Profitability analysis of beximco pharmaceutical s limited


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Profitability analysis of Beximco PharmaceuticalS Limited, Bangladesh; this is my BBA internship thesis paper.

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Profitability analysis of beximco pharmaceutical s limited

  1. 1. “Profitability analysis of Beximco Pharmaceuticals Limited”
  2. 2. DAFFODIL INTERNATIONAL UNIVERSITY “Profitability analysis of beximco Pharmaceuticals limited” A study on Operational Headquarter, Dhanmondi Daffodil International University 102, Shukrabad, Mirpur Road, Dhanmondi, Dhaka – 1207RONI BHOWMIK
  4. 4. DAFFODIL INTERNATIONAL UNIVERSITY Roni Bhowmik 17th Batch, ID No. – 072-11-2024 Bachelor Of Business AdministrationDISCLAIMERRONI BHOWMIK
  5. 5. DAFFODIL INTERNATIONAL UNIVERSITYI, Roni Bhowmik, hereby declare that the presented report of internship titled“Profitability analysis of Beximco pharmaceuticals Limited”. A study on OperationalHeadquarters, Dhanmondi is uniquely prepared by me after completion of two monthswork in Beximco Pharmaceutical Limited (BPL).I also confirm that, the report prepared only for my academic requirement not for anyother purpose. It might not be used with the interest of opposite party of the organization.………………………………Roni BhowmikBBA ProgramID: 072-11-2024Department of Business AdministrationFaculty of Business & EconomicsDaffodil International UniversityOctober 12, 2010 Certificate of ApprovalRONI BHOWMIK
  6. 6. DAFFODIL INTERNATIONAL UNIVERSITYI am pleased to certify that the Internship report on “Profitability analysis of Beximcopharmaceutical Limited” A study on Operational Headquarters, Dhanmondi conductingby Roni Bhowmik is bearing ID No: 072-11-2024 of the Department of BusinessAdministration has been approved for presentation and defense/viva-voce. Under mysupervision Roni Bhowmik worked with Beximco Pharmaceutical Limited as an intern.He completed the work during the Summer-2010 semester.I am pleased to hereby certify that the data and findings presented in the report are theauthentic work of Roni Bhowmik. I strongly recommend the report presented by RoniBhowmik for further academic commendations and defence/viva-voce.Roni Bhowmik bears a strong moral character and a very pleasant personality. It hasindeed been a great pleasure working with him. I wish him all success in life.Mr. Mahbub ParvezAssistant ProfessorDepartment of Business AdministrationFaculty of Business & EconomicsDaffodil International UniversityAcknowledgementRONI BHOWMIK
  7. 7. DAFFODIL INTERNATIONAL UNIVERSITYFirst of all I would like to thank the Almighty for giving me the strength, and the aptitudeto complete this report within due time. The intern gratefully acknowledges the guidanceand assistance received from different people and organizations while carrying out thestudy. Mr. Mahbub Parvez, Assistant Professor (Department of Business andAdministration) provided guidance during the entire internship period and in writing thereport. Mr. Md. Fazlul Haque, Deputy Manager, Accounts and Finance, BeximcoPharmaceutical Limited(Supervisor), Mosttafa Shazzad Hasan, Asst. Manager, Accountand Finance, MD. Syfur Rahman Chowdhury, Accounts Officer, BPL providedcontinuous support during whole of the placement period. They are also providedimportant data without which the study was not possible at all. The intern has alsoreceived valuable information and suggestions from other people from time to time.I am deeply indebted to my supervisor, Mr. Mahbub Parvez for assigning me such aninteresting topic named “Profitability analysis of Beximco pharmaceutical Limited”. Ialso express the depth of my appreciation to my honorable supervisor for his suggestionsand guidelines, which helped me in completing this report.Executive SummaryRONI BHOWMIK
  8. 8. DAFFODIL INTERNATIONAL UNIVERSITYThe global pharmaceutical industry as well as the Bangladeshi pharmaceutical industryhas moved a long way in the last ten years. We have seen pharmaceuticals marketgrowing to the new heights and realized that the most promising opportunities are to befound with world’s emerging economies. The increasing aged population globally,significant demographic shift, would result in the global pharmaceutical marketregistering a healthy growth over the next decade.Pharmaceutical industry is a knowledge-based market. This market differs fromconsumers market. Today in competitive environment, pharmaceutical industries aredemanding much promotional backup to satisfy their customers. We also believe thatgoing forward the pharmaceutical industry would witness a major shift from developedmarket to emerging economies, from primary care class to position therapy and chemistryto biotech.In recent times, the global pharmaceutical industry has shown high interest in Bangladeshdue to its sustained economic growth, health care reforms. In the last few yearsBangladeshi pharmaceutical industry has achieved significant energy, making itspresence felt in the global market primarily through its focus on global generics markets.The Bangladeshi general companies are making their presence felt across regulated andsemi regulated market through merger and achievement, alliances and agreement with bigPharma MNC’s. The product patent administration is believed to offer huge opportunityfor the Pharma MNC’s as it will not only position Bangladesh an important market tolaunch their block buster drugs but also a strategic destination for conducting clinicaltrails.Bangladeshi as well as big MNC’s are following the union and partnership model toattack into the new markets and geographies.Such model not only help them to capitalize on the latter company’s knowledge as wellas understanding of the local market, technical know-how would also provide them withready access to a strong distribution and supply communications.The increasing cost, dry up of research pipeline, increasing pricing pressure have led thecompanies outsource the R&D activities. The increasing outsourcing in the PharmaRONI BHOWMIK
  9. 9. DAFFODIL INTERNATIONAL UNIVERSITYindustry has led the Bangladeshi company focus on outsourcing opportunities from theirinternational counterparts.Beximco Pharmaceutical Ltd. (BPL) is a well-established pharmaceutical company inBangladesh. BPL holds the second position in this highly competitive knowledgeablemarket. BPL believes new competitive advantages need to be identified to succeed in theindustry and at present new comer activity becomes the most challenging job. BPL issuch a company, which never compromise with new comer. From the beginning they areproviding that support but day by day its demand is rapidly increasing and BPL alwaysready to match with that demand. BPL starts to provide promotional back up from thelaunching date of new products. BPL ensure that the shareholder wealth maximization. Table of ContentsRONI BHOWMIK
  10. 10. DAFFODIL INTERNATIONAL UNIVERSITY NAME Page no EXECUTIVE SUMMARY INTRODUCTION 1 1. Introduction 2 1.1 Origin of the Report 4CHAPTER - 01 1.2 Scope the Report 4 1.3 Significance of the Report 5 1.4 Objectives of the Report 5 1.5 Methodology of the Report 6 1.6 Limitations of the Report 9CHAPTER - 02 Organization Part 10 2. Background of Pharmaceutical Industry of Bangladesh 11 2.1 Pharmaceutical Industry Analysis of Bangladesh 12 2.2 Management Aspect 19 2.2.1 History of Beximco Pharmaceutical Limited 19 2.2.2 Company Profile at a Glance 20 2.2.3 Mission 21 2.2.4 Vision 21 2.2.5 Management Hierarchy 21 2.2.6 Philosophy of Beximco Pharmaceutical Ltd. 23 2.2.7 Board and Management 23 2.2.8 Factories 24 2.2.9 Departments of BPL and their Activities 24 Central Product Management (CPM) 25 Department Purchase Department 25 Market Research & Statistical Cell (MRC) 25 Department Sales Department 26 Human Resource Department 26 Finance and Accounts Department 27 Sales & Training Department 28 Management Information System (MIS) 28 Department Multimedia Department 28 Medical Services Department (MSD) 29 International Marketing Department 29RONI BHOWMIK
  11. 11. DAFFODIL INTERNATIONAL UNIVERSITY BPL Factory (Works Department) 29 2.3 Key Milestones 30 2.4 Services 31 2.5 Future Plans 33 2.6 New Product Update 34 2.7 Blockbuster Products of BPL 34 2.8 Position of BPL in BD pharmaceutical Industry 35 2.9 Beximco Pharma’s Differential Edge 37 Learning Part 38 3. Statically Analysis of Beximco Pharmaceutical Ltd. 39 3.1 Financial Performance Analysis of BPL 42 3.1.1 Ratios Analysis 42 3.1.1(a) Short Term Liquidity Ratios 42 3.1.1(b) Capital Structure and Long-term 44 Solvency Ratios 3.1.1(c) Return on Investment Ratios 46 3.1.1(d) Profitability (Operating Performance) 46 Ratios 3.1.1(e) Asset Utilization Ratios 48 3.1.1(f) Market Measures Ratios 49CHAPTER - 03 3.1.2 Performance Analysis of BPL with Graph 51 3.1.2(a) Net Profit 51 3.1.2(b) Sales 52 3.1.2(c) Expenses 53 3.1.2(d) Interest 54 3.1.2(e) Liability 55 3.1.2(f) Assets 56 3.2 SWOT Analysis in BPL 57 3.2(A) Strength 57 3.2(B) Weakness 58 3.2(C) Opportunities 59 3.2(D) Threats 61 3.3 Valuation of BPL 63 FINDINGS AND CONCLUSION 64 4. Findings of the Report 65CHAPTER - 04 4.1 Recommendation of the Report 66 4.2 Conclusion 67 References 68 Appendix 69RONI BHOWMIK
