eastern Europe, USA and
UK. The proportion of low-cost locations is much higher than high cost locations.

22. Market for Oncological Drugs in Bangladesh
Socio-Economic Aspect
• According to WHO, Cancer is Sixth leading cause of death in Bangladesh
• At present there are about 12,00,000 cancer patients in the country
• Every year 200,000 people are affected by cancer & 150,000 people die of the disease

23. Existing Oncological Drugs in the market:

24. Existing Oncological Drugs in the market:

25. Target Market
• Male Patients: Following cancers diseases are
mostly prevalent in men:
• mouth and oro- phyrangeal cancer
• lung cancer
• oesophageal cancer
• lymphoma
• stomach cancer
• bladder cancer
• liver cancer
• leukaemia
• colo-rectal cancer and
• prostate cancer
• Female patients: Following cancers diseases are
mostly prevalent in women:
• mouth and oro-phyrangeal cancer,
• cervical cancer
• breast cancer
• oesophageal cancer
• ovarian cancer
• lung cancer
• lymphoma
• stomach cancer
• liver cancer and
• colo-rectal cancer

26. Market Share
Companies No. of Oncological
Products
Annual Revenue (in crore
BDT) in 2014
Market Share
Beacon Pharma Ltd.
(Local manufacturer)
25 50 25%
Roche Bangladesh 10 39 20%
Sanofi Aventis 5 36 18%
Novartis 5 15 8%
GlaxoSmithKline 3 8 4%
Techno Drugs (Local
manufacturer)
20 25 13%
Indian products 15 15 8%
Baggage products 12 12 6%
Total 200

27. Market Potential and Demand Estimation
• The 4 MNCs are just importers of cancer drugs
• Their time to market is relatively longer than the local producers (Beacon and Techno)
• Beacon and Techno are marketing most of their products within range BDT 9900- BDT 10000
whereas the imported products price very often vary from BDT 18500 to more than BDT 100000.
• Orion's new plant will have equal production capacity as Beacon has now and it expects to
maintain competitive price in line with the other two local manufacturers. Within first year of
operation, Beacon earned $23.4 million from export.
• One course of Taxol, the paclitaxel version made by Pfizer in the US, costs Tk 39,000, whereas
its local variation, Xelpac, costs only TK 12,000

28. Market Potential and Demand Estimation
Year 2014 2015 2016 2017
Growth 20% 20% 25%
Revenue in Crore Tk 200 240 288 360
Revenue forecast for oncological drugs in 1st year of operation (2017)
Navigator’s Forecast Initial Forecast Boom Market
Scenario
BDT 65.33 crore BDT 87 crore BDT 120 crore
Expected growth of oncological drugs in Bangladesh will be as follows
(Source: IMS Health 4th QTR 2014)

29. Market for Hormonal Drugs in Bangladesh
Socio-Economic Aspect:
o High dependence on import
o Opportunity for local expansion and growth
Target Market:
4 Broad Categories:
• Anti-diabetic drug market
• Growth hormone drug market
• Acromegaly drug market-
• Hypogonadism drug market-

30. Market Share

31. Market Potential and Demand Estimation
Year 2014 2015 2016 2017
Growth 20% 20% 20%
Revenue in Crore Tk 240 288 345 415
Revenue forecast for hormonal drugs in 1st year of operation (2017)
Navigator’s Forecast Initial Forecast Boom Market
Scenario
BDT 47.50 crore BDT 63.33 crore BDT 87.40 crore
Expected growth of hormonal drugs in Bangladesh will be as follows
(Source: IMS Health 4th QTR 2014)

32. Influencers and Inducers for Consumer Purchase
Applicable for both Oncological and Hormonal Drugs:
• Physicians Advice
• Pharmacist/retailers’ opinion
• Past experience with a drug
• Good company reputation and image:
• Safety concern
• Level of education
Applicable for Hormonal Drugs only:
• Grassroots level health workers from NGOs such as BRAC generating nearly 70% of the sales of hormonal
drugs, particularly female-hormone related products.
• Hormonal drugs related to female health and birth control are allowed to run advertisements.

