Profitability analysis of beximco pharmaceutical s limited

“Profitability analysis of Beximco Pharmaceuticals
Limited”

DAFFODIL INTERNATIONAL UNIVERSITY

“Profitability analysis of beximco
Pharmaceuticals limited”

A study on
Operational Headquarter, Dhanmondi

Daffodil International University
102, Shukrabad, Mirpur Road, Dhanmondi,
Dhaka – 1207

RONI BHOWMIK


RONI BHOWMIK


Roni Bhowmik
17th Batch,
ID No. – 072-11-2024
Bachelor Of Business Administration

DISCLAIMER

RONI BHOWMIK


I, Roni Bhowmik, hereby declare that the presented report of internship titled
“Profitability analysis of Beximco pharmaceuticals Limited”. A study on Operational
Headquarters, Dhanmondi is uniquely prepared by me after completion of two months
work in Beximco Pharmaceutical Limited (BPL).

I also confirm that, the report prepared only for my academic requirement not for any
other purpose. It might not be used with the interest of opposite party of the organization.

………………………………
Roni Bhowmik
BBA Program
ID: 072-11-2024
Department of Business Administration
Faculty of Business & Economics

October 12, 2010
Certificate of Approval

RONI BHOWMIK


I am pleased to certify that the Internship report on “Profitability analysis of Beximco

pharmaceutical Limited” A study on Operational Headquarters, Dhanmondi conducting

by Roni Bhowmik is bearing ID No: 072-11-2024 of the Department of Business

Administration has been approved for presentation and defense/viva-voce. Under my

supervision Roni Bhowmik worked with Beximco Pharmaceutical Limited as an intern.

He completed the work during the Summer-2010 semester.

I am pleased to hereby certify that the data and findings presented in the report are the

authentic work of Roni Bhowmik. I strongly recommend the report presented by Roni

Bhowmik for further academic commendations and defence/viva-voce.

Roni Bhowmik bears a strong moral character and a very pleasant personality. It has

indeed been a great pleasure working with him. I wish him all success in life.

Mr. Mahbub Parvez
Assistant Professor
Department of Business Administration
Faculty of Business & Economics

Acknowledgement

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First of all I would like to thank the Almighty for giving me the strength, and the aptitude

to complete this report within due time. The intern gratefully acknowledges the guidance

and assistance received from different people and organizations while carrying out the

study. Mr. Mahbub Parvez, Assistant Professor (Department of Business and

Administration) provided guidance during the entire internship period and in writing the

report. Mr. Md. Fazlul Haque, Deputy Manager, Accounts and Finance, Beximco

Pharmaceutical Limited(Supervisor), Mosttafa Shazzad Hasan, Asst. Manager, Account

and Finance, MD. Syfur Rahman Chowdhury, Accounts Officer, BPL provided

continuous support during whole of the placement period. They are also provided

important data without which the study was not possible at all. The intern has also

received valuable information and suggestions from other people from time to time.

I am deeply indebted to my supervisor, Mr. Mahbub Parvez for assigning me such an

interesting topic named “Profitability analysis of Beximco pharmaceutical Limited”. I

also express the depth of my appreciation to my honorable supervisor for his suggestions

and guidelines, which helped me in completing this report.

Executive Summary

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The global pharmaceutical industry as well as the Bangladeshi pharmaceutical industry
has moved a long way in the last ten years. We have seen pharmaceuticals market
growing to the new heights and realized that the most promising opportunities are to be
found with world’s emerging economies. The increasing aged population globally,
significant demographic shift, would result in the global pharmaceutical market
registering a healthy growth over the next decade.
Pharmaceutical industry is a knowledge-based market. This market differs from
consumers market. Today in competitive environment, pharmaceutical industries are
demanding much promotional backup to satisfy their customers. We also believe that
going forward the pharmaceutical industry would witness a major shift from developed
market to emerging economies, from primary care class to position therapy and chemistry
to biotech.
In recent times, the global pharmaceutical industry has shown high interest in Bangladesh
due to its sustained economic growth, health care reforms. In the last few years
Bangladeshi pharmaceutical industry has achieved significant energy, making its
presence felt in the global market primarily through its focus on global generics markets.
The Bangladeshi general companies are making their presence felt across regulated and
semi regulated market through merger and achievement, alliances and agreement with big
Pharma MNC’s. The product patent administration is believed to offer huge opportunity
for the Pharma MNC’s as it will not only position Bangladesh an important market to
launch their block buster drugs but also a strategic destination for conducting clinical
trails.
Bangladeshi as well as big MNC’s are following the union and partnership model to
attack into the new markets and geographies.
Such model not only help them to capitalize on the latter company’s knowledge as well
as understanding of the local market, technical know-how would also provide them with
ready access to a strong distribution and supply communications.
The increasing cost, dry up of research pipeline, increasing pricing pressure have led the
companies outsource the R&D activities. The increasing outsourcing in the Pharma