  14. 14. DAFFODIL INTERNATIONAL UNIVERSITYThis internship is a part of the Bachelor of Business Administration (BBA) program thatprovides an on-the-job experience to students. I was placed at Beximco PharmaceuticalsLimited, Operational Headquarters Dhanmondi as an internee student for three months.This internship program was my very first on-the-job exposure and provided me withlearning experience and knowledge in several areas. During the first few weeks of myinternship period, I was able to get accustomed to the working environment of BeximcoPharmaceutical Limited. As the internship continued, I not only learned about theactivities and operations of Beximco Pharmaceutical Limited, but I also gathered someknowledge about the basic financing activities of Beximco Pharmaceuticals Limited infirst one-month of my internship period.Government and Private organization contribute significantly to the economicdevelopment of Bangladesh. Pharmaceutical Industry also contributes to the economicdevelopment in our country. It is not strengthening our Balance of payment but alsocontributing through earn foreign currency, provide domestic need and reduction ofunemployment, enhancing gross national income and save foreign exchange reserves.After ready-made garments (RMG), pharmaceutical sector has become one of the largestsectors in earning foreign currency. Meeting more than 95 percent demand of the localmarket, Bangladeshi drugs gained a significant position in the world’s drug market.Locally manufactured drugs are now being exported to more than 52 countries across theglobe like- Vietnam, Singapore, Myanmar, Bhutan, Nepal, Sri Lanka, Pakistan, Yemen,Oman, Thailand, and some countries of Central Asia and Africa.The scenario of pharmaceutical industry can be described in two parts- before the DrugPolicy Ordinance in 1982 and after the Drug Policy Ordinance in 1982.Before 1982, there were 177 licensed pharmaceutical manufacturers in the country butlocal production used to be dominated by the big multinational drug companies (MNCs)which manufactured the lion’s share about 75% of the products, 25 medium sizednational companies manufactured another 15% of the products and 133 small localcompanies (LCs) produced the remaining 10%. These multinational companies wereRONI BHOWMIK
  15. 15. DAFFODIL INTERNATIONAL UNIVERSITYfully armed with the technical know-how for producing sophisticated essential drugs, butthey were only engaged, to a large extent, in formulation of simple drugs including manyunnecessary products. At that time, the unregulated drug market of the country had veryfavorable conditions for pharmaceuticals to over price their products. That time localfirms could not compete effectively with these multinational market tycoons.A great change was noticeable in the pharmaceutical industry after the Drug PolicyOrdinance of 1982. The total national production of pharmaceuticals has risen by asubstantial 63%; the value of essential drug made in national factories has gone up by140% over the four years following the drug policy promulgation. Over 95% ofBangladeshs own pharmaceutical needs are met by domestic firms, which numberaround 230. Local companies (LCs) increased their share from 25% to 70% on totalannual production between 1982 and 2000. In 2000, there were 210 licensed allopathicdrug-manufacturing units in the country and now there are 265 registered companies areoperating. Few of the multinational companies closed their business in Bangladesh, as itwas difficult to make huge profit after the Drug Policy.1.1 Origin of the ReportRONI BHOWMIK
  16. 16. DAFFODIL INTERNATIONAL UNIVERSITYWithout the combination of theoretical and practical relationship for a student educationmethod will not more rich and helpful. Bookish knowledge is only theoretical knowledge,which cannot fully help in our professional life. So, every student must have practicalknowledge. In modern business world competition is very hard, the perfect coordinationbetween theory and practice is of vital in the every business students Therefore, and anopportunity is offered by Daffodil International University, for its potential businessgraduates to get three months practical experience, which is known as “InternshipProgram”. The study on “Profitability analysis of Beximco pharmaceuticals Limited”was carried out and this report was produced as requirement for the BBA InternshipProgram. The intern had earlier completed 40 required courses majoring in Finance, andwas placed with the Accounting and Finance Department, I have selected to work as aninternee in one of the leading company of pharmaceuticals field that is “BeximcoPharmaceuticals Limited (BPL)” a company of Beximco Group under a twelve weekinternship program, where his supervisor was Mr. Md. Fazlul Haque, Deputy Manager,Accounts and Finance, Beximco Pharmaceuticals Limited. At the end of the attachmentperiod this study topic was selected in consultation with Mr. Mahbub Parvez, AssistantProfessor, Department of Business and Economic and the internship supervisor.Internship Program brings a student quicker to the genuine life position and thereby helpsto start on a career with some previous experience.1.2 Scope of the ReportThere were huge scopes to work in the field of the report. Considering the dead line, thescope and exposure of the paper has been wide-ranging. The study, “Profitabilityanalysis of Beximco pharmaceuticals Limited” has covered Beximco PharmaceuticalsLtd. profit flows. The impact of different external and internal factors on the flow ofprofit by BPL has been showed in this report. The valuation of BPL has also beenshowed in this report. By preparing this report it becomes more understandable about thereal condition of the pharmaceutical industry in Bangladesh and the flow of profitthrough the different challenge.RONI BHOWMIK
  17. 17. DAFFODIL INTERNATIONAL UNIVERSITY1.3 Significance of the reportThe perfect coordination between theory and practice is important in the context of themodern business world in order to resolve between these two areas. The main reason ofthis report is develop into recognizable with the realistic business world to get practicalknowledge about the corporate world. Each and every one knows that there is nosubstitute of practical knowledge which is more advantageous than theoretical aspect.1.4 Objectives of the Report1.4(a) Primary Objective  The primary objective is to determine the position of Beximco pharmaceuticals Ltd. by analyzing their profit.1.4(b) Secondary Objectives  To identify different types of independent variables that help to analyze the profit of Beximco Pharmaceuticals Limited.  To identify and analyze Beximco Pharma policy measures that influences the flow of profit.  To identify different factors that effect profit earnings of Beximco Pharmaceuticals Limited.  To analyze the present value of Beximco Pharmaceuticals Limited.1.5 Methodology of the Report1.5.1 Selection of the topic:RONI BHOWMIK
  18. 18. DAFFODIL INTERNATIONAL UNIVERSITYInternship topic selected very important for a student. I am a student of DaffodilInternational University and internship program completed in Beximco Pharma Limited.The area chosen designed for the learning was selected by me and permitted by Mr.Mahbub Parvez, Assistant Professor, Department of Business Administration, Faculty ofBusiness & Economics, Daffodil International University.1.5.2 Research Design:The report is “Exploratory” in nature. To perform the report data sources were identifiedand collected, this was classified, analyzed, interpreted and presented in a systematicmanner and key points are found out.1.5.3 Data Sources:Two types of data are used to prepare the report, which are primary and secondary data. 1.5.3(a) Primary Sources: • Employees of the BPL • Clients of the BPL 1.5.3(b) Secondary Sources: • BPL Annual Report 1995-2009 • Published documents • Office circulars • Website of Beximco pharmaceuticals Limited • Bangladesh Association of Pharmaceutical Industries • Relevant books, Newspapers etc.1.5.4 Target Populations:All employees, management level, and customer of BPL, Operational headquarter.1.5.5 Sample Size: • 15 employeesRONI BHOWMIK
  19. 19. DAFFODIL INTERNATIONAL UNIVERSITY • 7 Clients1.5.6 Sampling Technique:Convenience sampling technique has been used.1.5.7 Data Collection Method:Data were collected through direct and face to face interview.1.5.8 Data Analysis Process:For analyzing the profitability of BPL, impact of this activity on its performance, andimpact of different factors on profit earnings of BPL. 15 years data have been used forthe analysis. The tools that are used for analysis are.1.5.8(i) Time Series AnalysisIn this report time series analysis has conducted by using 15 years data of profit earningsin Beximco Pharmaceuticals Limited. Least square method has used for this purpose.1.5.8(ii) Simple Regression AnalysisSimple regression analysis is conducted to find out the correlation between onedependent variable and five independent variables. Inward profit of BPL has consideredas independent variable here. From the outputs coefficient of correlation and coefficientof determination has analyzed. Besides the ANOVA test has also been demonstrated.This measures the significance and influence of both the inward profit of BPL.1.5.8(iii) Multiple Regression AnalysisIn this report Net Income in Beximco Pharmaceuticals Ltd is considered as dependentvariable. Numbers of Employers of BPL, Amount of Assets of BPL, Amount of Interestof BPL, Amount of Expenses of BPL, Amount of Sales of BPL as consideredRONI BHOWMIK
