beximco pharma

Presentation on Beximco Pharmaceuticals

Name of the presenters

Faisal Bin Kamal 2009-3-10-057 Quazi Aritra Reyan 2010-1-10-145 Md. Nayeem Hossain 2010-1-10-149 Tahrim Shahriar 2010-1-40-052

Background of the Company

Beximco Pharmaceuticals (BPL) is a leading edge pharmaceutical company based in Dhaka, Bangladesh. BPL started its operation in 1980 and now have grown to become nation's one of the leading pharmaceutical companies.

BPL supplies more than 10% of country's total medicine need. It offers top notch product quality and has world-class

manufacturing facilities. BPL is the recipient of three times ‘gold’ national export trophy,

Beximco Pharma is the largest exporter of pharmaceuticals from Bangladesh.

Background of the Company…

Mission: BPL’s mission is to ensure that each of the activities of the company benefits and adds value to the common wealth of our society.

Vision: Viewing the business as a mean of the social well-being of the investor, employees and the society and customers is the main vision of BPL.

Goals: The innovation of new products and satisfying the ever-changing need of consumers is the top priority goal of BPL. Ensuring full effort to enhance shareholders highest returns and growth of their asset is also a goal of the company.

Human side of The Business

Management: BPL has a three-tier management structure, comprising the Board of Directors, the Executive Committee and the Management Committee. There is an Audit Committee also, constituted in 2006.

The things that are focused in Beximco Pharma’s management are- Entrepreneurial spirit Innovation power Team work Employee empowerment

Human side of The Business…

Leadership and Motivation Style: BPL believes in participative management. In this light, BPL encourages each of its employees to be the leader of his /her zone of actions.

BPL uses Management by Objective (MBO) system so that everyone becomes Self-motivated. Apart from creating a healthy working environment, employee empowerment, BPL offers a number of benefits to motivate their employees.

The benefits offered by the company are given below: Education costs of the children Permanent job facility Leave facilities Promotion Yearly Employee Awards Foreign Travel with Family Offers Share from revenue etc.


Organizational Structure:


Training and Development program of BPL: It is done in 2 ways- On-the-job Training: Under the trainer’s supervision Apprenticeship Training Informal Learning Job Instruction Training Lectures Simulated Training Off-the-job Training: In an artificial environment. The Case Study Method Management Game Outside Seminars Behavior Modeling


Performance Appraisal: At BPL appraisals are done by the Self-appraisal system. Managers appraise the performance of their subordinates through 5 points Graphic Rating Scale. 1 for unsatisfactory, 2 for marginal, 3 for target, 4 for superior, 5 for outstanding.

Employee Compensation: It has two main components- Direct financial payments: Wages, salaries, incentives e.t.c. Time based pay Performance based pay


Indirect payments: Financial benefits like employer-paid insurance and vacations.

Benefits and Rewards Package: Supplemental Pay Benefits, Sick Leave, Vacations and Holidays, Parental Leave e.t.c

Contribution to Workers' Profit Participation/ Welfare: 5% of net profit before tax contributed by the company for workers.

Insurance Scheme:Employees of the company are covered under group life insurance scheme.

Production and Marketing

Contract Manufacturing: The severe price competition from the generic manufacturers has prompted BPL to shift or outsource their production from developed to developing and less developed countries, because of huge cost advantage.

Product Mix: BPL has a wide product mix consisting of 18 product lines. Most of the product lines are deep. The following table is the product mix of BPL, showing some of its products.

Production and Marketing

Production and Marketing…

Marketing Strategy: Beximco Pharma has adopted several Corporate Level Strategies regarding growth and market focus based on the SWOT analysis with the view to achieving organizational goals. Business level strategies developed by BPL help them to earn competitive advantage through quality products, superior services, and outstanding customer relationship. The things that are focused in BPL’s business strategy are-

Innovation strategies in product differentiation & promotion Marketing Approach rather than traditional Selling Approach Focus Strategy superior human resource and unique customer service


Strength (Internal)1. Employee Empowerment

2. Innovation & product differentiation 3. Outstanding Product Quality4. World Class Professional Service

Weakness (Internal)1.Insufficient Working Capital

2.Not Operating in Low Cost Market.

Opportunities (External)1.Ability to Retain Growth & market Focus In difficult

Operating Situations 2.Ability to Exploit Opportunities of Patent Law as an LDC in International Market.