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industry has led the Bangladeshi company focus on outsourcing opportunities from their
international counterparts.
Beximco Pharmaceutical Ltd. (BPL) is a well-established pharmaceutical company in
Bangladesh. BPL holds the second position in this highly competitive knowledgeable
market. BPL believes new competitive advantages need to be identified to succeed in the
industry and at present new comer activity becomes the most challenging job. BPL is
such a company, which never compromise with new comer. From the beginning they are
providing that support but day by day its demand is rapidly increasing and BPL always
ready to match with that demand. BPL starts to provide promotional back up from the
launching date of new products. BPL ensure that the shareholder wealth maximization.

Table of Contents

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NAME Page no
EXECUTIVE SUMMARY

INTRODUCTION 1
1. Introduction 2
1.1 Origin of the Report 4
CHAPTER - 01 1.2 Scope the Report 4
1.3 Significance of the Report 5
1.4 Objectives of the Report 5
1.5 Methodology of the Report 6
1.6 Limitations of the Report 9
CHAPTER - 02
Organization Part 10
2. Background of Pharmaceutical Industry of Bangladesh 11
2.1 Pharmaceutical Industry Analysis of Bangladesh 12
2.2 Management Aspect 19
2.2.1 History of Beximco Pharmaceutical Limited 19
2.2.2 Company Profile at a Glance 20
2.2.3 Mission 21
2.2.4 Vision 21
2.2.5 Management Hierarchy 21
2.2.6 Philosophy of Beximco Pharmaceutical Ltd. 23
2.2.7 Board and Management 23
2.2.8 Factories 24
2.2.9 Departments of BPL and their Activities 24
2.2.9.1- Central Product Management (CPM)
25
Department
2.2.9.2- Purchase Department 25
2.2.9.3- Market Research & Statistical Cell (MRC)
25
Department
2.2.9.4- Sales Department 26
2.2.9.5- Human Resource Department 26
2.2.9.6- Finance and Accounts Department 27
2.2.9.7- Sales & Training Department 28
2.2.9.8- Management Information System (MIS)
28
Department
2.2.9.9- Multimedia Department 28
2.2.9.10- Medical Services Department (MSD) 29
2.2.9.11- International Marketing Department 29

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2.2.9.12- BPL Factory (Works Department) 29
2.3 Key Milestones 30
2.4 Services 31
2.5 Future Plans 33
2.6 New Product Update 34
2.7 Blockbuster Products of BPL 34
2.8 Position of BPL in BD pharmaceutical Industry 35
2.9 Beximco Pharma’s Differential Edge 37
Learning Part 38
3. Statically Analysis of Beximco Pharmaceutical Ltd. 39
3.1 Financial Performance Analysis of BPL 42
3.1.1 Ratios Analysis 42
3.1.1(a) Short Term Liquidity Ratios 42
3.1.1(b) Capital Structure and Long-term
44
Solvency Ratios
3.1.1(c) Return on Investment Ratios 46
3.1.1(d) Profitability (Operating Performance)
46
Ratios
3.1.1(e) Asset Utilization Ratios 48
3.1.1(f) Market Measures Ratios 49
CHAPTER - 03
3.1.2 Performance Analysis of BPL with Graph 51
3.1.2(a) Net Profit 51
3.1.2(b) Sales 52
3.1.2(c) Expenses 53
3.1.2(d) Interest 54
3.1.2(e) Liability 55
3.1.2(f) Assets 56
3.2 SWOT Analysis in BPL 57
3.2(A) Strength 57
3.2(B) Weakness 58
3.2(C) Opportunities 59
3.2(D) Threats 61
3.3 Valuation of BPL 63
FINDINGS AND CONCLUSION 64
4. Findings of the Report 65
CHAPTER - 04
4.1 Recommendation of the Report 66
4.2 Conclusion 67
References 68
Appendix 69

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1.Introduction

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This internship is a part of the Bachelor of Business Administration (BBA) program that
provides an on-the-job experience to students. I was placed at Beximco Pharmaceuticals
Limited, Operational Headquarters Dhanmondi as an internee student for three months.
This internship program was my very first on-the-job exposure and provided me with
learning experience and knowledge in several areas. During the first few weeks of my
internship period, I was able to get accustomed to the working environment of Beximco
Pharmaceutical Limited. As the internship continued, I not only learned about the
activities and operations of Beximco Pharmaceutical Limited, but I also gathered some
knowledge about the basic financing activities of Beximco Pharmaceuticals Limited in
first one-month of my internship period.