  20. 20. DAFFODIL INTERNATIONAL UNIVERSITYindependent variable. After that the correlation analysis has done to understand theinfluence of these variables on profit earnings of BPL.1.5.8(iv) Valuation AnalysisThe assumptions of valuation analysis are based on the previous performance of BPL. Atfirst every year’s growth rate is calculated and then the mean of those growth rates isconsidered to be the growth rate of projected years. Here the growth rates are assumed tobe constant.1.5.8(v) Ratio AnalysisRatio analysis is used to find out the profitability, liquidity, management efficiency, debtposition and many more factors of an organization. Here I am trying to find out thosefactors and as well as giving recommendations according to the calculation. Also I amtrying to compare the variable among years (time series analysis).1.5.8( vi) SPSS 12 SoftwareTo identify the influence of number of employers, amount of assets, amount of interest,amount of expenses, amount of sales in BPL, and a multiple regression analysis hasconducted by using the latest software SPSS 12.1.6 Limitations of the ReportRONI BHOWMIK
  21. 21. DAFFODIL INTERNATIONAL UNIVERSITYA wholehearted effort was applied to conduct the study work and to bring a reliable andfruitful result from which proper strategy can be adopted to this report. Some limitationswere faced while preparing this report. Some of those limitations are highlighted below: • Unable to provide specific cost information of production part as BPL is not concerned or willing to reveal the accurate cost and profit. • To protect the organizational confidentiality some parts of the report are not in depth. • The report covers only profitability analysis. It does not cover management, marketing, HRM or other business related issues. • BPL staff is very busy with their activities; as a result they were unable to provide much information about the report. • Ratio analysis is done only based on Annual Report. Direct income statement, cash flow, balance sheet are not taken into consideration as they are treated as confidential.RONI BHOWMIK
  23. 23. DAFFODIL INTERNATIONAL UNIVERSITY2. Background of Pharmaceutical Industry of BangladeshThe scenario of pharmaceutical industry can be described in two parts- before the DrugPolicy Ordinance in 1982 and after the Drug Policy Ordinance in 1982.Before 1982, there were 177 licensed pharmaceutical manufacturers in the country butlocal production used to be dominated by the big multinational drug companies (MNCs)which manufactured the lion’s share about 75% of the products, 25 medium sizednational companies manufactured another 15% of the products and 133 small localcompanies (LCs) produced the remaining 10%. These multinational companies werefully armed with the technical know-how for producing sophisticated essential drugs, butthey were only engaged, to a large extent, in formulation of simple drugs including manyunnecessary products. At that time, the unregulated drug market of the country had veryfavorable conditions for pharmaceuticals to over price their products. That time localfirms could not compete effectively with these multinational market tycoons.A great change was noticeable in the pharmaceutical industry after the Drug PolicyOrdinance of 1982. The total national production of pharmaceuticals has risen by asubstantial 63%; the value of essential drug made in national factories has gone up by140% over the four years following the drug policy promulgation. At present, more then95% of the total demand of medicinal products is met by local production. Localcompanies (LCs) increased their share from 25% to 70% on total annual productionbetween 1982 and 2000.The pharmaceutical industry has enjoyed great prosperity as nineteen-ninety-eightmarked another stellar year for the industry. Profits stayed in a sharp up-trend as 28 of the37 stocks in the industry beat the Standard & Poors 500 Index, which rose by 26.7%. Thepharmaceutical industry includes establishments primarily engaged in manufacturing,fabricating, and processing medicinal substances into finished pharmaceuticals for humanand veterinary use. Ethical brand name drugs, generic products, and nonprescription orover-the-counter medication constitute the pharmaceutical industry sub-sector.In 2000, there were 210 licensed allopathic drug-manufacturing units in the country andnow there are 265 registered companies are operating. Few of the multinationalcompanies closed their business in Bangladesh, as it was difficult to make huge profitRONI BHOWMIK
  24. 24. DAFFODIL INTERNATIONAL UNIVERSITYafter the Drug Policy. Among the multinational companies ACI and Pfizer are nowrunning its business in national ownership.After ready made garments (RMG), pharmaceutical sector has become one of the largestsectors in earning foreign currency. Meeting more than 95 percent demand of the localmarket, Bangladeshi drugs gained a significant position in the world’s drug market.Locally manufactured drugs are now being exported to more than 52 countries across theglobe like- Vietnam, Singapore, Myanmar,Bhutan, Nepal, Sri Lanka, Pakistan, Yemen,Oman, Thailand, and some countries of CentralAsia and Africa. 1980 2003Local 20% 95%Imported 80% 5%Table-1: National Demand met by Local production & Imported drugsSource: Aminur Rahman, Managing Director, IMS Health Bangladesh2.1 Pharmaceutical Industry Analysis of Bangladesh2.1(a) Why the need for Industry Analysis?Many analysts suggest that resisting the business cycle is unsuccessful. For the simplereason that most prices are governed by large financial institutions that buy and sell themajority of the volume of stocks and these institutions generally give a very heavyweighting to the performance or the expected performance of a specific industry. Aftermarket risk, this is the most powerful factor in the performance of a stock.2.1(b) Pharmaceutical Industry AnalysisRONI BHOWMIK
  25. 25. DAFFODIL INTERNATIONAL UNIVERSITYIn Bangladesh Pharmaceutical sector is one of the most developed hi tech sector which iscontributing in the countrys economy. After the promulgation of Drug ControlOrdinance - 1982, the development of this sector was accelerated. The professionalknowledge, thoughts and innovative ideas of the pharmacists working in this sector arethe key factors for this development. Due to recent development of this sector we areexporting medicines to global market including European market. This sector is alsoproviding 95% of the total medicine requirement of the local market. LeadingPharmaceutical Companies are expanding their business with the aim to expand exportmarket. Recently few new industries have been established with hi tech equipments andprofessionals which will enhance the strength of this sector.The pharmaceutical industry is highly complex. The technologies leading to drugdiscovery and development are at the limits of human knowledge. The huge size of thecompanies and the complexities of their processes and technologies presents manyorganizational and management challenges. The development and management of thedistribution system is highly costly. Based on the Porters five forces model, there areconvincing explanation why the pharmaceutical industry has big profitability.RONI BHOWMIK
  26. 26. DAFFODIL INTERNATIONAL UNIVERSITYIn analyzing an industry future prospect industry analysis is very important in which theindustry is competing because the profitability of various industries differs over time.Profitability of an industry is influenced by the “five forces”. That is known as Porter 5Forces like as: Rivalry among the Exiting firm Bargaining Threats of power of new Supplier Entrants Porter’s 5 Forces Bargainin Threat of g power of Substitute Buyers product2.1(b)1. Rivalry among the exiting firm: Pharmaceutical industry has huge competition,because in this sector very important human life. Every person one of the main basicneed to health care, in this situations overall world very vital is pharmaceutical sector. InBangladesh pharmaceutical industry place risky position, because in our country not richRONI BHOWMIK
  27. 27. DAFFODIL INTERNATIONAL UNIVERSITYinvestor. As this situation, our country can’t establish world class pharmaceuticalcompany. • Highly competitive: Ready for action if any chances take in this competitive open market. Any company go to market create any country and in this time rich company capture to the market. In this situation local industry losses there market, not only local but also international market. Example of this situation Glaxo Smith Kline (GSK) capture to the world market, most of the country pharmaceutical market capture to there medicine. They are delivered 1.4 billion vaccine doses in 2009, of which nearly 1 billion were shipped for use in developing countries. • High fixed cost and high working capital: Pharmaceutical company establish very expensive to fixed cost, because her mechanism high costly. In her maintained cost also high, there are required highly qualified persons. And mechanism maintained cost need huge working capital. • Strong Pressure: It is information technology time, in this time small to big every business sector run strong pressure and competition. Bangladeshi pharmaceutical industry always runs pressure because India pharmaceutical industry very strong, so they are capture 16 core people market ready. • Globally open market: In this time world is create a global village market opportunity to the information technology. So one company easily go to global market and sell there product world wide. Though pharmaceutical industry have some rules and regulation in global market. In this situation if any company sell there product cheap rate and good quality, then this company easily captureRONI BHOWMIK
