INTRODUCTION(A)

Our report is based on Beximco Pharmaceuticals Ltd, known as (Beximco Pharma). It is a well

recognized Pharmaceutical company in Bangladesh. Beximco Pharma was incorporated in

1976.It started operation by imported it products by global MNCs like Bayer AG of Germany

and Upjohn Inc .of USA . Today Beximco Pharma manufactures and markets its own branded

generics for several diseases including AIDS , cancer , asthma , hypertension , and diabetes for

both national and international markets. Beximco was founded by two brothers – Ahmed Sohail

Fasiur Rahman and Ahmed Salman Fazlur Rahman. BEXIMCO manufactures and sells generic

pharmaceutical formulation products, active pharmaceutical ingredients (API) and intravenous

(IV) fluids. The Group’s product portfolio includes a variety of therapeutic areas, such as

analgesics, antibiotics, cardiovascular, central nervous system, dermatology, gastroenterology

and respiratory. It also has contract manufacturing agreements with global pharmaceutical firms.

Selected customers include Asthma Drug Facility, GlaxoSmithKline, Raffles Hospital, UNICEF

and UNESCO. The Group is planning to expand manufacturing capacities in value added

products such as inhalers, eye drops and sprays. Targeted global expansion areas include Middle

East, European Union, Latin America, USA, Australia and New Zealand. The company is the

largest exporter of pharmaceuticals in the country and its state-of-the-art manufacturing facilities

are certified by global regulatory bodies of Australia, Gulf nations, Brazil, among others. The

company is consistently building upon its portfolio and currently producing more than 400

products in different dosage forms covering broader therapeutic categories which include

antibiotics, antihypertensives, antidiabetics, antireretrovirals, anti asthma inhalers etc, among

many others.This report contains the background, origin,industry classification,

management ,governce issues of this pharmaceutical company as well as the major

investments,sources of funds,competativeness in market,shareprice fluctuations, ratio analysis of

profit,revenues all those major parts are highlighting of “BEXIMCO” pharmaceutical company

in this report.

B.Background of the company; origin; industry classification; management including governance issues:Incorporated in 1976, Beximco Pharma started its operation by importing products from global MNCs like Bayer AG, Germany and Upjohn Inc., USA and selling them in the local market. In 1980 the Company began manufacturing these products under licensing arrangement. From that humble beginning, Beximco Pharma has grown from strength to strength, and today it has become a leading manufacturer and exporter of medicines in Bangladesh. Company’s manufacturing facilities have been accredited by the major global regulatory bodies, and it has expanded its geographic footprint across all the continents.

In its long journey of 35 years, the Company remains committed to make a difference in the lives of people by providing high quality medicines at affordable .

In 2014 we have consolidated our position with sales turnover of BDT 11,206.9 million posting a growth of 6.8% over 2013. In its 35 years of operation, Beximco Pharma has been consistently delivering on its promise of performance. From the humble beginning as a small distributor of medicines from global MNCs, today it has become a leading exporter of medicines in the country. The company has achieved this by staying focused on creating value for all its customers and shareholders.

Despite political turbulence and headwinds, Bangladesh’s economy continued to grow above 6%, largely due to agricultural expansion, modest growth in apparel export, remittance from abroad and record foreign exchange reserve. The Bangladesh Pharma market is currently valued at more than $1.5 billion which is clearly dominated by local manufacturers. Ninety eight percent of country’s demand is met by local production; all the top 10 companies are local who have consistently occupied nearly 70% of the market share.

Political unrest in the country, which started in late 2013 and continued till first quarter of 2014, seriously disrupted our business activities. Despite all the challenges, we were able to register a growth of 9% in domestic formulation business. In the year we added 28 new products to our portfolio, 3 of which were launched for the first time in the country. Our in-house R&D efforts also saw the introduction of oral soluble film, a unique drug delivery system, for the first time in Bangladesh. Key to all our efforts has always been to offer the best possible solutions to our patients and to make them affordable. In the highly competitive market, we have maintained our strong position in key therapeutic segments like analgesics, respiratory, and anti-diabetic categories with excellent growth rate in each segment. We have also performed well with our gastrointestinal and cardiovascular range.