Threats (External)1.Strong Competitors in Domestic

& International Market. 2.Political Instability 3.Government & International Regulations. 4.Rising Trend of Material Price

SWOT


Promotional Activities: Beximco Pharma is very technical when it comes to promotional activities. They know how to turn their weaknesses into their strengths. As an example, Beximco Pharmaceuticals Limited (BPL) is the biggest CFC and HFA MDI manufacturer in Bangladesh but on the awareness raising of CFC-free alternatives in Bangladesh BPL came forward before anyone else. The target audiences of a normal promotional activity are-

primary care physicians and specialists non-government organizations pharmacists patients and patient groups government organizations medical and pharmacology colleges the general public and media


Pricing: Beximco Pharma believes in quality, service and consumer satisfaction. In case of pricing Beximco Pharma never does price based competition as they believe in quality. They focus on attaining consumer loyalty.

Business Environment

Core Values: Trust and reliability to the products Quality in manufacturing according to the rules of the WHO Hiring competent branch of people promoting new products through research and bringing cost

efficiency Sense of responsibility to keep the highest standards of products

Good products, however, are only one side of BPL’s commitment. BPL believes that their responsibility lies even more in ensuring that the society gets benefited while they continue to grow.

Business Environment…

Corporate Social Responsibilities: Corporate social responsibility is an integral part of BPL’s business strategy which is reflected in its mission statement. Each year, an increasing amount of contribution is ploughed back into social causes, demonstrating Beximco Pharma's commitment to the nation. Some examples of BPL’s Corporate social responsibilities are-

Partnership with NGOs working for AIDS patients Supporting sports Raising disease awareness among the people Donating 5000 pieces of Oseflu (Oseltamivir) capsule to ICDDRB Donation of medicines to victims of earthquake in Pakistan and

victims of tsunami in Sri Lanka

Accounting & Finance

Accounting Basis-The financial statements have been prepared on the Historical Cost

Basis except land, building and plant and machinery, and therefore, do not take into consideration the effect of inflation.

Reporting Currency-The financial statements are prepared and presented in Bangladesh

Currency (Taka), which is the company's functional currency. All financial information presented have been rounded off to the nearest Taka except where indicated otherwise.

Reporting Period-The financial period of the company covers one calendar year from 1st

January to 31st December consistently.

Accounting & Finance…

Going Concern-The Company has adequate resources to continue in operation for the

foreseeable future. For this reason, the directors continue to adopt going concern basis in preparing the accounts.

Statement of Cash Flows-The Statement of Cash Flow has been prepared in accordance with the

requirements of IAS 7: Statement of Cash Flows. The cash generated from operating activities has been reported using the Direct Method as prescribed by the Securities and Exchange Rules, 1987 and as the benchmark treatment of IAS 7, whereby major classes of gross cash receipts and gross cash payments from operating activities are disclosed.


Depreciation on Fixed Assets-

Depreciation is provided to amortise the cost of the assets after commissioning, over the period of their expected useful lives, in accordance with the provisions of IAS 16: Property, Plant and Equipment. Depreciation is provided for the period in use of the assets. Depreciation is provided at the following rates on reducing balance basis:

Building and Other Construction 5% to 10%

Plant and Machinery 7.5% to 15%

Furniture & Fixtures 10%

Transport & Vehicle 20%

Office Equipment 10% to 15%


Income Tax Expense-Income tax expense comprises current and deferred tax. Income tax

expense is recognized in profit and loss account andaccounted for in accordance with the requirements of IAS 12 : Income

Tax.

Current Tax:Current tax is the expected tax payable on the taxable income for the

year, and any adjustment to tax payable in respect ofprevious years. The company qualifies as a “Publicly Traded

Company”, hence the applicable Tax Rate is 27.50%.


Deferred Tax:The company has recognized deferred tax using balance sheet method in

compliance with the provisions of IAS 12 : Income Taxes. The company's policy of recognition of deferred tax assets/ liabilities is based on temporary differences (Taxable or deductible) between the carrying amount (Book value) of assets and liabilities for financial reporting purpose and its tax base, and accordingly, deferred tax income/expenses has been considered to determine net profit after tax and earnings per shares (EPS).

Foreign Currency Transactions:Foreign currency transactions are recorded at the applicable rates of

exchange ruling at the transaction date.The monetary assets and liabilities, if any, denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchanges ruling at that date. Exchange differences are charged off as revenue expenditure in compliance with the provisions of IAS 21 : The Effects of Changes in Foreign Exchange Rates.


The rates of relevant foreign exchanges at year end are :2008 20071 US Dollar $ = Tk. 69.4500 69.2000

Report of the Directors to the Shareholders:For the year ended 31 December 2008

The Directors are pleased to present their report to the shareholders together with the audited accounts of the Company for the year ended 31st December, 2008 along with Auditors' Report thereon.