  28. 28. DAFFODIL INTERNATIONAL UNIVERSITY market. As like Bangladeshi company Beximco Pharma sell there some medicine UK, USA, South Africa, and Middle East country because there good quality. • High switching cost: Pharmaceutical industry switching cost very high, so because there fixed cost high. In this situation investor can’t interest pharmaceutical industry. Bangladeshi investors are not so rich they can’t go to invest this sector, because pharmaceutical company preliminary and switching both cost very high. • Low customer loyalty: Low customer loyalty in Pharmaceutical Company, because some time Pharmaceutical company produce low quality medicine. As like some time ago Bangladeshi Renata Company produces low quality medicine and many children ill. In this situation Pharmaceutical Company lost loyalty in our country general people.2.1(b)2. Threats of new entrants: Strong Pressure to new entrants becausePharmaceutical industry is much competitive in the market. There were many strong rivalexisted in the market. That’s why it was much difficult to enter in the market for newPharmaceutical Company. • Very low barriers to entry: Pharmaceutical industry very low barriers to new entry, in this time new investor encourage investing in this sector. But new investor done this work not trouble-free because much competitive in the market in existing company. In this situation many country newly entry invest this sector and it is one kind of threat in Bangladeshi Pharmaceutical Industry. • Advent of product administration supportive for entry of Pharma MNCs: Beginning of product management supportive for entry of Pharma MNCs, in thisRONI BHOWMIK
  29. 29. DAFFODIL INTERNATIONAL UNIVERSITY situation new investor encourage to investing. In that opportunity Bangladeshi investor give confidence invest in this sector. In this position many country recently entry invest this sector and it is one kind of warning in Bangladeshi Pharmaceutical Industry. • Economies of scale exist: In existing company use the economies of scale to take the market position. Existing company produce the product extent level and they are benefited to cost. Bangladeshi Pharmaceutical Industry histories not mature in this position foreign Pharmaceutical Company uses this opportunity.2.1(b)3. Threat of substitute product: Low Pressure in substitute because BangladeshiPharmaceutical Industry has much preference like herbal medicine but Biotechnology is athreat to Pharma products. In our Asian country India is very strong in Biotechnology, soit is threat in our pharmaceutical industry. • Biochemic is a threat to Pharma products: Bangladesh is a poor country, in this country illiteracy people high they are believe to herbal medicine and Biochemic. Biochemic is a threat to Pharmaceutical products in our country because village people can’t believe pharmaceutical medicine.2.1(c)4. Bargaining power of buyers: Low pressure because pharmaceutical industry isvery much responsible about their customer. They offer competitive price as like ascompetitors offers their customer but maintaining quality. • Brand identity exists and is in the hands of influencer (Doctors): If Bangladeshi pharmaceutical industries have already brand identity exists and is in the hands of influencer (Doctors) but people some time avoid Bangladeshi company. Because some Bangladeshi company can’t maintain to there quality, in this situation they need to more use influencer.RONI BHOWMIK
  30. 30. DAFFODIL INTERNATIONAL UNIVERSITY • End consumers do not have bargaining power: Final consumers do not have enough bargaining power in our country. Because they can’t take enough substitute medicine to there sick. MNCs have some rules to medicine import and export one country to another country, in this situation final consumer depended to only local pharmaceutical medicine and there bargaining power very low.2.1(b)5. Bargaining power of supplier: Low pressure they have much ability tocompete with other supplier in pharmaceutical industry. Bangladeshi pharmaceuticalindustries have enough bargaining power to supplier, they are shift any time to therenecessary raw material supplier. • Volume benefits occur: Pharmaceutical industries purchase there important raw material large volume, in this situation they take volume benefit. If the supplier bargaining to there products then they are shift supplier, sometimes it is difficult because Bangladeshi pharmaceutical industries necessary raw material purchase foreign country. • Numerous suppliers- switching cost low: When the Bangladeshi pharmaceutical company demand to high price then many suppliers switching cost low. • Raw material cost constitute major portion of total expenses: We know pharmaceutical industries raw material cost constitute major portion of total expenses. In this situation pharmaceutical company try to there cost minimize bargaining when purchase raw material.Degree of actual and potential competition depends on first 3 forces and a rest 2 forcedetermines the relative bargaining power in input and output markets.RONI BHOWMIK
  31. 31. DAFFODIL INTERNATIONAL UNIVERSITY2.2 MANAGEMENT ASPECT:2.2.1 History Beximco Pharmaceuticals LimitedThe company was incorporated in 1976 and commencedoperations in 1980 with the manufacturing and marketingof products of Bayer AG, Germany and Upjohn Inc.,USA under licensing arrangements. In 1983, the companystarted manufacturing its own formulations and it launched export operation in 1992. In2005 Beximco Infusions Ltd, the company that produces intravenous fluids wasamalgamated with the parent company. In the same year it completed the state-of-the-artoral solid dosage plant in compliance with the US FDA and UK MHRA standards, whichhas been approved by major global regulatory bodies. Today Beximco Pharma is thelargest exporter of pharmaceuticals in the country and the only company to win NationalExport Trophy (Gold), the highest national accolade for export, for record three times.The company is the largest producer of Metered Dose Inhalers (MDIs) in the country,and the first to produce CFC free inhalers. BPL is also the first company to produce anti-retroviral drugs (ARVs) locally. As a public limited company, its shares are activelytraded in Dhaka Stock Exchange and Chittagong Stock Exchange, and Beximco Pharmahas the unique distinction of being the only company in the country listed on AIM ofLondon Stock Exchange. Today Beximco Pharma manufactures and markets its ownbranded generics for several diseases including AIDS, cancer, asthma, hypertension, anddiabetes for both national and international markets.RONI BHOWMIK
  32. 32. DAFFODIL INTERNATIONAL UNIVERSITY2.2.2 Company Profile at a GlanceCorporate Headquarters: 17 Dhanmondi R/A, Road No.-2 Dhaka-1205, BangladeshOperational Headquarters: 19 Dhanmondi R/A, Road No.-7 Dhaka-1205, BangladeshFactory: Auspara, Tongi , GazipurYear of Establishment: 1976Commercial Production: 1980Status: Public Limited CompanyBusiness Line: Manufacturing and marketing of Pharmaceutical Finished products and Active Pharmaceutical Ingredients (APIs)Overseas Offices And Associates: UK, USA, Pakistan, Myanmar, Singapore, Kenya, Yemen, Nepal, Czech Republic, Vietnam, Cambodia and Sri Lanka.Export Outlets: Bhutan, Georgia, Germany, Hong Kong, Iran, Iraq, Kenya, Malaysia, Myanmar, Nepal, Pakistan, Russia, Singapore, Taiwan, Vietnam, Yemen, Czech Republic, Mozambique, Philippines, Srilanka, Thailand, Ukrain.Authorized Capital in Taka: 9,100 millionPaid-up Capital in Taka: 1511.49 millionTurnover (net) in Taka of 2009: 4868.25 millionNumber of Shareholders: 80,189 (as on Dec. 31, 2009)Stock Exchange Listings: Dhaka, ChittagongNumber of Employees: 2,511Source: Annual Report of BPL, 20092.2.3 MissionRONI BHOWMIK
  33. 33. DAFFODIL INTERNATIONAL UNIVERSITYA mission statement broadly outlines the organization’s future direction and serves as aguiding concept for what the organization is to do and to become.“Each of our activities must benefit and add value to the common wealth of our society.We firmly believe that in the final analysis we are accountable to each of the constituentswith whom we interact namely our employees, our customers, our business associates,our fellow citizens and share holders.”2.2.4 VisionThere activity must benefit and add value to the common wealth in our society. Sociallyare committed ethical Company.They are firmly believing that, in the final analysis they are accountable to each of theconstituents with whom they interact, namely: there employees, customer, businessassociates, fellow citizens and shareholders2.2.5 Management Hierarchy:The Organizational hierarchy of the Beximco Pharmaceuticals Ltd. can be shown by thefollowing diagram: Board of directorsRONI BHOWMIK
  34. 34. DAFFODIL INTERNATIONAL UNIVERSITY Managing Director (MD) Deputy Managing Director (DMD) Executive Vice President (EVP) Senior Vice President (SVP) Vice President (VP) Senior Assistant Vice President (SAVP) Assistant Vice President (AVP) Senior Executive Officer (SEO) Executive Officer (EO) Principal Officer (PO) Senior Officer (SO) Officer Junior Officer (JO) Chart 3: Organizational hierarch2.2.6 Philosophy of Beximco Pharmaceuticals Ltd.RONI BHOWMIK