Major Investment Decisions Taken By Beximco Pharma in Recent Years:(c)

1. Registered 48 new products in 8 countries including New Zealand, Azerbaijan, Kuwait, Singapore and Colombia in 2011.

2. Introduced 40 new generics in 55 different dosage forms and strengths in 2011.3. Launched combination therapies: NapaDol (Paracetamol+tramadol), Dinovo Bangladesh in 2011.

4. Took up a major corporate rebranding initiative.5. Signed a contract manufacturing agreement with an MNC to produce a range of

Products in 2012.6. Registered 36 new products in 12 countries; commenced export to 7 new countries.7. Launched 28 products (24 generics) in the domestic market; three of which were

launched for the first time in Bangladesh in 2013.8. A total of 55 new registrations done in 15 different countries in 2013.9. Became the first Bangladeshi company to receive Good Manufacturing Practice (GMP)

approval from the Taiwan Food & Drug Administration (TFDA) and the Canadian regulatory authority (Health Canada).

10. Also received approval from BPOM (Indonesian Agency for Drug and Food Control) for the Company's Metered Dose Inhaler (MDI) unit.

11. Net sales increased to BDT 11,206.9 million (GBP92.28 million), registering a y-o-y growth rate of 6.8% (2013: BDT 10,490.7 million (GBP80.1 million).

12. Profit before tax increased 0.76% to BDT 2,109.6 million (GBP17.37 million) (2013: BDT 2,093.6 million, GBP16.0 million).

13. The Company has declared a 5% stock dividend (i.e. 5 shares for every 100 shares held) and a 10% cash dividend (i.e. BDT 1 per share), with the record date set on 21 May 2015. Dividend is due within 30 days from the date of approval of the dividend at the Annual General Meeting (AGM).

14. The AGM will be held on 13 June 2015 at 10.30am at the Beximco Industrial Park, Sarabo, Kashimpur, and Gazipur, Bangladesh.

15. o Registered 16 products in seven countries

16. Became the first Bangladeshi company to be successfully audited by the US Food and Drug Administration (FDA)

17. Audited without any 483 observation (a 483 form is issued when the US FDA has observations of non-compliance or deviation from its current Good Manufacturing Practices (cGMP)).

18. Entered into a loan agreement with BHF-Bank Aktiengesellschaft, Frankfurt, Germany to borrow up to US $51.559 million to partially finance the purchase of new plant and machinery to expand the Company's production facilities.

19. (Exchange rates of GBP1 = Taka 131.03 for 2013 numbers and GBP1 = Taka 121.45 for 2014 numbers have been used in this announcement).

Nazmul Hassan MP, Managing Director of Beximco Pharmaceuticals, commented:"Despite prolonged political unrest causing serious disruption to our business activities, especially the first quarter of 2014, we registered a year-on-year growth of 6.8% with revenues of BDT 11,206.9 million; we successfully introduced a number of products into the during domestic market to further expand our portfolio; we entered two new markets, including Romania, and we obtained regulatory approvals from the TFDA and Health Canada. In addition, in January 2015, Beximco Pharma achieved a major milestone by being the first Bangladeshi company to be successfully audited by the US FDA. The audit was conducted without any 483 observation being issued by the globally regarded regulatory authority, which is known for its stringent regulatory standards.

Our major focus remains on research and development to bring high quality, differentiated products with regulatory filings to emerging and developed markets. Our recent loan agreement enables us to expand our production capacity and upgrade a number of our existing units with the intention of securing the Company's current and future growth. We believe our focused strategy will help us to achieve sustainable growth in shareholder value."

Audited financial reports are available from the Company's website: www.beximcopharma.com and will be posted to shareholders in due course.

