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Organizational Background

The pharmaceutical industry in Bangladesh is one of the most developed hi-tech sectors

within the country's economy. In 2000, there were 210 licensed allopathic drug-

manufacturing units in the country, out of which only 173 were in active production; others

were either closed down on their own or suspended by the licensing authority for drugs due to

non compliance to good manufacturing practices or drug laws. The industry manufactured

about 5,600 brands of medicines in different dosage forms. There were, however, 1,495

wholesale drug license holders and about 37,700 retail drug license holders in Bangladesh.

After the promulgation of Drug Control Ordinance - 1982, the development of this sector

was accelerated. The professional knowledge, thoughts and innovative ideas of the

pharmaceutical professionals working in this sector are the key factors for this developments.

Due to recent development of this sector, the industry is exporting medicines to global

markets, including the European market.

Top Twenty Manufacturers

Based on market share and growth top 20 pharmaceuticals companies are

1) Square 2) Incepta 3) Beximco 4) Acme 5) Opsonin 6) Eskayef 7) Reneta 8) Aci 9) Aristo

pharma 10) Drug International 11) Sanofi Aventis 12) GlaxoSmithKline 13) Orion Pharma

Ltd. 14) Novo Nordisk 15) Healthcare Pharma 16) General 17) Sandoz 18) Popular Pharma

19) Novartis 20) Ibn Sina.

Company Background

Beximco Pharmaceuticals Ltd. is the leading pharmaceutical company of Bangladesh.

Founded in 1976, Beximco Pharmaceuticals Ltd. has been producing world class

pharmaceutical products following current Good Manufacturing Practice (CGMP) as required

by the World Health Organization (WHO) in order to improve health, happiness and quality

of life. Beximco Pharmaceuticals Ltd. has products of different therapeutic classes, each of

which occupies a prominent position in the market and the heart of our customers and

shareholders.

Beximco Pharmaceuticals Ltd. is always committed to improve the lives of people through

the development and commercialization of high quality and cost-effective medicines.

Products & Service

Beximco Pharmaceuticals Ltd (BPL) is a leading manufacturer of pharmaceutical

formulations and Active Pharmaceutical Ingredients (APIs) in Bangladesh. 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, European Union, 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 among many others. Their products come in a wide range of dosage forms

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including tablets, capsules, dry syrup, powder for suspension, cream, ointment, suppositories,

metered dose nasal sprays, large volume intravenous fluids, metered dose inhalers etc.

ensuring the global standard of quality product.

Corporate Governance & Committees

The Company has a three-tier management structure, comprising the Board of Directors, the

Executive Committee and the Management Committee. There is also an Audit Committee,

constituted in 2006.

The Board is the highest level of authority within the Company comprising mainly non-

executive directors, none of whom receive directors' remuneration from it. The Board meets

with the Executive Committee, comprising six executive directors, twice a year to conduct a

full review of the Company's operations.

Board Details

Executive Committee

Management Committee

Audit Committee

Organizational Structure

BPL is completely governed and maintained by a corporate body. The chief of the

organization is the Chief Executive Officer and the total operation is divided into Marketing,

Sales, Commercial, Manufacturing, Finance and Accounting, Product Planning, Business

Research and Development, and MIS departments each supervised by a director. Directors of

the department‟s report directly to the CEO. Bearing the demands of dynamic environment in

mind BPL designed its organizational structure as highly adaptive and flexible. It is a

Learning Organization that has developed the capacity to continuously learn, adapt and

change.

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External Environment

Also known as the operating environment, this refers to market conditions, economic and

political issues onthe local andnational levels,demographic factors,and other forces outside of

a business that affect the overall success of that business. The external environment creates

both risks and opportunities for acompany.

1. Elements of external environment:

There are seven elements that make-up the external environment. These elements include

Marketenvironment, Social environment, Competitors, Intermediaries, Physical environment,

Legal & political state and Technological environment. Each of these elements adds its

own contribution to the overall decision undertaken by an organization. In BPL the three

factors mainly which provides multiple contexts that influence how the organization operates

and how and what it produces.

I. The Economic Factor

Economic factors like inflation, exchange rates, GNP and unemployment rate could have

significantaffect on BPL‟s operating profits. We can further divide the economic factors in

few parts based ontheir type. These are following:

a) Change in inflation

b) Change in exchange rates

c) Change in interest rates

d) Change in GDP

e) Change in unemployment rate

Change in Inflation:

We know that inflation is a persistent increase in the level of consumer prices or a persistent

declinein the purchasing power of money. At present we are dealing with the change in

inflation. The change in inflation can create an impact on our actions in various ways and it is

a present scenario. A potential rise in inflation rates would mean that the cost of raw

materials would increase thus decreasing the profit margin of BPL. On the other hand, if

there is an increase in inflation this would translate in increased products prices, and BPL‟s

imports could decrease since buyers may go elsewhere looking for competitive prices and

BPL would the suffer adverse consequences given the amount of resources employed in

increasing production capacity. So, it has present status of occurrences.

Change in Exchange Rates:

If we consider the status of occurrence of the change in exchange rates, we can see that it‟s

potential. Change in exchange rate put some significant impact on our actions. As Beximco

Pharmaceutical Limited is operating their business all around the world, so this create

problem in their decision making process. Exchange rates would play a major role. For

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instance, in BPL wants to import machinery but the Taka depreciates heavily against the

major world currencies; this would make the same procurement cost much more.

Change in Interest Rate:

Change in interest rate is a potential factor. Business might be directly affected by a change

in interest rates. Interest rate changes also affect individuals and individuals are customers! If

interest rates change, the incentive for individuals to take out loans to buy goods will also

change. As a organizations profitability depends on the customers and their buying decision

so change in interest rate plays an important role in the decision making process.