  35. 35. DAFFODIL INTERNATIONAL UNIVERSITY“We firmly believe that in the final analysis we are accountable to each of theconstituents with whom we interact; namely, our customers, our employees, oursuppliers, our shareholders, and fellow citizens”.2.2.7 Board and Management2.2.7-a- Board of DirectorName PositionA S F Rahman ChairmanSalman F Rahman Vice ChairmanNazmul Hassan MP Managing DirectorIqbal Ahamed DirectorM A Qasem DirectorO K Chowdhury DirectorDr.Farida Huq DirectorAdvocate Ahsanual Karim DirectorDr. Abdul Alim Khan Independent Director2.2.7-b- Executive CommitteeName PositionO K Chowdhury Member of the board of DirectorsNazmul Hassan MP Managing DirectorRabbur Raza Chief Operating OfficerAli Nawaz Chief Financial OfficerAfsar Uddin Ahmed Director, Commercial2.2.7-c- Management CommitteeName PositionM Tahir Siddique Executive Director, QualityLutfur Rahman Director, ManufacturingZakaria S Chowdhury Director International MarketingRabbur Reza Chief Operating OfficerNazmul HAssan MP Managing DirectorO K Chowdhury Member of the board of DirectorsAli NAwaz Chief Financial OfficerAfsar Uddin Ahmed Director, CommercialA R M Zahidur Rahman Executive Director, ProductionShamim Momtaz Executive Director, ManufacturingJamal Ahmed Chowdhury General Manager, Accounts & Finance2.2.7-d- Company SecretaryRONI BHOWMIK
  36. 36. DAFFODIL INTERNATIONAL UNIVERSITYMd. Asad UllahSource: Annual Report of BPL, 20092.2.8 FactoriesBeximco Pharma manufacturing facilities are spread across a 20-acre (81,000 m2) sitelocated in Dhaka, Bangladesh. The facilities comprise of a number of purpose-builtplants, including a new Oral Solid Dosage (OSD) plant. The site includes manufacturingfacilities as well as a research laboratory and a number of warehouses. The plant andmachinery of the facilities were designed, produced and installed by partners fromGermany, Switzerland, Sweden, Italy and the United Kingdom, amongst others.2.2.9 Departments of BPL and their Activities BPL has highly qualified professional staffs for handling all the condition of the company. Introduction of various divisions are as follows: 1. Central Product Management (CPM) Department 2. Purchase Department 3. Market Research & Statistical Cell (MRC) Department 4. Sales Department 5. Human Resource Department 6. Finance and Accounts Department 7. Sales & Training Department 8. Management Information System (MIS) Department 9. Multimedia Department 10. Medical Services Department (MSD) 11. International Marketing Department 12. BPL Factory (Works Department)1. Central Product Management Department (CPMD):RONI BHOWMIK
  37. 37. DAFFODIL INTERNATIONAL UNIVERSITYCPM stands for Central Product Management that takes care of the total marketing of theproducts. Central Product Management (CPM) is the core department of BPL. Thisdepartment mainly focuses and gives emphasis on the strategies. Major functions of theCPM Department are:  Preparing product literature and promotional materials for doctor.  Determining the packaging pattern, color, size.  Setting target sales  Conducting meeting with field workers  Issuing budget in consulting with different department  Setting price for each product2. Purchase Departments:This department interacts directly with the planning, production, and finance department.Finance department develops a cash flow budget at the beginning of the year. The salesdepartment fixes the sales target. According to the demand, Purchase department startstheir operations which are mentioned below in the sequential basis:  Being ordered from the planning department, the department establishes and calculates the cost of raw materials necessary.  It asks for cash to the finance department.  Decide which product to purchase from the local market and which to import.  It arranges for bidding to the suppliers which involves close interaction with the planning department.3. Market Research & Statistical Cell (MRC) Department:Market Research & Statistical Cell (MRC) Department plays a vital role in looking formarket share of the company in the industry. The whole country is divided into 829territories under 20 regions. The department discloses the trend of increasing orRONI BHOWMIK
  38. 38. DAFFODIL INTERNATIONAL UNIVERSITYdecreasing market share by compiling the received data from the market. Responsibilitiesof the Market Research & Statistical Cell (MRC) Department:  Forecasting future market share in response to the data from the market research representative.  Recruitment of research persons in consultation with the Human Resource Department.  Strategy developing for effective market survey.  Arrange training for field force.  Performance evaluation of the market researchers.4. Sales Departments:Sales department is forecasting the sales. The major responsibilities of this departmentare, preparing the strategies for expense budget through CPM. The main goal of salesdepartment is sales achievement. The department divided the whole country into 20regions and assigned 20 Regional Sales Executives to control sales activities. Mainactivities of Sales Department are:  Forecasting future sales in consultation with the CPM department.  Recruitment of sales force in consultation with the HR department.  Arrange training for field force.  Handling critical customers.  Ensuring product availability.  Performance evaluation of the sales force.5. Human Resource Departments (HRD):The objectives of Human Resource Department (HRD) are-  Recruitment policy and procedureRONI BHOWMIK
  39. 39. DAFFODIL INTERNATIONAL UNIVERSITY  Placement of employees  Career planning  Hiring and firing  Job description preparation  Conducting appraisal at the end of each year  Maintaining and developing employees personal files  Safety and security  Welfare activities for employees6. Finance and Accounts Department:There are three wings under the Finance & Accounts Department. These ares- • Treasury Accounts • Financial Accounting • Management Accountingi) Core functions of Treasury Wings: • Fund management • Maintaining banking transactions loan and leases • Party payments • Employee payrollii) Core functions of Financial Accounting Wings: • Day to day transaction recording • Monthly Reports • Auditing • Handling Tax related matters • Maintaining legal complianceRONI BHOWMIK
  40. 40. DAFFODIL INTERNATIONAL UNIVERSITY • Maintaining SEC rules • Preparing Financial Reportsiii) Core functions of Management Accounting Wings: • Budgeting • Costing • Internal Reporting7. Sales & Training Department:The Department has the responsibility of providing training to the firm’s employees andmanagement. There one Manager and two Officers in this department. The departmentbasically offers four types of training programs:  Induction Training Programs  Supervisory Management Programs  Advanced Supervisory Management  Refresher Training Programs for everyone in sales8. Management Information System (MIS) Departments:The MIS Department takes care of total automation of BPL. It supports the hardware andsoftware network of the company and the factory. This department provides servicesthrough SNA Server, WIN NT Server, and SQL Server. BPL operational headquarters islinked to the corporate headquarters through fiber optic cable. The department alsoestablished a Wide Area Network (WAN) with the 12 depots around the country. MISdepartment develops the access Control & attendance monitoring System internally.9. Multimedia Departments:RONI BHOWMIK
  41. 41. DAFFODIL INTERNATIONAL UNIVERSITYBPL is the only pharmaceutical company that has a Multimedia Department. This ishelping in the product promotion. It designs medical videos for the doctors. Majorfunctions of the Multimedia Department are:  Web page designing.  Developing multimedia presentation for presentation programs.  Making videos of conferences, meeting etc.  Designing the cover page of annual report.  Making video for products.  Making video for company.  Keeping the records of annual meeting and other meeting.  Copying literature, promotional tools, and medical in CDs to gift it to doctors.10. Medical Services Department (MSD):This department is a unique department in this industry as BPL established this first everin order to create easy relationship through using the professional linkage with thedoctors, the ultimate customer of the pharmaceutical companies. It arranges seminars ondifferent issues such diseases and their cures in different parts of the country. It publishesa special ‘Medical Newsletter’ quarterly and sends the current issues to the enlisteddoctors at free of cost.11. International Marketing Departments:In 1991, the company took the challenge to venture into the international arena. At first itstarted exporting only formulation products. Then in 1996 this company first startedexporting their finished goods. This department is concerned with the internationalpromotion and marketing of BPL finished products and basic chemicals.12. BPL Factories (Works Department):RONI BHOWMIK