Government and Private organization contribute significantly to the economic
development of Bangladesh. Pharmaceutical Industry also contributes to the economic
development in our country. It is not strengthening our Balance of payment but also
contributing through earn foreign currency, provide domestic need and reduction of
unemployment, enhancing gross national income and save foreign exchange reserves.

After ready-made garments (RMG), pharmaceutical sector has become one of the largest
sectors in earning foreign currency. Meeting more than 95 percent demand of the local
market, Bangladeshi drugs gained a significant position in the world’s drug market.
Locally manufactured drugs are now being exported to more than 52 countries across the
globe like- Vietnam, Singapore, Myanmar, Bhutan, Nepal, Sri Lanka, Pakistan, Yemen,
Oman, Thailand, and some countries of Central Asia and Africa.

The scenario of pharmaceutical industry can be described in two parts- before the Drug
Policy Ordinance in 1982 and after the Drug Policy Ordinance in 1982.
Before 1982, there were 177 licensed pharmaceutical manufacturers in the country but
local production used to be dominated by the big multinational drug companies (MNCs)
which manufactured the lion’s share about 75% of the products, 25 medium sized
national companies manufactured another 15% of the products and 133 small local
companies (LCs) produced the remaining 10%. These multinational companies were

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fully armed with the technical know-how for producing sophisticated essential drugs, but
they were only engaged, to a large extent, in formulation of simple drugs including many
unnecessary products. At that time, the unregulated drug market of the country had very
favorable conditions for pharmaceuticals to over price their products. That time local
firms could not compete effectively with these multinational market tycoons.

A great change was noticeable in the pharmaceutical industry after the Drug Policy
Ordinance of 1982. The total national production of pharmaceuticals has risen by a
substantial 63%; the value of essential drug made in national factories has gone up by
140% over the four years following the drug policy promulgation. Over 95% of
Bangladesh's own pharmaceutical needs are met by domestic firms, which number
around 230. Local companies (LCs) increased their share from 25% to 70% on total
annual production between 1982 and 2000. In 2000, there were 210 licensed allopathic
drug-manufacturing units in the country and now there are 265 registered companies are
operating. Few of the multinational companies closed their business in Bangladesh, as it
was difficult to make huge profit after the Drug Policy.

1.1 Origin of the Report

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Without the combination of theoretical and practical relationship for a student education
method will not more rich and helpful. Bookish knowledge is only theoretical knowledge,
which cannot fully help in our professional life. So, every student must have practical
knowledge. In modern business world competition is very hard, the perfect coordination
between theory and practice is of vital in the every business students Therefore, and an
opportunity is offered by Daffodil International University, for its potential business
graduates to get three months practical experience, which is known as “Internship
Program”. The study on “Profitability analysis of Beximco pharmaceuticals Limited”
was carried out and this report was produced as requirement for the BBA Internship
Program. The intern had earlier completed 40 required courses majoring in Finance, and
was placed with the Accounting and Finance Department, I have selected to work as an
internee in one of the leading company of pharmaceuticals field that is “Beximco
Pharmaceuticals Limited (BPL)” a company of Beximco Group under a twelve week
internship program, where his supervisor was Mr. Md. Fazlul Haque, Deputy Manager,
Accounts and Finance, Beximco Pharmaceuticals Limited. At the end of the attachment
period this study topic was selected in consultation with Mr. Mahbub Parvez, Assistant
Professor, Department of Business and Economic and the internship supervisor.
Internship Program brings a student quicker to the genuine life position and thereby helps
to start on a career with some previous experience.

1.2 Scope of the Report

There were huge scopes to work in the field of the report. Considering the dead line, the
scope and exposure of the paper has been wide-ranging. The study, “Profitability
analysis of Beximco pharmaceuticals Limited” has covered Beximco Pharmaceuticals
Ltd. profit flows. The impact of different external and internal factors on the flow of
profit by BPL has been showed in this report. The valuation of BPL has also been
showed in this report. By preparing this report it becomes more understandable about the
real condition of the pharmaceutical industry in Bangladesh and the flow of profit
through the different challenge.