33. Project At A Glance
Name:
i)“Hormone project”- a specialized unit of Orion Pharma Ltd
ii)“Oncology project”- a specialized unit of Orion Pharma Ltd
Scope:
i) The scope of the “Hormone project” is limited to preparing and packaging cytostatic drugs, sex hormones
related drugs and multiproduct.
ii) The scope of “Oncology project” is limited to preparing and packaging anti-cancer drugs of several generic
types
Location and site:
i) The manufacturing facility has been proposed to be established in Siddhirgonj, Narayangonj of Dhaka,
Bangladesh.
ii) The location has excellent road communication, river communication and it is on the opposite to Orion‟s own
100 MW power station.
iii) The facility will not disrupt the ecological balance in the surroundings
Required Initial Investment: BDT 2,830,650,000 (Debt:Equity = 70:30; Long term loan BDT 1,981,455,000)

34. Financial Feasibility Analysis
Forecasting Revenues:
• Forecasting Revenue for Oncological Products under different growth assumptions
• Forecasting Revenue for Hormonal Products under different growth assumptions
• Adding them up would give combined revenue from the project
Forecasting Expenses:
Orion has instructed to undertake following estimates while calculating expenses.
• Annual Cost of Raw materials is considered to be 30% of the Annual Sales Revenue.
• Annual Factory Overhead is considered to be 10% of the Annual Sales Revenue.
• Annual Administration Overhead is considered to be 6% of the Annual Sales Revenue.
• Annual Selling & Marketing Overhead is considered to be 10% of the Annual Sales Revenue.
• Annual Distribution Overhead is considered to be 6% of the Annual Sales Revenue.
• Annual Interest Rate for the 7 year Long term loan is considered to be 7%. Loan Payments will be made
quarterly during a year.
• Annual Interest Rate for the Short term loan is considered to be 14%.
• No tax for first 5 years. After that, the tax rate is 27.5%.

35. Financial Feasibility Analysis
Working Capital Calculation
• Raw materials have a tied up period of 90 days which means Raw Material Inventory turnover is (360/90) = 4
times in a year. Therefore, the working capital required for raw material inventory is 1/4 th of the Annual Cost
of Raw Materials.
• Locally Purchased materials have a tied up period of 60 days which means Locally Purchased Inventory
turnover is (360/60) = 6 times in a year. Therefore, the working capital required for Locally Purchased
materials inventory is 1/6 th of the Annual Cost of Raw Materials.
• Finished Goods have a tied up period of 60 days which means Finished Goods Inventory turnover is (360/60)
= 6 times in a year. Therefore, the working capital required for raw material inventory is 1/6 th of the Annual
Cost of Raw Materials and Annual Factory Overhead.
• Accounts Receivables is considered to be 20% of Total Annual Sales.
• Accounts Payables is considered to be 40% of Total Annual Payables.

36. Financial Feasibility Analysis under different scenarios
• At Navigators, I had to conduct the feasibility analysis considering three scenarios and had to project revenue
for 7 years. The required rate of return is 15% and the cutoff period is 5 years.
• Then under each scenario we had to generate pro-forma Income Statement, Cash Flow Statement and
Capital Budgeting Analysis (Payback period, NPV and IRR calculations). I have come to following results:

37. Inference Based on Financial Feasibility Analysis
• The project seems feasible only in the boom market scenario
• The project will not be feasible as per our revenue projections and Orion's initial revenue projections.
• But, Orion Management insisted to go ahead with the project considering the boom market scenario only.
Orion's decision can be justified to some extent because:
• The plant is expected to run 15 years. And Orion will not sell the plant after 7 years. Eventually there will
always remain a possibility of having a positive NPV.
• It has considered aggressive depreciation at a rate of 10% annually but following normal straight line method
the depreciation expense would be around 6.67% per annum.
• The Terminal Value after 7 years has been calculated as the residual book value after taking depreciation into
account. In reality, the fair value of these equipments and machinery will be more after 7 years. This will
result in a higher terminal value after 7 years which in turn should contribute to a positive NPV.

38. Inference Based on Financial Feasibility Analysis
• The Selling and Marketing expenses are considered to remain as a constant % of revenue. In reality, these
costs will be higher in initial years and will be lower in later years as Orion grabs the market share gradually.
This would result in lower expenses in later years and the NPV would become positive.
• Once the patent related benefits go out of the scenario in 2016, the market in high end generic medicine
would be a lucrative one in terms of profitability.
• The major reason behind going for boom market forecast was that, Orion believes that, even if it can't sell the
produced drugs here in the local market, the door for export will always remain open as long as it maintains
competitive price and ensure quality.