  42. 42. DAFFODIL INTERNATIONAL UNIVERSITYBeximco Factory Complex (a manufacturing plant in Auspara, Tongi, Dhaka) has 7 acresof land and a total covered space of 160,000 sq. ft. Total manpower in the factorycomplex is 450. It has three different types of plants: • Raw materials Plants: Produce raw materials of Plants. • Basic Chemical Plants: Produces raw materials of Antibiotics. • Beximco Infusions Ltd.: Produces Intravenous (IV) Fluids.2.3 Key Milestones1976 Registration of the company.1980 Started manufacturing and marketing of license products of buyer AG of Germany and Upjohn Inc. of USA.1983 Launching of BPL’s own products1985 Listing in the Dhaka Stock Exchange (DSE) as a Public Limited Company (PLC).1990 Commissioning of Basic Chemical Unit.1992 Started export operation with Active Pharmaceutical Ingredients (APIs).1993 First export market operation with finished pharmaceutical products.1994-1995 Achievement of National Export Trophy (Gold) as the first pharmaceutical company of the country. Introduction of 20 new products.1996 Introduction of sustained release dosage form in the market. Introduction of 12 new products.1997 Commissioning of Metered Dose Inhaler (MDI) plant and introduction of suppository dosage form. Introduction of 15 new products.1998 Introduction of Metered Dose Nasal Spray. Introduction of 13 new products.1999 UNICEF approval of BPL as an enlisted supplier. Introduction of 6 new products.2000 Contract manufacturing agreement of Metered Dose Inhaler (MDI) with Glaxo SmithKline. Introduction of 11 new products.2001 Introduction of small volume parenteral products (Injectables).RONI BHOWMIK
  43. 43. DAFFODIL INTERNATIONAL UNIVERSITY Establishment of Analgesic-Anti inflammatory plan. Introduction of 26 new products.2002 The first Bangladeshi company to supply pharmaceuticals to Raffles Hospital- the most prestigious hospital of Singapore.2003 Introduced Anti-HIV drugs for the first time in Bangladesh. Diversification into Anti-Cancer therapeutic class.2005 Only company in Bangladesh to get listed on Alternative Investment Market (AIM) of London Stock Exchange through issuance of GDRs. Construction of state-of-the-art USFDA standard oral solid dosage facility was completed.2006 Launched CFC free HFA inhalers for the first time in Bangladesh Introduction of 11 new products.2007 New Oral Solid Dosage (OSD) facility was commissioned according to US FDA standards.2008 First and only Bangladeshi company receives GMP Clearance from Therapeutic Goods Administration (TGA) Australia, and Gulf Central Committee for Drug Registration, for GCC member state. Technology transfer arrangement to manufacture Roche’s ARV drug Saquinavir.2009 Only Bangladeshi company to receive GMP Certification from ANVISA, Brazil ION unit was launched for producing injectables, ophtalmics and nebulizer solutions.Source: Annual Report of BPL, 20042.4 Services………2.4(a) Corporate Social ResponsibilityRONI BHOWMIK
  44. 44. DAFFODIL INTERNATIONAL UNIVERSITYThe guiding philosophy of there CSR activities is doing the best in what they do and atthe same time helping others in doing what they do. With this in mind, there CSRstrategy is that they should manufacture highest quality medicines, there modus operandishould be compassionate for all the people and all there activities should be such thatthese are benevolent for our society and benign to our environment.2.4(b) Protracting our EnvironmentBeximco Pharma does not view its success and achievements in financial terms only, butalso in terms of its deep relationship with the society and environment. It is one of therecore values that they should take maximum care for environment and should reduceenvironmental effects of manufacturing activities to a practical minimum.2.4(c) Scientific Seminar SeriesThe Medical Department arranges seminars and workshops covering a wide range ofmedical topics. These events are led by team of medical service experts, and are attendedby members of the medical profession. It also organizes a good number of NationalSymposia on specialized medical topics, which are attended by countrys renownedphysicians and scientists.2.4(d) Special PublicationsThe Dept. has published a number of handbooks on specialized medical areas and drugproducts namely Infectious Diseases Handbook, ECG handbook, Drugs in Pregnancy,Therapeutic Index etc. All these publications are distributed free among the academicphysicians.2.4(e) Continuing Medical EducationBeximco jointly organizes Training programs in the form of symposia, workshops or 2-7day courses with national academic institutions. The main objectives of these programsare to retrain general practitioners in major medical problems, to update their knowledge,and bring the highlights of new techniques, therapies and procedures to their doorsteps.2.4(f) Responding to Doctors QueriesRONI BHOWMIK
  45. 45. DAFFODIL INTERNATIONAL UNIVERSITYBeximco takes great care in answering queries from doctors. The Medical Departmentsteam of highly dedicated professionals is well trained to attend to these queries. Thecompany encourages doctors to send their queries in postage paid envelopes attached toevery copy of the Newsletter, or on a specific query form distributed in each clinicalmeeting. Currently, most of the doctors queries are met through its own Internetfacilities.2.4(g) Medical Illustration and Audiovisual AidsTo assist physicians in sharing the results of their academic research and experienceswith the larger medical community, Beximco extends its services, to a great extent, inpreparation of presentation packages including slides, transparencies and texts.2.4(h) Medical Research UpdateAbstracts of recent publications in different fields of medical science are printed anddistributed quarterly to doctors according to their specializations.2.4(i) Collaborative ResearchFrom time to time research proposals are solicited from scientists or clinicians on basicscience, pre-clinical, and clinical topics. A few years back, two research projects, one onin-vitro effects and another on in-vivo effects, of Ciprofloxacin were conducted at DhakaShishu Hospital and Institute of Post Graduate Medicine and Research respectively. Theresults of both studies were published in reputed international journals. Beximco alsosponsors a number of other research projects at various institutions of the country.Studies recently done in collaboration with BPL Medical Dept. include: • "Screen out cervical cancer by Pap smear" • "Isolation of Staph. aureus from wound of diabetic patient" • "H. pylori project" • "Early diagnosis of tuberculosis by PCR" • "Association of widal positivity in viral hepatitis patients"2.5 Future PlansRONI BHOWMIK
  46. 46. DAFFODIL INTERNATIONAL UNIVERSITYThe Medical Department plans to strengthen its activities further through widening therange of customers and services. The future plans include: • Setting up electronic information services in regional centers for better and faster information exchange with the headquarters and the rest of the world. • Providing more specialized services to doctors of various disciplines. • Publication of scientific research journal.2.6 New Product Update • Beximco Pharma introduces Nasomet Nasal Spray • Beximco Pharma launches three new Respirator solutions • Beximco Pharma launches two new HFA Inhalers • Beximco Pharma introduces four new Cardiovascular Drugs for the “First Time” in Bangladesh.Beximco Pharma introduces three new HFA Inhalers “First Time” in Bangladesh.2.7 Blockbuster Products of BPLNapa Highest selling drug in Bangladesh Pharmaceutical Market in terms of unit.Neoceptin-R Highest selling drug in Bangladesh Pharmaceutical Market in terms of value.Bextrum / Bextrum Gold Emerged as the most admired & highest selling nutritional supplement in BangladeshRONI BHOWMIK
  47. 47. DAFFODIL INTERNATIONAL UNIVERSITY Pharmaceutical Market in just one year.Amdocal Highest selling cardiovascular drug in Bangladesh Pharmaceutical Market in terms of value.Tofen Highest selling oral anti-asthma drug in Bangladesh Pharmaceutical Market in terms of value.Azmasol Highest selling Metered Dose Inhaler brand in Bangladesh Pharmaceutical Market in terms of value.Source: Annual Report of BPL, 20092.8 Position of Beximco Pharmaceutical Ltd. in overall BangladeshiPharmaceutical IndustryTen companies are occupying more than 60 % of market share,where there are more than 250 (registered and unregistered)companies in Bangladesh Pharmaceutical Market. Out of thesetop ten pharmaceutical companies in Bangladesh, eight arelocal companies, while only two are multinational companies(MNC’s). The top two domestic manufacturers, namely Squareand Beximco Pharmaceuticals are having a combined marketshare of about 25% of the total pharmaceutical market of thecountry.Pharmaceutical Companies Market Share in Terms of SalesSquare Pharmaceutical Ltd. 14.5%Beximco Pharmaceuticals Ltd 10.0%Acme 8.0%Aventis 6.0%Incepta 5.0%SK+F 4.5%Glaxo SmithKline Bangladesh 4.3%Opsonin Chemical Industries Ltd. 4.0%Drug International 3.8%RONI BHOWMIK
  48. 48. DAFFODIL INTERNATIONAL UNIVERSITYACI 3.7%Others 36.2%Table-2: Top Ten Pharmaceutical Companies in Bangladesh Market Share in Terms of Sales Square Pharmaceutical Ltd. Beximco Pharmaceuticals Ltd Acme 14.50% Aventis 36.20% Incepta 10.00% SK+F 8.00% Glaxo SmithKline Bangladesh 6.00% Opsonin Chemical 3.70% Industries Ltd. 3.80% 5.00% Drug International 4.00% 4.50% 4.30% ACI OthersFigure-3: Shares of Top Ten Pharmaceutical CompaniesSource: Md. Nazmul Hossain, Asst. Product Manager, CPM Department, BPLRONI BHOWMIK
  49. 49. DAFFODIL INTERNATIONAL UNIVERSITY2.9 Beximco Pharmas Differential Edge • World class manufacturing facilities • Highest GMP standards • Outstanding product quality • Sophisticated formulation technology • Diversified dosage forms & products • Significant investment in R&D • Excellent customer services • Responsible care for the environment • Commitment to the people & the societyRONI BHOWMIK