Change in GDP:

If we consider the status of occurrence of the change in GNP, we can see that it‟s a potential

factor. The Gross National Product (GNP) is the total taka value of all final goods and

services produced for consumption in society during a particular time period. If GDP

increases it means the total taka value of all final goods and services produced for

consumption in society increases and vice versa. It is a present factor for BPL while taking an

action in Bangladesh.

Change in Unemployment Rate:

The unemployment rate represents the number of people unemployed as a percent of the

labor force. The status of occurrence is present. The actions of BPL may not get affected by

change in unemployment rate.

II. Technological Factors

In the technology aspect BPL is well equipped and is usually way ahead of most the

pharmaceutical industry players as it continuously invests in its plant facilities to upgrade its

manufacturing processes and make them more effective and efficient. Therefore competitors‟

advancement in technology usually does not worry BPL. We can further divide the

technological factors in few parts based on their type. These are following:

a) Advancements in technology

b) Growth in R & D in the industry

Advancement in Technology:

If we consider the status of occurrence of the advancement in technology, we can see that it‟s

uncertain factor.

Growth in R & D in the Industry:

Growth in R & D in the industry is an uncertain factor for Beximco Pharmaceutical Limited.

Almost of the competitors of Beximco Pharmaceutical Limited are investing a lot of money

for R & D purpose in recent times so it has become a vital factor for Beximco Pharmaceutical

Limited as well.

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III. Government/Political /Legal Factors

The political environment is really not much of an issue regarding Beximco Pharmaceutical‟s

business operations. As of now, Bangladesh is being governed by the political government.

Before this government took over the power, Bangladesh saw unprecedented political unrest

for quite some period. These types of political calamities spoil country‟s reputation as a

whole and subsequently foreign authorities become reluctant to inspect the pharmaceutical

companies. We can further divide the Government/Political/Legal factors in few parts based

on their type. These are following:

a) Export/import policies

b) Political unrest

Export/Import policies:

The export and import policy of a country greatly affect any organizations decision making

process that are somehow related with any business purpose with that country. The status of

occurrence of this matter is low uncertain.

Political Unrest:

If we consider the status of occurrence of political unrest, than we can see that it‟s a low

potential factor. Political unrest can greatly affect the decision making process of Beximco

Pharmaceutical Limited. Political disturbance has a potential impact on the actions of an

organization.

(<http://www.scribd.com/doc/89024982/Strategic-Plan-for-BPL >)

2. Competitive force: Poters five force

Poters five forces model devised by Michael Poter to aid firm in analyzing competitive forces in a

industry environment.

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At first we analysis the five forces to identify the position of the company.

Is it Strong

Moderate

Weak

a) Bargaining Power of Buyers

Price Sensitivity:

Buyers are more prices sensitive when the product is undifferentiated but in the Beximco

Pharma, there is no undifferentiated products. When the products are undifferentiated there is

low switching cost here. Beximco Pharma has so many products such as Napa Extra,

Oseltamivir, Decomit, Nitrosol, Bexi gold,Dexiten,Atrizin,Napa DT, Ras, Saritene,Nitaxide,

Q-Respria 1, 2 etc all products Price are fixed. We know that in the field of medicine site

buyer feel reluctant to bargain.

Relative Bargaining Power:

Having the fixed Price of Beximco Parma‟s product so the buyers in the market have no

ability to bargain. They feel interest to buy on the showing price.

b) Bargaining Power of Suppliers

Beximco Pharmaceuticals Ltd as supplier has a strong bargains power in Pharmaceuticals Ltd

companies. Because we have some unique features thus make us unique. We have IV fluid

manufacturing plant, MDI plant and Oral solid dosage(OSD) plant. Beximco Pharmaceuticals

Ltd have supported by owns backward and forward integration. Because Beximco Pharma

have a own paper printing machine and plastic machine. The cover of the medicine is made

by the Beximco plastic industries LTD. So it was backward integration of Beximco Pharma.

c) Rivalry among existing firms

Industry Growth Rate:

Beximco pharmaceutical is the accelerated medicine company in the pharmaceutical industry

in Bangladesh. The company has grown market share by taking share away from other

players .They involve with export processing in 2005 and has able to grab market share than

incumbent firms. The Pharma AIDS is the lower competitors in the industry and still they

could not able to capture market share for the strong existing firms. As a result, price wars the

firms inthe industry. Stagnant firm‟s gains higher profit than that the incumbent firms.

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Concentration and balance of competitors:

The number of the industry and their relative size determines the degree concentration in an

industry. Beximco Pharma, Squire Pharma etc are the largest company and leading position

at the present time. They produce in a large scale and ultimately they are able to cut the price

of the products. So small competitors can not able reduce the price then they have to follow

the largest firms pricing strategy and rules. As a result price wars among the existing firms.

But when the Beximco fights against the Square Pharma then there are no destructive price

competitions among them.

Degree of d if ferent iat ion and switching cost:

Beximco Pharma produces the various types products .The company more emphasis on some

important matters such as dimension of the product form, features, performance,

conformance, durability ,reliability as well as service dimension such as order ease delivery,

installation customer consulting and others. By considering this the company has able to

differentiate the products in the market. Price is also important issues for switching cost.

Sometimes switching cost is high for customer loyalty.

Excess capacity and Exit barriers:

Beximco pharmaceutical Ltd. has able to fulfill the huge customer demands and also earn

abnormal profit.So there is a good advantage for the company to cut prices to fill capacity.