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1.3 Significance of the report

The perfect coordination between theory and practice is important in the context of the
modern business world in order to resolve between these two areas. The main reason of
this report is develop into recognizable with the realistic business world to get practical
knowledge about the corporate world. Each and every one knows that there is no
substitute of practical knowledge which is more advantageous than theoretical aspect.

1.4 Objectives of the Report

1.4(a) Primary Objective
 The primary objective is to determine the position of Beximco pharmaceuticals
Ltd. by analyzing their profit.

1.4(b) Secondary Objectives
 To identify different types of independent variables that help to analyze the profit
of Beximco Pharmaceuticals Limited.
 To identify and analyze Beximco Pharma policy measures that influences the
flow of profit.
 To identify different factors that effect profit earnings of Beximco
Pharmaceuticals Limited.
 To analyze the present value of Beximco Pharmaceuticals Limited.

1.5 Methodology of the Report

1.5.1 Selection of the topic:

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Internship topic selected very important for a student. I am a student of Daffodil
International University and internship program completed in Beximco Pharma Limited.
The area chosen designed for the learning was selected by me and permitted by Mr.
Mahbub Parvez, Assistant Professor, Department of Business Administration, Faculty of
Business & Economics, Daffodil International University.

1.5.2 Research Design:

The report is “Exploratory” in nature. To perform the report data sources were identified
and collected, this was classified, analyzed, interpreted and presented in a systematic
manner and key points are found out.

1.5.3 Data Sources:
Two types of data are used to prepare the report, which are primary and secondary data.
1.5.3(a) Primary Sources:

• Employees of the BPL
• Clients of the BPL

1.5.3(b) Secondary Sources:

• BPL Annual Report 1995-2009
• Published documents
• Office circulars
• Website of Beximco pharmaceuticals Limited
• Bangladesh Association of Pharmaceutical Industries
• Relevant books, Newspapers etc.

1.5.4 Target Populations:
All employees, management level, and customer of BPL, Operational headquarter.

1.5.5 Sample Size:
• 15 employees

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• 7 Clients

1.5.6 Sampling Technique:
Convenience sampling technique has been used.

1.5.7 Data Collection Method:
Data were collected through direct and face to face interview.

1.5.8 Data Analysis Process:

For analyzing the profitability of BPL, impact of this activity on its performance, and
impact of different factors on profit earnings of BPL. 15 years data have been used for
the analysis. The tools that are used for analysis are.

1.5.8(i) Time Series Analysis

In this report time series analysis has conducted by using 15 years data of profit earnings
in Beximco Pharmaceuticals Limited. Least square method has used for this purpose.

1.5.8(ii) Simple Regression Analysis

Simple regression analysis is conducted to find out the correlation between one
dependent variable and five independent variables. Inward profit of BPL has considered
as independent variable here. From the outputs coefficient of correlation and coefficient
of determination has analyzed. Besides the ANOVA test has also been demonstrated.
This measures the significance and influence of both the inward profit of BPL.

1.5.8(iii) Multiple Regression Analysis

In this report Net Income in Beximco Pharmaceuticals Ltd is considered as dependent
variable. Numbers of Employers of BPL, Amount of Assets of BPL, Amount of Interest
of BPL, Amount of Expenses of BPL, Amount of Sales of BPL as considered

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independent variable. After that the correlation analysis has done to understand the
influence of these variables on profit earnings of BPL.

1.5.8(iv) Valuation Analysis

The assumptions of valuation analysis are based on the previous performance of BPL. At
first every year’s growth rate is calculated and then the mean of those growth rates is
considered to be the growth rate of projected years. Here the growth rates are assumed to
be constant.

1.5.8(v) Ratio Analysis

Ratio analysis is used to find out the profitability, liquidity, management efficiency, debt
position and many more factors of an organization. Here I am trying to find out those
factors and as well as giving recommendations according to the calculation. Also I am
trying to compare the variable among years (time series analysis).

1.5.8( vi) SPSS 12 Software

To identify the influence of number of employers, amount of assets, amount of interest,
amount of expenses, amount of sales in BPL, and a multiple regression analysis has
conducted by using the latest software SPSS 12.