Financial Results and Profit Appropriations:


DividendThe Board of Directors has recommended 10% cash and 20% stock

dividend for approval of the shareholders for the year ended 31 December, 2008.

DirectorsMr. A. S. F. Rahman, Director of the company retires by rotation as

per Articles 126 and 127 of the Articles of Association of the Company and being eligible offers himself for re-election. Mr. A.B. Siddiqur Rahman, Director of the company retires by rotation as per Articles 126 and 127 of the Articles of Association of the Company and being eligible offers himself for re-election being the nominee of Beximco Holdings Ltd. Advocate Ahsanul Karim, Director of the Company also retires by rotation as per Articles 126 and 127 of the Articles of Association of the Company and being eligible offers himself for re-election being the nominee of Bangladesh Export Import Company Ltd.


Board Audit CommitteeThe Company has an audit committee, which met twice in 2008, to

consider its Annual Financial Statements for the year ended 31 December 2007 and Half-Yearly Report for the half-year to 30 June 2008. The Committee comprises Mr. M A Qasem as Chairman and Dr. Abdul Alim Khan and Advocate Ahsanul Karim as Members.

Accounting & Financing…


The sources of fund-1. Issued share capital2. Profit/Sales3. Long Term BorrowingThis Consists of :(a) Project Loan (b) Interest and PAD Block (c ) Obligation Under Finance Leases4. Short Term Borrowings (a) Janata Bank:Cash Credit-Pledge Cash Credit-Hypothecation (b) Citibank NA (c) Standard Chartered Bank (d) IPDC (e) Loan from Beximco Holdings Ltd.


5. Other Income - This is arrived at as follows:Interest Income Exchange gain (loss) on retention quota (F.C.) accounts Gain on Sale of shares in Bextex Ltd. (Loss) / Profit on Sale of Fixed Assets 6. Foreign Exchange Earned7. Account Receivable-This is unsecured, considered good and is falling due within one year.8. Selling old equipment & accessories.


Distribution of fund-1. Production 2. Cash paid suppliers & employees3. Interest paid4. Income tax paid5. Investing activity (Acquisition of property, plant & equipment)6. Creditors & other payable7. Maintenance of plant, machinery & other accessories.8. Administrative expenses.9. Selling, Marketing & Distribution.10. Contribution to workers welfare fund.11. Dividend paid12. Social welfare activity, etc.


Ratio Analysis-

Current Ratio = Current assests/Current liabilities

= 2861891654/ 2602032267

= 1.09

Working Capital Ratio = Working Capital/ Current Liabilities

= 259859387/2602032267

=.09

Quick Ratio = Quick Assets/ Current liabilities

= 1,505,288,093/2602032267

= 0.58

International Business

Beximco entered international market with the export of Active Pharmaceutical Ingredients (APIs) to Hong Kong in 1992 and finished formulation products in 1993. The activities that BPL performs in international market are-

selling products to retail outlets and supplying products to renowned hospitals and institutions

Contract manufacturing for major international brands of leading multinational companies.

In international market the main competitors for pharmaceutical companies in this 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 a high price.

International Business…

International Business…

The Obstacles Faced by BPL in International Market: International Laws and Regulations: For example, to import

necessary raw materials from India 30% duty has to be paid Patent Laws: After 2015 BPL or any other pharmaceutical company

will not be able to do business in international market with Patent Medicines.

Business Laws: As an example, because of the regulatory restrictions of the banks, BPL was unable to open letter of credit (LC) for the whole year of 2006 which resulted in its insufficient working capital facility.

Conclusion

Recommendations:Beximco Pharma maintained standard quality in every sphere of their

organization. Here we have some recommendations to improve policies of BPL, Bangladesh.

The company should follow both on-the-job and off-the-job training method when they are training their employees.

As a learning organization BPL should keep their practices of flexibility to encourage innovation for the times of much needed change.

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.

In order to ensure more prospects in the import and export activities of raw materials BEXIMCO needs to negotiate to adjust several business laws and regulations with the Government.

Conclusion…

Pharmaceutical Industry has grown in Bangladesh in the last two decades at a considerable rate. With the development of healthcare infrastructure and increase of health awareness and the purchasing capacity of people, this pharmaceutical industry is expected to grow at a higher rate in future. As one of leading pharmaceutical manufacturer Beximco Pharma plays a vital role in the industry as well as in the national economy. Healthy growth is likely to encourage the pharmaceutical companies to introduce newer drugs and newer research products, while at the same time maintaining a healthy competitiveness in respect of the most essential drugs. So, it is a great responsibility for Beximco Pharma as well as other companies in this industry to concentrate on quality product and quality service to take this industry towards further success.

Thank You!

beximco pharma

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