USES OF FUNDS: (e)

Beximco Pharma borrows $51.5 million to fund expansion: Bangladesh-based Beximco Pharmaceuticals (AIM: BXP) has entered into a new loan agreement to borrow up to $51.559 million to partially finance the purchase of new plant and machinery to expand its production facilities in Dhaka.

The loan, which is secured on the plant and machinery being purchased, will be drawn down in four tranches against delivery and installation of the plant and machinery starting now. The installation is due for completion in June 2016, with commissioning to be completed by September 2016. 

Nazmul Hassan, managing director of Beximco Pharmaceuticals, said: “We are delighted to have had formal approval for the new Loan Agreement, which enables us to fund the purchase of new plant and machinery to expand our facilities in Dhaka. The investment is aimed at securing the

company’s current and future growth, increasing the production capacity and adding new products in the portfolio to cater to the demand of domestic and international markets.”

BEXIMCO Pharma provides Tk 5 lakh from their CSR fund for development and dissemination of Low Cost Mechanical prosthetic hand: BEXIMCO Pharmaceuticals LTD, has given a grant of Tk. 5 Lakh from their CSR fund for dissemination and further development of the low cost Mechanical Prosthetic hand innovated under the leadership of the department’s Chairperson, Professor K Siddique-e Rabbani. Mr. Rabbur Reza, COO of BEXIMCOPharma, handed over the cheque to Dr.Rabbani at a small ceremony held in their head office on March 13, 2014.It needs to be mentioned that Farm Fresh Brand of Akij group had donated Tk. 1.7 lakh in 2010 at the initial phase of the development of the prosthetic hand.

Analysis of the sources and uses of funds (cash flow statement )(f)

Net Cash and Cash Equivalents at End of Year 2014 = 222,239,239

Net Cash and Cash Equivalents at End of Year 2013 = 595,732,966

Percentage of Cash and cash Equivalents decrease in 2014 from 2013 = 62.69 %

Percentage of change in turms of Net Cash and Cash Equivalents at End of Year

2014 2013

Cash Generated from Operations(2,845,881,497/222,239,239)*100

=1280.55%424.23%

Net Cash Generated from Operating Activities 997..76% 357.60%

Net Cash Used in Investing Activities -1024.19% -520.17%

Net Cash Generated from Financing Activities -141.63% -520.17%

Analysis of profit/loss/balance sheet (g)

1.acid-test ratio = cash +account receable currentent liablity

year 2014 = 222,239,239+1,397,498,648/4,707,747,430

=0.34

Year 2013 = 595,732,966+1,249,434,697/4,382,581,278

= 0.40

2. return on assets 2014 = Net Income + intrest expence (1- tax ) (average Total Assets) / 2

= 1,529,264,605+581,258,160(1-tax) ( 29,000,525,961+ 27,470,751,802)/2 =1530129005/28235638882

=5.41%

3 Return on Equity = .Net Income Equity =1,529,264,605/20,920,185,325

=7.30%

4. Earning per share 2014 = net income- pefered devident Avg.no of common share outstanding

= 1,529,264,605-0 (367,851,652 +367,851,652)2

= 4.15 tk per share

5. gross profit margin 2014 = gross profit *100/ net sals

=5,104,191,354*100/11,206,885,677

=45.45%

6. times interest earned 2014 = ebit/i

=2,109,555,733+724,314,963/724,314,963

=3.91 times

7. total debt to equity = total liability / total equity

=3,372,593,206+4,707,747,430 / 20,920,185,325

=38.62%

8.sales to end of year warking capital 2014=sales / working capital

= 11,206,885,677 / ( 8,366,279,107-4,707,747,430)

= 11,206,885,677 /3658531677.00

=3.06 times

9. long turm debt to equity 2014= total long term debt +other liability / total equity

= 3,372,593,206 / 20,920,185,325

= 16.12 %

10. day”s to sell inventory 2014= 360 / inventory turnover (in times )