Government rules and regulations create the barriers to excess capacity for a firm but when a

firm enters in to the industry they can never leave from the industry as like. They must bind

to follow to the government policy for continuing their business operation.

b) Threat of New Entrants

Beximco Pharmaceuticals Ltd is earning abnormal profit. As we know the potential for

earning abnormal profit attracting new entrants to an industry. Beximco Pharmaceuticals Ltd

has already established in the market.

Economics of scale:

Beximco Pharmaceuticals Ltd has listed in 1986. So, Beximco Pharmaceuticals Ltd gets large

cost advantage and facility from government. On the other hand, Beacon Pharmaceuticals

Limited face the choice of having either to invest in a large capacity which might not be

utilized right away or to enter with less than the optimum capacity and Beacon

Pharmaceuticals Limited or Pharma Aids are at least initially suffer from cost disadvantage in

competing with Beximco Pharmaceuticals Ltd.

First Mover Advantage:

Beximco Pharmaceuticals Ltd. Square Pharmaceuticals Ltd. always get the first mover

advantage because it has already set industry standards and enter into exclusive arrange meets

with suppliers of cheap raw materials as well as tax advantages. Beximco Pharma leads all

over the country. On the other hand, the new entrants firm doesn‟t get these types of

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facilities. First mover advantages are also likely to be large when there are significant

switching costs for customers once they start using existing products.

Access to channels of distribution and relationships:

Beximco Pharmaceuticals Ltd.has a limited capacity and Beximco Pharmaceuticals Ltd. and

Square Pharmaceuticals are famous company. Distributors can easily sell their product to the

customer. Similarly, new consumer goods manufacturers find it difficult to obtain value of

the market and it is difficult to make relationship with the customers.

e) Threat of Substitute Product

Relevant substitutes are not necessary those that have the same form as the existing products,

but those that perform the same function. For example, Beximco Pharma produces different

products. Napa is one of them for reducing the fever. On the other hand Square

pharmaceuticals also produce ACE for reducing the fever. But the price of this product is

almost same of these companies. So, customer buys sometimes NAPA and sometimes ACE.

It‟s a threat for the Beximco Pharmaceuticals Ltd. Having the reputation and goodwill of the

company is leading position among the pharmaceutical companies.

Interpreting industry analysis whether the industry is low profit potential or high profit

potential.

From the above discussion we may say that this is an apprently unattractive industry with low

profit potential.

(Habib, Anamul & Alam, Zahedul. (2011) “Business Analysis of Pharmaceutical Firms in

Bangladesh: Problems and Prospects” Volume–VI, Number–01, January-June, 2011. )

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Internal Environment

The conditions, entity, event and factors within an organisation that influcence its activities

and choices; particularly the behaviour of the employees. Factors that are frequently

considerd part of the internal environment include the organisations mission statement,

leadership styles and its organizational culture.

Importent to analyses internal environment

It is very importent to analyses the internal environment to know about the internal issues of a

company and to find out some factors.

1.Find out organizational resources and capabilities

2.Find out the companyes core competencies.

3.Get the competitive advantage over the rival.

4.Creating a value chain.

5.SWOT analysis and

6.Taken the strategy.

1. Resources of Beximco Pharmaceutical Company

They spend a huge amount of capital for Strong R&D.

Have a strong Brand image.

Have a good infrastructure.

Strong HR team.

Well reputation in the market.

Good supply chain management.

High quality products and services.

Worldwide distribution network.

Capabilities of Beximco Pharmaceutical Company

Capable to develop new products and services.

Capable to handle machinery or labor.

Capable to handle Raw materials.

Capable to deliver to the target customer at a right time, quickly.

Capable better use of technology.

Capable to create a value chain.

Capable to motivate employee.

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Capable to provide training to employee.

Excellent management system.

Capable to spend huge amount of money for R&D and implement their strategy.

2. Core Competences

Resources and capabilities that we have, serve as a source of competitive advantages over the

close rival.

Four feature to analysis Beximco Pharma‟s core competences:

Valuable: Beximco Pharma’s are

valuable in terms of their products, quality,

price, features, technology etc compare to

their competitors.

Rare: Beximco Pharma’s products are

available in to the market as they have many

competitors like: Square Pharmaceuticals

Ltd, Incepta Pharmaceuticals Ltd ETC.

Costly to Imitate: Their products are

costly to imitate.

Non Substitutable: Beximco Pharma has

some substitutable product in to the market,

through which they are facing problem.

Like: Homiopathi, Aliopathi etc.

Core competences: Beximco Pharma getting core competences and Compititive Advantage

in terms of their

Brand Name

Product Range

Quality

Product Line

Innovation

3. Competitive Status of a Firm

In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors which is

contributing in the country's economy. The national companies account for more than 65% of

the pharmaceutical business in Bangladesh. Except Beximco Pharma other leading

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companies are Square Pharma, Incepta Pharmaceuticals. Navana Pharma Ltd., Opsonin

Chemical Industries Ltd., Aventis Pharma Ltd. Etc. Among them Square Pharma is the

market leader at this moment. BPL follows Square Pharma at the 2ndposition. The

analysis of the two company‟s financial data shows that for the year 2009 -

20010gross profit of BPL was 1,629,514,837(BDT) and Square Pharma was 3,401,781,806

(BDT) .

There are a number of reasons why BPL could not beat Square Pharma for the first position.

The most relevant of them are stated here.

Fewer Markets Served

Square Pharma serves a larger market than BPL while BP concentrates on market focus. For

example, unlike Square Pharma BPL does not do business in the credit market. They only

serve the premium market.