1.6 Limitations of the Report

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A wholehearted effort was applied to conduct the study work and to bring a reliable and
fruitful result from which proper strategy can be adopted to this report. Some limitations
were faced while preparing this report. Some of those limitations are highlighted below:

• Unable to provide specific cost information of production part as BPL is not
concerned or willing to reveal the accurate cost and profit.
• To protect the organizational confidentiality some parts of the report are not in
depth.
• The report covers only profitability analysis. It does not cover management,
marketing, HRM or other business related issues.
• BPL staff is very busy with their activities; as a result they were unable to provide
much information about the report.
• Ratio analysis is done only based on Annual Report. Direct income statement,
cash flow, balance sheet are not taken into consideration as they are treated as
confidential.

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2. Background of Pharmaceutical Industry of Bangladesh

The scenario of pharmaceutical industry can be described in two parts- before the Drug
Policy Ordinance in 1982 and after the Drug Policy Ordinance in 1982.
Before 1982, there were 177 licensed pharmaceutical manufacturers in the country but
local production used to be dominated by the big multinational drug companies (MNCs)
which manufactured the lion’s share about 75% of the products, 25 medium sized
national companies manufactured another 15% of the products and 133 small local
companies (LCs) produced the remaining 10%. These multinational companies were
fully armed with the technical know-how for producing sophisticated essential drugs, but
they were only engaged, to a large extent, in formulation of simple drugs including many
unnecessary products. At that time, the unregulated drug market of the country had very
favorable conditions for pharmaceuticals to over price their products. That time local
firms could not compete effectively with these multinational market tycoons.
A great change was noticeable in the pharmaceutical industry after the Drug Policy
Ordinance of 1982. The total national production of pharmaceuticals has risen by a
substantial 63%; the value of essential drug made in national factories has gone up by
140% over the four years following the drug policy promulgation. At present, more then
95% of the total demand of medicinal products is met by local production. Local
companies (LCs) increased their share from 25% to 70% on total annual production
between 1982 and 2000.
The pharmaceutical industry has enjoyed great prosperity as nineteen-ninety-eight
marked another stellar year for the industry. Profits stayed in a sharp up-trend as 28 of the
37 stocks in the industry beat the Standard & Poor's 500 Index, which rose by 26.7%. The
pharmaceutical industry includes establishments primarily engaged in manufacturing,
fabricating, and processing medicinal substances into finished pharmaceuticals for human
and veterinary use. Ethical brand name drugs, generic products, and nonprescription or
over-the-counter medication constitute the pharmaceutical industry sub-sector.

In 2000, there were 210 licensed allopathic drug-manufacturing units in the country and
now there are 265 registered companies are operating. Few of the multinational
companies closed their business in Bangladesh, as it was difficult to make huge profit

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after the Drug Policy. Among the multinational companies ACI and Pfizer are now
running its business in national ownership.
After ready made garments (RMG), pharmaceutical sector has become one of the largest
sectors in earning foreign currency. Meeting more than 95 percent demand of the local
market, Bangladeshi drugs gained a significant position in the world’s drug market.
Locally manufactured drugs are now being exported to more than 52 countries across the
globe like- Vietnam, Singapore, Myanmar,
Bhutan, Nepal, Sri Lanka, Pakistan, Yemen,
Oman, Thailand, and some countries of Central
Asia and Africa.

1980 2003
Local 20% 95%
Imported 80% 5%

Table-1: National Demand met by Local production & Imported drugs
Source: Aminur Rahman, Managing Director, IMS Health Bangladesh

2.1 Pharmaceutical Industry Analysis of Bangladesh

2.1(a) Why the need for Industry Analysis?

Many analysts suggest that resisting the business cycle is unsuccessful. For the simple
reason that most prices are governed by large financial institutions that buy and sell the
majority of the volume of stocks and these institutions generally give a very heavy
weighting to the performance or the expected performance of a specific industry. After
market risk, this is the most powerful factor in the performance of a stock.

2.1(b) Pharmaceutical Industry Analysis

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In Bangladesh Pharmaceutical sector is one of the most developed hi tech sector which is
contributing in the country's economy. After the promulgation of Drug Control
Ordinance - 1982, the development of this sector was accelerated. The professional
knowledge, thoughts and innovative ideas of the pharmacists working in this sector are
the key factors for this development. Due to recent development of this sector we are
exporting medicines to global market including European market. This sector is also
providing 95% of the total medicine requirement of the local market. Leading
Pharmaceutical Companies are expanding their business with the aim to expand export
market. Recently few new industries have been established with hi tech equipments and
professionals which will enhance the strength of this sector.