  51. 51. DAFFODIL INTERNATIONAL UNIVERSITY3. Profitability Analysis of Beximco Pharmaceuticals Limited3.1 Multiple Regression Analysis:Multiple Regression Analysis helps in the NetIncome of Beximco Pharmaceuticals Ltd. andInternal Factors effect. 15 years financial data areused for this purpose to identify the influence ofnumber of employers, amount of assets, amountof interest, amount of expenses, amount of salesin Beximco Pharmaceuticals Ltd., and a multipleregression analysis has conducted by using SPSS12 software.Here,Dependent variable (Y) = Net Income in Beximco Pharmaceuticals Ltd.Independent variable (X 1 ) = Numbers of Employers of Beximco PharmaceuticalsLtd.Independent variable (X 2 ) = Amount of Assets of Beximco Pharmaceuticals Ltd.Independent variable (X 3 ) = Amount of Interest of Beximco Pharmaceuticals Ltd.Independent variable (X 4 ) = Amount of Expenses of Beximco Pharmaceuticals Ltd.Independent variable (X 5 ) = Amount of Sales of Beximco Pharmaceuticals Ltd.RONI BHOWMIK
  52. 52. DAFFODIL INTERNATIONAL UNIVERSITY3.1(a) Multiple Regression EquationThe equation is generally, Y = a + bx. Where: a = constant, b = slope.Y = 3094003 – 1.567X 1 – 1.035X 2 + .188X 3 – .824X 4 + 2.339X 5This equation indicates if Beximco Pharmaceuticals Ltd’s number of employee increasesfor 1 unit, Net Income of Beximco Pharmaceuticals Ltd. will decrease by Tk. 1.567. So,here a negative relationship exits between Net Income in Beximco Pharmaceuticals Ltd.and Numbers of Employers of Beximco Pharmaceuticals Ltd. The equation also indicatesthat if amount of assets of Beximco Pharmaceuticals Ltd. increases for 1 unit the NetIncome in Beximco Pharmaceuticals Ltd. will decrease by Tk. 1.035. If the amount ofinterest of Beximco Pharmaceuticals Ltd. increases for 1 unit the Net Income in BeximcoPharmaceuticals Ltd. will increases Tk. 0.188. If the amount of expenses of BeximcoPharmaceutical Ltd. increases for 1 unit the Net Income in Beximco Pharmaceuticals Ltd.will decrease Tk. 0.824; and if amount of sales of Beximco Pharmaceuticals Ltd.increases for 1 unit the Net Income in Beximco Pharmaceuticals Ltd. will increase by Tk.2.339.3.1 (b) R = Co-efficient of multiple correlationsHere, R = .947We know that, 0 – Absence of relationship .01 - .29 – Very low degree of relationship .30 - .49 – Low degree of relationship .50 - .69 – Moderate degree of relationship .70 - .89 – High degree of relationship .90 - .99 – Very high degree of relationshipRONI BHOWMIK
  53. 53. DAFFODIL INTERNATIONAL UNIVERSITY 1 – Perfect relationship.It indicates that there exists a very high degree of positive relationship among number ofemployers, amount of assets, amount of interest, amount of expenses, and amount ofsales and net income by Beximco Pharmaceuticals Ltd.3.1 (c) R 2 = Co-efficient of multiple determinationsHere, R 2 = .896R 2 indicates that number of employers, amount of assets, amount of interest, amount ofexpenses, and amount of sales explain 89.6% of the variation in the net income byBeximco Pharmaceuticals Ltd. which is very influential as it is higher than 50%.3.1 (d) ANOVAThe ANOVA table indicates that the relationship among number of employers, amount ofassets, amount of interest, amount of expenses, and amount of sales and net income byBeximco Pharmaceuticals Ltd. is statistically significant as the test is significant at 0.000level which less than (e) Beta Co-efficientThe beta co-efficients of number of employers, amount of assets, and amount of interest,amount of expenses, and amount of sales reflect that adoption of amount of sales is themost important variable which has higher influence on amount of net income by BeximcoPharmaceuticals Ltd.RONI BHOWMIK
  54. 54. DAFFODIL INTERNATIONAL UNIVERSITY3.2 Financial Performance Analysis of Beximco PharmaceuticalsLimited 3.2.1 Ratios Analysis 3.2.1(a) Short Term Liquidity Ratios Current Ratio 2006 2007 2008 2009 Current assets 3357393266 2923775458 2861891654 6916737893 Current liability 2527420798 1627972936 2602032267 2321451642 1.33:1 1.80:1 1.10:1 2.90:1The current ratio measures the company’s ability to pay off its current liability. Here wecan see that current ratio was highest in 2009 with compare in preceding years. But it alsodenotes that company has huge idle money, so it is not good sign for the BeximcoPharmaceuticals Ltd. So in a concluding note I would like to say company should utilizethere idle money in a profitable manner. Acid Test Ratio 2006 2007 2008 2009 (Total Current Assets – (3357393266 – (2923775458 – (2861891654 – (6916737893 – Inventory) 1754440288 ) 1652480291) 1505288093) 1722953284) Average Current 2527420798 1627972936 2602032267 2321451642 Liability 0.63:1 0.78:1 0.52:1 2.24:1Acid-test ratio is the most conservative ratio in calculating liquidity position. Here we can seethat acid-test was quite stable in first three years, but it was increased dramatically in 2009.RONI BHOWMIK
  55. 55. DAFFODIL INTERNATIONAL UNIVERSITY The company’s current liquidity position is more then satisfactory. Again I say that companies should decrease their idle money.Average 2006 2007 2008 2009Collection Period(A/R x 360 days) (430240095 x 360) (499680792 x 360) (503916401 x 360) (430240095 x 360) 3702317159 3597024812 4010167059 4868254915Total Credit Sales 41.83 days 50.01 days 45.24 days 51.33 days This ratio helps to find out average collection period of accounts receivables. The lower the collection periods the higher the management efficiency measure collect the account receivables. We see that average collection period was better in 2006. But in 2009 it was increased due to increase of sales volume. A/R Turnover 2006 2007 2008 2009 360 days 360 days 360 days 360 days 360 days Average Collection 42 days 50 days 45 days 51 days Period 8.57 times 7.2 times 8 times 7.06 times Account receivable turnover is the relationship between the amount of an asset and some measure of its use. Accounts receivables turnover is measure the number of times per year that the average amount of receivables is collected and transfers the cash amount. If the organization account receivable turnover increase then the average collection period decrease and vice-versa. Here we see that in 2006 account receivable turnover highest and average collection period less. Here average collection period was more or less same so account receivable turnover was stable. Inventory 2006 2007 2008 2009 Turnover Cost of Goods Sold 1971231333 1967509975 2002871181 2566206626 RONI BHOWMIK
  56. 56. DAFFODIL INTERNATIONAL UNIVERSITY Average Inventory (3438162347)/2 (3406920579)/2 (3157768384)/2 (3228241377)/2 1.15 times 1.16 times 1.27 times 1.59 times Inventory turnover ratio measures how fast the inventory become cash or accounts receivable. If the turnover number is more then the company’s position is good and vice versa. In 2006 it is 1.15 times and in 2007 1.16 times in 2008 it is 1.27 times in 2009 it is 1.59. Here we see the turn over is increasing over the time. It shows a positive impact on their management efficiency but the speed is very slow .It should be more fast. Average Payment 2006 2007 2008 2009 Period (A/P x 360 days) (365255938 x 360) (271814118 x 360) (263176822 x 360) (409898122 x 360) Total Credit 1521651955 1459653540 1626964288 2402117132 Purchase 86.41 days 67.04 days 60.14 days 61.43 days Average payment period tell about how many time a company takes to pay its accounts payable. If a company quickly pays the accounts payable then it means they can’t use their capital properly on the other hand if it take too much time to pay its accounts payable then it will hamper their reputation toward its debtors. It wills create problem for further loan. Here we have seen their average payment period is decreasing over the year. In 2009 the period slightly increases then the previous year. The over all position is good. 3.2.1(b)Capital Structure and Long-term Solvency RatiosTotal Debt to 2006 2007 2008 2009Total Capital(Total Liabilities (3962592062 x 100) (3702479293 x 100) (4387463296 x 100) (9006006808 x 100)x100) (7949920425 + (8250939647 + (10450202145 + (10885706614 +(Equity Capital + 3962592062) 3702479293) 4387463296) 9006006808)Total Liability) 33.26% 30.97% 29.57% 45.27% Total debt to total capital ratio measures the total capital against how much liabilities (suppliers, lenders, creditors and obligors) have committed to the company versus what the RONI BHOWMIK
  57. 57. DAFFODIL INTERNATIONAL UNIVERSITY shareholders have committed. To a lower the percentage, total debt to total capital ratio means that a company is using less leverage and has a stronger equity position. Beximco Pharmaceutical Ltd. in 2009 the more the company is burdened by liability. Here we see that total debt to total capital ratio were quite stable exception in 2009.Long-term Debt to 2006 2007 2008 2009Equity Capital LongtermDebt 1159409947 1776449778 1446600500 1924933065 X 100 X 100 X 100 X 100 X 100 EquityCapital 7949920425 8250939647 10450202145 10885706614 14.58% 21.53% 13.84% 17.68% Long-term debt to equity capital ratio helps to keep the measure relationship to long-term debt and equity capital. If the company this ratio result 1:1then says, that 1 TK. equity capital against 1 TK. long-term debt. In 2007 Beximco Pharmaceuticals Ltd. has per taka equity capital against 0.2153 taka long-term, this is not good sign, but in 2006, 2008, and 2009 good. Times Interest Earned 2006 2007 2008 2009 EBIT 802724636 674403942 999481358 1200268790 253318784 254742392 249654298 289427992 Interest 3.17 times 2.65 times 4.00 times 4.15 times Creditors, especially long-term creditors, want to know whether a borrower can meet its required interest payments when these payments come due. Times interest earned ratio is an indication of such ability, if the lower the ratio, the more the company is burdened by debt expense. In lieu of the market, Beximco Pharmaceuticals Ltd has earned enough income to pay of the interests of the creditors. But in 2007 the company did not have enough income. Another side in 2009 Beximco Pharmaceuticals Ltd. per taka interest pay for interest and income before interest stable their fund 4.15 TK. For the investor and creditor this means the company has little chance of defaulting on their investments and borrowings. RONI BHOWMIK