Producing Injectables

Again BPL does not manufacture or market Injectables where this is a huge market. In

contrast, Square Pharma has a range of 44 injectables and has sold28, 289,000 units in the

year 2009-20010.

Product Range

BPL has a fewer range of products than Square Pharma does. BPL manufactures only over

300 products in comparison to Square Pharma‟s over 500products.

In international, market the main competitors for pharmaceutical companies in our country

are India and China. The challenge faced in open market competition is the scarcity and

unavailability of raw materials in local market. So, companies in our country have to import

these materials from abroad (India, China and a few countries from Europe) at high price.

Besides, the privileges of being LDC as a result of the Patent Law will no longer be in effect

after 2015.

Beximco Pharmaceutical LTD. Competitive Advantage

Business level strategies developed by BPL help them to earn competitive advantage through

quality products, superior services, and outstanding customer relationship. Innovation

strategies have been the key to their success both in product differentiation and in product

promotion. BPL had been the first-mover to bring Marketing Approach rather than traditional

Selling Approach in local pharmaceuticals industry. BPL also believes in Focus Strategy and

concentrates on a particular segment of the market. They strive to retain existing customers as

well as to attract new ones. BPL has developed unique customer service through their

Unbiased Medical Service. BPL has also developed superior human resource for earning

competitive advantage in the market.

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C) SWOT Analysis

The aim of any SWOT analysis is to identify the key internal and external factors that are

important to achieving the objective. These come from within the company's unique value

chain. SWOT analysis groups key pieces of information into two main categories:

Internal factors – The strengths and weaknesses internal to the organization.

External factors – The opportunities and threats presented by the external

environment to the organization.

SWOT Analysis of Beximco Pharmaceutical Ltd

BPL is one of the leading companies in the pharmaceutical industry of the country and could

attain almost 15% of the local market. The strength of attaining such position in the industry

are:

A. Strength

Characteristics of the business, or project team that give it an advantage over others.

Brand Leadership

As survey showed that 27 of BPL‟s products are found to be brand leaders out of 47 products

surveyed while 10 stand at second place.

Market Recognition

Beximco has secured market recognition in the market through innovative marketing

strategies and aggressive product promotion. The company‟s strong support to the medical

community has gained its brand loyalty from the doctors.

Market Growth

The market is expected to grow by 15 to 20% per annum for the next 5 years. The

compounded annual growth for the previous 6 years was 15%. The next stage of growth is

expected to come from backward integration to manufacture high volume raw materials,

introduction of Hi-Tech manufacturing process that are difficult to imitate products, and

exports.

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Diversification

The strength of Beximco Pharmaceuticals Ltd. lies in its diversified products and dosage

forms.BPL,

Achievement of national export trophy

First export market operation with finished pharmaceutical products1994-95 : Achievement

of National Export Trophy (Gold) as the first pharmaceutical company of the country.

R & D

B P L has a strong R&D and they spend a huge amount of capital for it.

Employee Empowerment

Employee Empowerment Capability to Bring Innovation & product differentiation

Outstanding Product Quality World Class Professional Service.

B. Weakness (or Limitations):

Characteristics that place the team at a disadvantage relative to others.

In able to produce injectibles

The company does not produce any kind of injectibles. The company can increase its market

share by producing injectibles. BPL has a narrower product line and number of products than

its principal competitors in the market. Unless the product line and number of product are

expanded the market share of BPL will be endangered in near future.

Lack of Working Capital

The company does not have sufficient working capital.

Diversify

To

Solid products (tablets and

capsules

Liquid products like syrup,

suspension and solution

Semisolid products like

cream and ointment

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c) Opportunities

External chances to improve performance (e.g. make greater profits) in the environment.

New products of different therapeutic classes

BPL always tried to add new products of different therapeutic classes in its portfolio and

these products are highly appreciated by the health professionals. Most important of them are

Triocim, Arixon, Prosan, Recox, Atova etc.Introduction of these new products enriched is

product portfolio and is contributing to enhance its sales.

Technology

The benefits of technology belong to all of us benefits that create new opportunities and open

doors to a better life. For example, the new inhaler plant of BPL has been designed in a way

to ensure highest-possible quality at every stage of manufacturing and quality control.

Sectors

There are some of the sectors where BPL has not entered but that possess ample

opportunities. One of such sector is SVP or small volume Parenteral that is known as

injections in the market. Due to having the quality attainment capability as evident in

producing IV products, expertise and resource BPL should immediately think of this product

and decide upon having the feasibility study.

International market

International market is also another very lucrative sector for BPL. In the world

market the low cost of product is an important upper hand for BPL to market its

product. The new FDA compliant plant will assist BPL to confirm the world market about the

quality of its products.

d) Threats

External elements in the environment that could cause trouble for the organization.

Social Commitment

BPL has a commitment to the society to supply world class Active Pharmaceutical

Ingredients (APIs). Therefore, BPL is not only engaged in formulations but also in fine

chemicals business with a view to supplying cost effective quality materials to other local

companies as well as for captive consumption.

Open Market Competition

Beximco Pharmaceuticals Ltd. has been preparing itself for the post-WTO open market

competition. It has all the courage to compete with world leaders in pharmaceuticals business

when the tariff and non-tariff barriers will be withdrawn the new USFDA standard plant is

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planned to be operational in early 2003. Once completed, this will be one of the finest

facilities to be available anywhere in the globe.

Local Competition

Competition from the local pharmaceutical companies and the very specifically in context of

price is a major threat for BPL. The poor economic status of Bangladesh requires a low price

of drugs to ensure public health. For the reasons like high cost of maintaining quality of

products and high distribution cost etc the products of BPL cost higher than that of other

companies. As a result, BPL is in fear of losing market in the rural areas of Bangladesh.