39. Operational Viability & Broad Technical Assessment
Machinery and Equipment:
• Imported Quality Machineries (see appendix of the main report)
• Product development lab equipment for hormone & oncology is estimated to cost $703,000
• QC lab machines for hormone & oncology is estimated to cost $1,243,300
• Support production equipment would cost $6,537,700
• The cost for utility machineries is projected to be $1,510,000
• Total Utility, Support Production, QC & Product Development machinery cost is projected to be $9,994,000.

40. Operational Viability & Broad Technical Assessment
Erection and Installation:
• Will be done by the foreign engineers with the help of local engineers and skilled workers.
• Whole project would take 18 months to be fully implemented.
• Paperwork for importing the machines would be completed by month 5 and the machines would arrive within
the next four months.
• In the meantime, construction of all the buildings would be completed.
• Installation of the machines would start from month 9 and would take about 5 months.
• There would be a 3 month trial run to test the machines and then after 4 months of process validation,
commercial operation would begin.

41. Operational Viability & Broad Technical Assessment
Technical Analysis (Oncological Drugs):
Oncology Building Production Lines
• Tablet Manufacturing Line
• Capsule Manufacturing Line
• Liquid in Vial Manufacturing Line
• Lyophilized Vial Manufacturing Line
• Pre-filled Syringe Manufacturing Line
Specialties:
• Completely validated plant to comply European regulations & Other Regulations
• European standard production environment equipped with fully computerized support of heating, ventilation
and air conditioning system (HVAC).
• Complete Production Area will have been made by Sandwich Panels because it is
• - Impervious,
• - Non-porous and non-shedding
• - Free of cracks & dirt retainig holes
• - Washable

42. Operational Viability & Broad Technical Assessment
Specialties:
• Most modern purified water and water for injection loop distribution system as per United States
pharmacopoeia (USP35 - NF30) requirement, which will be supplied, installed and validated by reputed
European company.
• Latest "SCADA" (Standard Control and Data Administration) system will be incorporated to ensure strict
operation and monitoring from three different stations simultaneously
• Integrated Building Management System (IBMS) support by latest dynamic software and separate network to
ensure central monitoring and complete automatic operation of the plant.

43. Operational Viability & Broad Technical Assessment

44. Operational Viability & Broad Technical Assessment
Product mix and production capacity
Safety provision:
• Sufficient firefighting equipment and first aid box
• Cost has been included in the cost of furniture & fixture. (See Appendix)

45. Management Hierarchy
PRODUCTION
MANAGER
ASSISSTANT MANAGER,
ORAL DOSE
ASSISSTANT MANAGER
,INJECTION

46. Management Roles
Management Team:
• The entire plant will be headed by a Production Manager who will co-ordinate the works of all units and report
to the Head of Operations.
• two assistant managers- one responsible for oral dose form (tablets & capsules) and the other for injection
form (vials and syringes), who will supervise the activities of the procurement manufacturing, packaging and
warehousing process of their respective units and will directly report to the production manager
• Each assistant manager will have officer(s) working under them. Officers are responsible for overseeing the
work of all operators and some helpers.
Manufacturing and Packaging:
• Operators operate the machines-both manufacturing and packaging; they will always be physically present
while the machine is operating.
• Operators directly report to the officer in charge of their respective units.
Quality Control:
• A team of analysts will be working on quality control and will inspect finished products in order to ensure
minimum standards and marketable quality
• The team will report to the officer in charge of the QC (Quality Control) unit.

47. Specific Objective
• To understand and analyze the market prospects of related drugs √
- To understand the existing market condition, current market demand and intensity of
competitiveness
- To identify the Influencers and Inducers of Consumer Purchase
• To determine the financial feasibility of the project √
- To calculate the capital requirements
- To estimate the future sales based on different growth assumptions
- To prepare pro-forma income statement and cashflow statement
- To suggest the acceptance or rejection of the project based on calculated NPV
and IRR
• To study the operational viability of the project √

48. Thank you