  58. 58. DAFFODIL INTERNATIONAL UNIVERSITY 3.2.1(c)Return on Investment Ratios Return on Total 2006 2007 2008 2009 Assets EBIT 802724636 674403942 999481358 1200268790 X 100 X 100 X 100 X 100 X 100 TotalAssets 11912512487 11953418940 14819665441 19891933422 6.74% 5.64% 6.74% 6.03% Return on total assets indicates how profitable a company is relative to its total assets. It also indicates the management efficiency to utilize total assets to make profit. Return on total assets highest in 2009, but Beximco Pharmaceuticals Ltd. should utilize their fixed assets very efficiently.Return on Equity 2006 2007 2008 2009 NetIncomeforStockholder 470658563 353067878 545341273 624740307 X 100 X 100 X 100 X 100 X 100 EquityCapital 7949920425 8250939647 10450202145 10885706614 5.92% 4.28% 5.22% 5.74% Return on equity is the measurement of shareholders wealth maximization. It indicates how much shareholders earned from their investment. The higher the ratio indicates higher the shareholders wealth maximization. Return on equity was highest in 2006 and then it has a decreasing trend in 2007 and 2008. In 2009 Beximco Pharmaceuticals Ltd. is back in right track with 5.74%. 3.2.1(d) Profitability (Operating Performance) RatiosGross Margin Ratio 2006 2007 2008 2009 Gross Pr ofit ( M arg in ) 1731085826 1629514837 2007295878 2302048289 X 100 X 100 X 100 X 100 X 100 Sales 3702317159 3597024812 4010167059 4868254915 RONI BHOWMIK
  59. 59. DAFFODIL INTERNATIONAL UNIVERSITY 46.76% 45.30% 50.05% 47.29% Gross margin ratio is used to analyze how efficiently a company is using its materials, labor and manufacturing related fixed assets to generate profits. A higher gross margin percentage is a favorable profit indicator and vice-versa. This ratio helps organization to fix their product price. If the ratio minimum percentage then indicates the product market price lower or product production cost high. Here we see that gross margin ratio was quite stable and it is good sign for Beximco Pharmaceuticals Ltd.Operating Profit to 2006 2007 2008 2009Sales EBIT 802724636 674403942 999481358 1200268790 X 100 X 100 X 100 X 100 X 100 Sales 3702317159 3597024812 4010167059 4868254915 21.68% 18.75% 24.92% 24.65% Operating profit to sales ratio helps to find out per 100 Tk. sales to how much taka operating profit. By subtracting selling, general and administrative, or operating expenses from a company’s gross profit number, we get operating profit. This ratio measure efficiency in management has much more control over operating expenses. If the high percentage then indicates the administrative and selling expenses lower and vice-versa. Here we see that Beximco Pharmaceuticals Ltd. operating profit to sales ratio were quite stable exception in 2007.Net Income to 2006 2007 2008 2009Sales NetIncome 470658563 353067878 545341273 624740307 X 100 X 100 X 100 X 100 X 100 Sales 3702317159 3597024812 4010167059 4868254915 12.71% 9.82% 13.60% 12.83% Net income to sales ratio is very important in operating performance measurement. This ratio is helpful in identifying the proportion of sales unit that remains after the deduction of all expenses. This ratio indicates the net amount of profit on each sales taka. The amount of net income includes all types of non operating items that may occur in a particular period. The ratio dropped in 2007, then increase in 2008. But it again fell in 2009. RONI BHOWMIK
  60. 60. DAFFODIL INTERNATIONAL UNIVERSITY 3.2.1(e) Asset Utilization RatiosSales to Cash 2006 2007 2008 2009Sales 3702317159 3597024812 4010167059 4868254915Cash Balance 581098945 85698910 73647728 1058433574 6.37 times 41.97 times 54.45 times 4.59 timesEvery organization needs minimum cash money to running their sales activity. Sales to cashratio helps to measure every taka uses and how much amount sales. If ratio is high then theorganization sales ratio to cash deposit minimum and vice-versa.Here we can see, in 2006 and 2009 there were proper utilization of cash balance and itgenerates good sales. But in 2007 to 2008 their cash balance has no usage due to politicaland economical instability.Sales to Account 2006 2007 2008 2009ReceivableSales 3702317159 3597024812 4010167059 4868254915Account Receivable 430240095 499680792 503916401 694111730 8.61 times 7.19 times 7.95 times 7.01 timesSales to account receivables develop the relationship between sales and account receivables.It indicates the organizations credit policy. The higher the ratio, indicate hard the creditpolicy and vice-versa. Sales to account receivable were quite stable.Sales to Inventories 2006 2007 2008 2009Sales 3702317159 3597024812 4010167059 4868254915Inventories 1754440288 1652480291 1505288093 1722953284 2.11 times 2.17 times 2.66 times 2.83 timesRONI BHOWMIK
  61. 61. DAFFODIL INTERNATIONAL UNIVERSITYBeximco Pharmaceuticals Ltd. is a production related organization. So sales to inventoriesratio is very important in BPL. It indicates the sales against 1 unit of inventory. It helps tokeep the optimum level of inventory. The higher the ratio indicates the lower the inventoryand vice-versa. Here sales to inventories were more or less same and inventory level wasstable.Sales to Fixed Assets 2006 2007 2008 2009Sales 3702317159 3597024812 4010167059 4868254915Fixed Assets 8513136381 8992942393 11921072697 12966587178 0.43 times 0.39 times 0.33 times 0.37 timesEvery organization fixed assets is very important. Sales to fixed assets ratio indicate the salesagainst per unit of assets. It helps to keep the optimum level of fixed assets. The higher theratio indicates the lower the fixed assets and vice-versa. Here sales to assets were more orless same and assets level was stable.Sales to Total Assets 2006 2007 2008 2009Sales 3702317159 3597024812 4010167059 4868254915Total Assets 11912512487 11953418940 14819665441 19891933422 0.31 times 0.30 times 0.27 times 0.24 timesSales to total assets ratio indicate the sales against per unit of total assets. It helps to keep theoptimum level of total assets. The higher the ratio indicates the higher the assets utilizationand vice-versa. Here sales to total assets were more or less same and assets level was stable. 3.2.1(f) Market Measures RatiosPrice Earning Ratio 2006 2007 2008 2009Market Price Per Share 53.7 58.9 167.7 155.8Earning Per Share 4.11 3.08 3.61 4.13 13.06 times 19.12 times 46.45 times 37.72 timesRONI BHOWMIK
  62. 62. DAFFODIL INTERNATIONAL UNIVERSITY Price earning ratio is the most widely used indictors in investment decision. It indicates how much an investor would be paying for every taka earnings. Price earning ratio was height in 2008 but it has decreasing in 2009. So it means market price of BPL was fall in 2009.Earning Yield 2006 2007 2008 2009 EarningPerShare 4.11 3.08 3.61 4.13 X 100 X 100 X 100 X 100 X 100 Market Pr icePerShare 53.7 58.9 167.7 155.8 7.65% 5.23% 2.15% 2.65% Earning yield measures the earning rate from actual invests of an investor. Earning yield ratio was height is 2006 but in 2008 and 2009 was decrease because in proportion to market price per share, earning is not favorable. Dividend Payout Ratio 2006 2007 2008 2009 DividendPerShare 1.5 1.5 3 1 .5 X 100 X 100 X 100 X 100 X 100 EarningPerShare 4.11 3.08 3.61 36.32 36.50% 48.70% 83.10% 36.32% Dividend payout ratio is an indicator of how well earnings support the dividend payment. Here we see that in 2008 pay highest dividend but in 2009 is also decrease. So company is not moving towards shareholders wealth maximization. Earning Per Share 2006 2007 2008 2009 Net profit After Tax 470658563 353067878 545341273 624740307 No. of Outstanding 114507043 114507043 131149296 131149296 Shareholder 4.11 Tk 3.08 Tk 3.61 Tk 4.13 Tk Shareholders are mostly concern about earning per share (EPS), because EPS is widely used indicator in investment decision. In 2006 EPS was TK. 4.11 but in next two years it was not that much good. Beximco Pharmaceutical Ltd. was back in right track in 2009 with EPS TK.4.13. 3. 3 Performance Analysis of BPL with Graph RONI BHOWMIK
  63. 63. DAFFODIL INTERNATIONAL UNIVERSITYIn this graph presentation I have use Beximco Pharma 15 year’s financial data. Net profit,total sales, operating expenses, interest, liability, and assets presented serially.3.3.1. Net Profit 1995 700000000 1996 600000000 1997 1998 500000000 1999 2000 400000000 2001 2002 300000000 2003 200000000 2004 2005 100000000 2006 2007 0 2008 Year Net Profit 2009Here we can see that net profit is increasing constantly till 2001. Then it decreaseddramatically in next 3 years due to decrease in sales. Furthermore expenses were higher thanpreceding years. Management were very inefficient in those years, cost of capital was alsohigher. Again it may happen due to investment in property, plant, and equipment (PP&E).RONI BHOWMIK