Competitive strategies and Implementation

Corporate strategy:

Theoretical aspects:

Corporate level strategy is an action taken to gain a competitive advantage through the

selection and management of a mix of businesses competing in several industries or product

markets.

Corporate level strategy involves

Horizontal Integration – Acquiring , Merging

Vertical Integration – Expanding operation backward into industry that produces

inputs for company or forward into that distributes company‟s products.

Strategic Outsourcing - Letting some value creation activities within business be

performed by independent entity.

Beximco Pharmaceuticals Strategies:

Business level Strategy

Functional Level Strategy

Global Strategy

Corporate level strategy

Business level Strategy:

Distinguished Manufacturing 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. Located at Tongi,

near the capital city Dhaka, BPL‟s manufacturing site is spread over an area of 20 acres,

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which houses a number of self-contained production units including oral solids, metered dose

inhalers, intravenous fluids, liquids, ointments, creams, suppositories, ophthalmic drops,

injectables, nebulizer solutions etc. (<http://www.sagia.gov.sa/en/Archive/SAGIA/Partner-

companies/Beximco-Pharmaceuticals-Ltd-/ >) The bulk drug unit for producing paracetamol

is also located within this site. Company‟s penicillin API and formulation units are situated at

Kaliakoir, a few kms from the main site.

The plant and machinery throughout the site have been designed by and procured mostly

from renowned European companies. Beximco Pharma has its own utility infrastructure to

ensure adequate generation and distribution of purified water at all times. The installed

capacity of power generation is 8MW. There is also liquid nitrogen generation facility on site.

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. Their three brands

- Neoceptin R (Ranitidine), Napa (Paracetamol) and Amdocal are the top three selling brands

in the Bangladesh Pharmaceutical market (“Annual Report,” 2010). There were also 55 new

product launched in 2011, (“Annual Report,” 2011).

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. (“Annual Report,” 2011)

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. (“Annual Report,” 2011)

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

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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, (“Annual Report,” 2010).

Functional Level Strategy

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. (“Annual Report,” 2010)

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. (“Annual Report,” 2010)

Global Strategy

Beximco Pharma always took the leading, proactive and pioneering role in exporting

pharmaceuticals from Bangladesh. Beximco Pharma commenced its international operations

with the export of API to Hong Kong in 1992 and formulation products to Russia in 1993.

The company has received the „National Export Trophy‟ (Gold) for an impressive three

times. Since then, BPL has taken greater strides over the years to increase its footprints in

international markets.

In 2010, BPL successfully ventured into several new countries including South Africa (via

contract manufacturing) and Netherlands Antilles, and registered 45 products in overseas

markets. The company achieved export revenues of Tk 330.54 million, up 21.47% over 2009.

The current expansion of this overseas portfolio includes prioritizing and directing marketing

operations to focus more on highly regulated markets such as the European Union (EU),

USA, Australia and GCC member countries for value added generics.

As of 2010 Beximco Pharma has 322 products registered in Asia, 91 in Africa, five in Central

and Latin America, and 22 in Middle East, while we are actively taking measures to register

our products in attractive branded generic markets such as the CIS states and the EU

countries.

BPL‟s products are highly trusted for their quality by physicians and consumers at home and

abroad. With this acclamation BPL is supplying different formulations from its portfolio to

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renowned hospitals and institutions including Raffles Hospital, Heathway Medical Group &

K. K. Women and Children Hospital in Singapore; Asthma Drug Facility (ADF) in France;

CENABAST in Chile; and MEDS and Kenyatta National Hospital in Kenya. BPL is

constantly investing in its state-of-the-art manufacturing facilities to significantly expand its

capabilities to meet the regulatory requirements of developed countries. (“Annual Report,”

2010).

BPL has pursued approvals from different drug regulatory authorities, e.g. TGA (Australia),

GCC (Gulf Council), ANVISA (Brazil) and INVIMA (Colombia), which highlights BPL‟s

credentials as it explores new opportunities in the export arena.

Corporate level strategy

National wide distribution network

BPL is found to be performing much better than most others in the industry. Beximco Pharma

distribution network is relatively more extensive in comparison to the top industry players. It

covers whole Bangladesh. Bangladesh has area of 147,570 square-km with over 150 million

populations, (“Annual Report,” 2010). Therefore, national wide distribution Network serves a

huge number of target customers and end users (patients). National wide distribution network

is definitely a strong favorable key success factor for Beximco Pharmaceutical Limited on its

own and also relative to its rivals.

Relationship with the doctor

When it comes to physician relationship management, BPL is performing better than most

but is still not performing well enough to take the number one position in this respect. Square

Pharmaceuticals Limited, BPLs biggest competitor has taken the lead in this respect.

Financial Strength

BPL has considerable financial strength in comparison to most but Incepta is not far behind

while Square Pharmaceuticals has substantial financial strength as well. Relative Financial

strength is something that BPL should always try to monitor after all this the criteria on

which corporations choose financial decisions regarding its debt/equity mix (capital structure

of a firm),maturity structure (maturity of assetsand liability), method of financing investment

projects (project appraisal or capital budgeting) and other decisions with a goal of

maximizing the value of the firm i.e. the value of the shareholders wealth.

Strong Relationships

Through Beximco Pharma‟s eyes, at the core of every successful partnership is a professional

relationship based on mutual trust and respect. Beximco Pharma recognizes and understands

that Its alliances and partnerships are a core component to accomplishing its strategic global

aspirations. Beximco Pharma believe that the right alliances can contribute appreciably to the

achievements of Its partners as well as to its own vision and sustainable growth. Beximco

Pharma has a successful track record of partnerships and alliances with global MNCs such as

GSK, Aventis, Bayer AG, Upjohn Inc and Ciba.