= 360 / 2.488 times

=144.69 or 145 days

Inventory turn over (in times ) = cogs / avg inventory

=6,102,694,323 / 2452769662

=2.488 times

11. net profit margin 2014 = net profit / total revenue

=1,529,264,605 / 11,206,885,677

=13.64 %

12. operating return on assets 2014 = operating income / average total assets

=2,418,176,836 / 29,000,525,961+ 27,470,751,802

=4.28%

Share price flaxtuation (h)The global pharmaceutical market is showing signs of recovery with total spending reaching $1 trillion in

2014, an increase of 7 per cent over the previous year, according to IMS. This impressive rise is driven

mainly by high prices and uptake for several breakthrough cancer and hepatitis C drugs entering the

market in developed countries. By 2018, this spending is expected to rise to $1.3 trillion due to new

breakthrough therapies. The year 2014 also saw approval of 44 new drugs in world market, making it

the best year for pharmaceutical innovation since 1996. On the other hand, global generic drugs market

currently stands at more than $250 billion, with consistent double digit.3.13 Share Premium

The Share Premium shall be utilized in accordance with the provisions of the Companies Act, 1994 and

as per direction of the Securities and Exchange Commission in this respect.

3.14 Proposed Dividend

The amount of proposed dividend has not been accounted for but disclosed in the notes to the accounts

in accordance with the requirements of International Accounting Standard (IAS) 1: Presentation of

Financial Statements. Also, the proposed dividend has not been considered as “Liability” in accordance

with the requirements of International Accounting Standard (IAS) 10: Events After The Reporting Period,

because no obligation exists at the time of approval of accounts and recommendation of dividend by the

Board of Directors.

3.15 Earnings per Share (EPS)

This has been calculated in compliance with the requirements of IAS 33: Earnings Per Share by dividing

the basic earnings by the weighted average number of ordinary shares outstanding during the year.

Current Year (2014)

The Bonus Shares issued during the year 2014 were treated as if they always had been in issue. Hence,

in computing the Basic EPS of 2014, the total number of shares including the said bonus shares has been

considered as the Weighted Average Number of Shares outstanding during the year 2014.

Earlier Year (2013)

The number of shares outstanding before the bonus issue has been adjusted for the proportionate

change in the number of shares outstanding as if the bonus issue had occurred at the beginning of the

earliest period reported (2013), and accordingly, in calculating the adjusted EPS of 2013, the total

number of shares including the subsequent bonus issued in 2014 has been considered as the Weighted

Average number of Shares outstanding during the year 2013.

The basis of computation of number of shares as stated above is in line with the provisions of IAS 33:

Earning per Share. The logic behind this basis, as stated in the said IAS is that the bonus Shares are

issued to the existing shareholders without any consideration, and therefore, the number of shares

outstanding is increased without an increase in resources.

Diluted Earnings per Share

No diluted EPS is required to be calculated for the year as there was no scope for dilution during the

year under review.

Competitiveness inThe Market:( h)

Competitive Advantages and the ways it changes over time: Distinguished operational capability, in 1980 it was small in operation but big in dreams and passionate with its vision - building a healthier tomorrow where people will live longer, healthier and happier. Its activities have always been centered on developing core competencies to deliver the best in the industry ensuring superior value and return to customers. Consistently delivering high quality products today, the name “Beximco Pharma” has become synonymous with ‘trust’ and ‘reliability’. Quality is its relentless passion. Quality is ingrained in our values and in all that it does. Beximco Pharma’s business processes and practices are designed to achieve quality results that would meet the expectations of patients and physicians by getting the highest quality products, and of shareholders and stakeholders through achieving returns.

Professional Management Capability: Beximco Pharma is the pioneer in implementing corporate governance to professionally run a company in Bangladesh. Beximco Pharma provides an environment which fosters creativity, innovation, self-development and entrepreneurship. Adopting innovation in manufacturing process Beximco Pharma has always been the pioneer in adopting innovative technologies that introduced both sophistication and scale in our business processes. It also focuses on improving manufacturing efficiency to meet the challenge of maintaining the bottom line of the business in an ever-changing competitive market place.