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The company has successfully established its brand value within the medical community. The

company seeks to further reinforce its relationships with all major stakeholders in the

healthcare value chain. BPL differentiates itself by providing value added, academic services

to the medical community in the form of seminars and symposia, clinical meetings, scientific

publications and the like. Beximco Pharma engaged in constant communication with doctors

to ensure prompt feedback and meet any requests for academic services, (“Annual Report,”

2010).

Implimenting Strategy:

Beximco Pharmaceuticals Limited the implementation stage is visualizedas starting after the

choice of strategy has been made. Once implementation gets under way it is tobe expected

that there will be a constant process of feedback with earlier stages. As resources aregather

together it may become apparent that the original objectives are unattainable, that

predictedcosts were too low, that likely competitive reaction was overestimated and that the

full range of strategy choice was not realized. This may make it difficult to isolate

implementation as anindependent activity in practice. However, by treating implementation

as an independent part of thestrategy process, the manager is forced to recognize that no

matter what sophisticated analysis hasbeen undertaken to arrive at a strategic choice, at the

time the choice is made it is possible thatnothing has been produced and nothing has been

sold. In other words, choosing strategy is not anend in itself; unless there is a mechanism for

making it happen it is a somewhat pointless activity.

The process of strategic information involves

The resource planning

Budgeting

Selecting and recruiting suitable individuals

Train Individuals who would implement the action

Setting sales targets

Determining the sales force size

Resource Planning

As Beximco Pharmaceuticals Limited is going to achieve a competitive advantage, it must set

up procedures to ensure that resources are used efficiently. Effective communication between

marketing and production would reveal the likely incidence of bulk orders, provide guidance

to production on how much inventory the marketing department feels that it can reasonably

live with,and enable the marketing department to appreciate the difficulties of capacity

utilization and inventory control, and the benefits of a relatively stable production schedule.

Resource planning has implications for all aspects of the performance of Beximco

Pharmaceuticals Limited. The application of sophisticated just-in-time approaches can reduce

inventory costs significantly, the smoothing of peaks and troughs in production schedules can

create the stable environment necessary to develop a company culture, the introduction of

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new technology at appropriate times can enable; Beximco Pharmaceuticals Limited to make

use of new skills and techniques, and a systematic approach to resource planning is the

foundation for monitoring costs. Therefore, Beximco Pharmaceuticals Limited should

emphasis in just-in-time approach, smoothing of peaks and troughs in production schedules,

and introduction to new technology for resource that is more efficient planning.

Budgeting

Beximco Pharmaceuticals Limited is to set across-the-board budget limits; this has the

advantage that Beximco Pharmaceuticals Limited is treated in the same way, and in turn

Beximco Pharmaceuticals Limited can set across-the-board limits, since this is consistent

with corporate policy. However, such an approach is inconsistent with principles of efficient

resource allocation. The whole emphasis of the strategic planning process has been on the

identification of activities with different potential pay-offs and directing resources

accordingly. For example, if the objective of Beximco Pharmaceuticals Limited were to

increase the market shares of products currently being produced, it would make little sense to

increase the research budget of Beximco Pharmaceuticals Limited at the same time simply

because the marketing budget was to be increased. On the other hand, if there is no sensible

budgetary control, when Beximco Pharmaceuticals Limited is faced with adverse market

conditions and decide to follow a retrenchment strategy the first thing that is usually done is

to cut back on those budgets which can be manipulated without affecting current

performance. Training, research and maintenance budgets are often pruned to achieve an

immediate increase in ROI without proper consideration of the overall resource allocation

implications of Beximco Pharmaceuticals Limited. This is often justified by senior

management on the grounds that survival is the primary concern and refinements can come

later.

Recruitment and Selection

Beximco Pharmaceuticals Limited conducts recruitment and selection of people who have the

aptitude and motivation for success. Beximco Pharmaceuticals Limited should pursue

following steps.

1. Set selection criteria that must be met by the candidates (e.g. education, experience, age,

ability to work own or in a team, communication skills, physical requirements such as

speech, appearance)

2. Invite applications

3. Shortlist candidates based on the criteria

4. Interview candidates

5. Conduct test centers to determine applicant‟s individual abilities as well as ability to work

in a team

6. Hire the individuals who score best overall in accordance with the criteria.

Training and Development

Beximco Pharmaceuticals Limited can pursue following three steps for training and

development.

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1. Analyze employee‟s performance

2. Identify his/her strengths and weaknesses

3. Train him/her to overcome weaknesses and maximize strengths, Training programmers

such as on-the-job training as well as formal training courses (both in-house and at other

institutions) must be arranged to develop personnel of Beximco Pharmaceuticals Limited.

Setting Sales Targets

The allocation of resources to selling is a basic determinant of strategic success, given that

the mechanism by which target market share is achieved is by setting sales targets to

Beximco Pharmaceuticals Limited and to individual salespeople. Beximco Pharmaceuticals

Limited can use sales targets to give the sales force an idea of what is expected of them, and

to serve as part of an incentive system. But what criteria can be used to determine what the

target market share should be, or how many units should be sold by a particular sales group in

a particular segment of the market is a question than Beximco Pharmaceuticals Limited needs

to find an answer.

Determining the Sales Force Size

For determining the sales force of Beximco Pharmaceuticals Limited, one method is called

the workload approach that follows eight steps can be taken in consideration. Eight steps are

following:

1. Customers are grouped into categories according to the value of goods bought by them and

their potential for future.

2. Determine the call frequency for each group to Beximco Pharmaceuticals Limited.

3. The total required workload per year is computed by multiplying the call number (or

frequency) by the number of customers in each group.

4. Add all workloads for all customer groups and you will get total workload for Beximco

Pharmaceuticals Limited in a year.

5. Estimate the average calls expected per week per salesperson.

6. Determine the actual number of weeks adjusting for holidays, illness, training and so on. In

other words, deduct the weeks not used from the total number of weeks in a year.

7. Compute the average calls per year per salesperson by multiplying the average expected

calls per week per salesperson of Beximco Pharmaceuticals Limited.

8. Divide the total annual workload by the average sales calls per year per salesperson to get

the total number of salespersons required for Beximco Pharmaceuticals Limited.

Beximco Pharmaceuticals Limited can follow this model and by following those eight steps,

Beximco Pharmaceuticals Limited can find the optimum size of sales force.

The reasons behind Beximco Pharmaceuticals Limited Success:

Sales and Profitability:

With an uninterrupted growth, achieving a 21.6% increase in sales to Tk. 7,890.24 million

(2010: Tk. 6,490.85 million). In 2011, BPL significantly enhanced its prescription share in

sales of the formulation products and maintained, as expected, growth in all its key

therapeutic segments. Sales of BPL; Active Pharmaceutical Ingredients (APIs) also recorded

a significant 37.1% growth to reach Tk. 486.91 million (2010: Tk. 355.24 million). However,

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its impact on the overall profitability of the company is currently low because of a low gross

margin predominantly due to the high cost of import of intermediate materials to manufacture

these APIs. In 2011, export sales grew by 18.1% to Tk. 390.32 million (2010: Tk. 330.54

million).

Along with sales growth, Beximco Pharma also achieved a marked growth in profit in 2011.

BPL‟s pre-tax profit increased 23.2% to Tk. 1,677.85 million (2010: Tk. 1,361.53 million).

Gross margin as percentage of sales however, slightly declined to 48% as against 48.9% for

the prior period. This was due principally to depreciation in the value of the Taka against the

Dollar and the high level of domestic inflation. However, with BPL‟s constant drive to

contain costs and effective profit optimization strategies, the negative impact of rising cost on

profit has been kept to the practicable minimum.

(<http://www.advfn.com/news_Beximco-Pharmaceuticals-Ltd-AGM-Statement_52957815.html>)

Overseas Business :

Certification of the relevant manufacturing facility by the duly accredited authorities is the

first step of the enduring process of the export of pharmaceutical products. Our

manufacturing facilities have been approved by a number of major regulatory authorities. In

2011 we received GMP (Good Manufacturing Practice) accreditation from the Austrian

Agency for Health and Food Safety (AGES) for our oral solid dosage and ophthalmic

manufacturing facilities. This is another testimony of our manufacturing excellence and

important progress towards achieving targeted exports into the regulated European markets.

Research & Development (R&D) and New Products

Beximco Pharma continuously focused on strengthening its R&D capabilities. There have

been a series of positive developments in the year under review. BPL has inducted in our

existing pool of talent two highly experienced professionals from overseas.

BPL‟s R&D team successfully introduced 40 new generic formulations in 55 different dosage

forms and strengths. During this year Beximco Pharma launched combination therapies such

as NapaDol(R) (Paracetamol+Tramadol), Dinovo(R) (Naproxen+Esomeprazole) and

Glipitia(R)M (Sitagliptin+Metformin). Beximco also outsourced some R&D services to

develop certain specialized products for regulated markets, (“Annual Report,” 2010).

Investments for Sustainable Growth

Expansion of metered dose inhaler (MDI) plant has added significant further capacity raising

the total manufacturing capacity to 20 million canisters. Two other projects, namely facilities

for dry powder inhalers (DPI) and pre-filled syringe products were also successfully

completed and became operational. Amino acid unit also started commercial operation in

2011. Facilities for liquid lyophilized products and powder for suspensions and sachets are

nearing completion. Other projects are progressing as planned.

Beximco Pharma has always been a pioneer in adopting innovative technologies. This brings

both sophistication and the potential to sustain growth to our business. Over the past couple

of years BPL have made considerable investments in facilities and processes to improve

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productivity, drive growth and achieve excellence in operations. A number of such projects

that can drive future growth are in its investment plan. Alongside investment in

manufacturing facilities, BPL are equally focused on investing in products, markets and most

importantly our human resource to ensure both the sustainable growth of our business and a

meaningful return for its valued shareholders.

Corporate Social responsibilities

Corporate social responsibility (CSR), also known as corporate responsibility,

corporate citizenship, responsible business, sustainable responsible business (SRB),

or corporate social performance, is a form of corporate self-regulation integrated

into a business model. Ideally, CSR policy would function as a built-in, self-

regulating mechanism whereby business would monitor and ensure its adherence

to law, ethical standards, and international norms. Business would embrace

responsibility for the impact of their activities on the environment, consumers, employees,

communities, stakeholders and all other members of the public sphere. Furthermore, business

would proactively promote the public interest by encouraging community growth and

development, and voluntarily eliminating practices that harm the public sphere,

regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into

corporate decision-making, and the honoring of a triple bottom line: People, Planet and

Profit.

Corporate Social Responsibility (CSR) is an integral part of Beximco Pharmaceuticals

business strategy. Some of the CSR activities undertaken by the company are showing as

follows:-

As a first Bangladeshi Pharma company BPL introducing anti-retroviral medicines for

HIV/AIDS treatment, medicine to combat the virus of bird flu and anoral anti-smoking

drug to help chronic smokers quit smoking. ( <http://saffron.pharmabiz.com/article/detnews.asp?articleid=19151&sectionid=50> )

Food and Medicine donation during different natural disasters.