R&D capability in both formulation and API (Active Pharmaceutical Ingredients) :R&D is another area where Beximco Pharma has already shown capability and led the Bangladesh Pharmaceutical Market in both formulation R&D and API R&D. Its formulation R&D capability is proven not only by the consistent quality of its products but also by its ability to introduce hi-tech, specialized products and dosage forms. The reverse engineering capability of the R&D team has enabled it to introduce innovative new products to serve the ailing people at home and abroad.

Sales & Marketing capability focused on brand building: The major source of competitive advantages of Beximco Pharma is its sales and marketing team. Its marketing team is composed of innovative people from diverse discipline. Because of the innovative & creative approach adopted by its marketing team, it has been able to create many vibrant brands like Napa, Neoceptin-R, Amdocal, Neofloxin, Tycil, Omastin, Azmasol, Bexitrol-F, Atova, Bextram Gold etc. Infact, the ability of its sales & marketing team to differentiate our brands even in a crowded generic market is Beximco Pharma’s major competitive advantage.

Experience in foreign markets Beximco Pharma always took the leading, proactive and pioneering role in exporting pharmaceuticals from Bangladesh; it is the pioneer in exporting APIs, IV Fluids and hi-tech specialized products. It is the first pharmaceutical company in Bangladesh to enter CIS countries. It is also pioner to enter African markets. It is the only

company in Bangladesh to supply medicines to Raffles Hospital and KK Women & Children Hospital of Singapore. It is the only company in Bangladesh to supply medicines to Raffles Hospital and KK Women & Children Hospital of Singapore.

Future growth potential |Domestic and existing export markets Its past and present performances clearly suggest that it has ample scope to grow even in the domestic as well as in our existing export markets. Beximco Pharma has already identified some attractive niche markets where the investment is negligible as compared to its expected returns in terms of profitability. Once the new OSD (Oral Solide Dosage) plant is operational and it has the capacity, confidently, it will be able to capitalize on these opportunities and increase its market share in the domestic market as well as in other existing export markets.

New export markets: Each year patents on pharmaceutical products expire with annual sales worth billions of dollars. Data monitor estimates that there are blockbuster drugs coming off-patent by 2007 which have sales in excess of US $82 billion.This will be one of the key factors which will help drive generic pharmaceutical growth over the next decade. Beximco Pharma is seeking for position to take advantage of this growing generic market by regularly introducing new products in its existing and new markets. Its low manufacturing cost will provide a competitive edge over our global competitors in any international generic pharmaceutical market.

Findings (j)

1.acid-test ratio 2014 = 0.34

Year 2013 =0.40

Year 2014 =0.34

2. return on assets =5.41%

3.return on equity =7.30%

4.earning per share = 4.15 tk per share

5. gross profit margin 2014 = 45.45%

6 times interest earned 2014 = ebit/I =3.91 times

7. total debt to equity = 38.62%

8.sales to end of year warking capital 2014=sales / working capital =3.06 times

9. long turm debt to equity 2014= 16.12%

10. . day”s to sell inventory 2014= 360 / inventory turnover (in times ) = 145 days

11. net profit margin 2014 = 13.64 %

12. operating return on assets 2014 =4.28%

Conclusion and recommendations (k):

opportunities in generic drugs are increasing day by day with increasing government pressure

around the world to cut healthcare costs. The country has tremendous opportunities for pharma

export, particularly for value added generics in regulated markets. In 2015 alone, patented drugs

worth $60 billion are going off patent which opens up opportunities for generic manufacturers

around the world. Bangladesh could be ideally positioned to gain from generic drug

opportunities with its cost advantages and skilled manpower as India and China are losing cost

advantages owing to rapid increase in wages in these countries.

We have strengthened our presence in several Asian and African countries and we are actively

evaluating opportunities to extend our geographic footprint by replicating our successful model

in other emerging markets. Although our current export turnover is still low and contributes little

to the overall sales, we strongly believe there is ample opportunity to expand our export

business. In the year we have made 55 registrations in 15 countries