Sponsoring, organizing & participating many cultural and sports events like Corporate

Cricket League, SAAf Football Championship, Inter-School Handball tournament, Open

air concert etc.

Publishing posters-banners-festoons, arranging rallies-seminars-conference etc. on AIDS,

Diabetes, Smoking, Cancer, Asthma, Birds Flu etc.

Beximco Pharmaceuticals Ltd. manufactures CFC-free Metered Dose Inhalers among the

few pharmaceuticals in the world. ( <http://www.thefinancialexpress-bd.com/more.php?date=2012-03-18&news_id=123819 >)

Official sponsor of the Bangladesh National Cricket team for the ICC Cricket World Cup

2011.

Official sponsor of the FIFA friendly match between Argentina and Nigeria held in

September, 2011.

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Recommendation and Features Challenges

The pharmaceutical industry in Bangladesh is undoubtedly one of the most potential

industries. However, the industry is not operating without any problems. This part of the

report states the possible steps that could be taken to mitigate the gravity of the difficulties

that threat the industry. As one of the leading pharmaceutical company Beximco Pharma also

faces these problems that are bar to achieve organizational goals effectively. To sort out these

problems here some suggestions are recommended:

Coping with Instable Economic State:

To cope with the ever changing economic environment, the management of BPL should

always be watchful and should constantly analyze the organization‟s overall environment.

BPL should keep their practices of flexibility to encourage innovation for the times of much

needed change. Again, as Government is going to pass a new version of law, involving the

pharmaceutical industry Beximco Pharma should prepare their arrangements to cope with the

coming changed business environment.

Handling Competitions:

Since, BPL‟s business strategy is to focus on particular segments of the total market they

should be operating with the view to becoming the market leader of those areas. In the mean

time, they should look forward to grow their business as much as possible both in national

and international market.

Negotiating with the Government:

In o r d e r t o ensu r e m o re p ro sp ec t s i n t h e im po r t and ex p or t activities of raw

materials Beximco needs to negotiate to adjust several business laws and regulations with the

Government. Such approach can be proved as a benefit of the company.

Increase Product Variation:

Beximco Pharmaceuticals Limited should increase its product variety. Product variety

represents different types of items of medicines. At present, Beximco offers around 180

different types of medicine. Some other companies are offering more than this. BPL can

diversify itself from others by operating in highly specialized segments such as anti cancer

segments.

Strengthen Promotion:

BPL‟s promotion is quite weak. They should provide more product samples gifts to the

doctors to increase their image among them. Doctors should be informed previously that new

medicines are coming up and will be offered within two or three months. Thus the doctors

can perceive an insight about the new Beximco's medicines as an alternative of

competitor'sexisting items and Beximco pharma can gain good relationship with the doctors.

Market Diversification:

After 2015, privileges as LCD regarding Patent Act will expire. Therefore, BPL must get

ready to compete in a more challenging situation in the international market where, India will

be the biggest contestant. BPL will have to concentrate on the Generic medicines that are the

products that are produced in mass scale and marketed by several companies under different

brand name, where the formulation of this product is almost same. Prices of the products are

under this category are competitive. Bangladesh mainly concentrates on this category, as

labor cost is one of the lowest in the world. Again, Beximco Pharma can operate on off-

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patent products as after years of business the formulations of Patent Medicines are sold in the

market so that others can go into mass production. Thus, the company can take a better

position by maximizing profit in an open market economical condition.

Involving more on CSR Policies:

So far we have seen that Beximco Pharma hasn‟t much more involes in CSR activities. Other

competitor‟s like Square, Glaxco, ACI, Renata has significanly involve in CSR activities. For

maximising BPL‟s Value and brand creation; they should adopt examplorary CSR policies.

Conclusion

After knowing the whole strategic management techniques followed by Beximco Pharma it

is clear that, no company can follow one form or approach from the corporate

level strategy. Situations vary and so does the business strategies to meet the demand at a

given point of t ime. However , Beximco Pharma has al so been that of a kind

where they pract iced di f ferent t ypes of growth s t rategies , reached boom

and at the same t ime company fol lowed to the need for recovery s tage

where they have gone through the renewal strategy. But more or less it can be

said that Beximco Pharma preferred either growth through market

developments and i f not so then s tabi l i ty; wi th a cons is ten t approach towards

consumer. Well the sum up we can be stated as that with all their superior strategies and

techniques they have continued to stay prosperous from centuries and hope to

maintain that throughout.

= 0 =

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References

Beximco Phamaceuticals Limited: <http://www.beximco-pharma.com/>

<http://www.thefinancialexpress-bd.com/more.php?date=2012-03-18&news_id=123819>

<http://www.advfn.com/news_Beximco-Pharmaceuticals-Ltd-AGM-

Statement_52957815.html>

<http://www.scribd.com/doc/48694794/Bangladesh-pharmaceutical-industry>

<http://www.scribd.com/doc/89024982/Strategic-Plan-for-BPL >

“Beximco Pharmaceuticals Ltd: Building A Healthier Tomorrow”. Articles Base. August 04,

2010. < http://www.articlesbase.com/medicine-articles/beximco-pharmaceuticals-ltd-

building-a-healthier-tomorrow-2956604.html >

Habib, Anamul & Alam, Zahedul. (2011) “Business Analysis of Pharmaceutical Firms in

Bangladesh: Problems and Prospects” Volume–VI, Number–01, January-June, 2011.