The pharmaceutical industry is highly complex. The technologies leading to drug
discovery and development are at the limits of human knowledge. The huge size of the
companies and the complexities of their processes and technologies presents many
organizational and management challenges. The development and management of the
distribution system is highly costly. Based on the Porter's five forces model, there are
convincing explanation why the pharmaceutical industry has big profitability.

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In analyzing an industry future prospect industry analysis is very important in which the
industry is competing because the profitability of various industries differs over time.

Profitability of an industry is influenced by the “five forces”. That is known as Porter 5
Forces like as:

Rivalry
among the
Exiting
firm

Bargaining
Threats of
power of new
Supplier Entrants

Porter’s 5
Forces

Bargainin Threat of
g power of Substitute
Buyers product

2.1(b)1. Rivalry among the exiting firm: Pharmaceutical industry has huge competition,

because in this sector very important human life. Every person one of the main basic

need to health care, in this situations overall world very vital is pharmaceutical sector. In

Bangladesh pharmaceutical industry place risky position, because in our country not rich

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investor. As this situation, our country can’t establish world class pharmaceutical

company.

• Highly competitive: Ready for action if any chances take in this competitive

open market. Any company go to market create any country and in this time rich

company capture to the market. In this situation local industry losses there market,

not only local but also international market. Example of this situation Glaxo

Smith Kline (GSK) capture to the world market, most of the country

pharmaceutical market capture to there medicine. They are delivered 1.4 billion

vaccine doses in 2009, of which nearly 1 billion were shipped for use in

developing countries.

• High fixed cost and high working capital: Pharmaceutical company establish

very expensive to fixed cost, because her mechanism high costly. In her

maintained cost also high, there are required highly qualified persons. And

mechanism maintained cost need huge working capital.

• Strong Pressure: It is information technology time, in this time small to big

every business sector run strong pressure and competition. Bangladeshi

pharmaceutical industry always runs pressure because India pharmaceutical

industry very strong, so they are capture 16 core people market ready.

• Globally open market: In this time world is create a global village market

opportunity to the information technology. So one company easily go to global

market and sell there product world wide. Though pharmaceutical industry have

some rules and regulation in global market. In this situation if any company sell

there product cheap rate and good quality, then this company easily capture

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market. As like Bangladeshi company Beximco Pharma sell there some medicine

UK, USA, South Africa, and Middle East country because there good quality.

• High switching cost: Pharmaceutical industry switching cost very high, so

because there fixed cost high. In this situation investor can’t interest

pharmaceutical industry. Bangladeshi investors are not so rich they can’t go to

invest this sector, because pharmaceutical company preliminary and switching

both cost very high.

• Low customer loyalty: Low customer loyalty in Pharmaceutical Company,

because some time Pharmaceutical company produce low quality medicine. As

like some time ago Bangladeshi Renata Company produces low quality medicine

and many children ill. In this situation Pharmaceutical Company lost loyalty in

our country general people.

2.1(b)2. Threats of new entrants: Strong Pressure to new entrants because

Pharmaceutical industry is much competitive in the market. There were many strong rival

existed in the market. That’s why it was much difficult to enter in the market for new

Pharmaceutical Company.

• Very low barriers to entry: Pharmaceutical industry very low barriers to new

entry, in this time new investor encourage investing in this sector. But new

investor done this work not trouble-free because much competitive in the market

in existing company. In this situation many country newly entry invest this sector

and it is one kind of threat in Bangladeshi Pharmaceutical Industry.

• Advent of product administration supportive for entry of Pharma MNCs:

Beginning of product management supportive for entry of Pharma MNCs, in this

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situation new investor encourage to investing. In that opportunity Bangladeshi

investor give confidence invest in this sector. In this position many country

recently entry invest this sector and it is one kind of warning in Bangladeshi

Pharmaceutical Industry.

• Economies of scale exist: In existing company use the economies of scale to take

the market position. Existing company produce the product extent level and they

are benefited to cost. Bangladeshi Pharmaceutical Industry histories not mature in

this position foreign Pharmaceutical Company uses this opportunity.

2.1(b)3. Threat of substitute product: Low Pressure in substitute because Bangladeshi
Pharmaceutical Industry has much preference like herbal medicine but Biotechnology is a
threat to Pharma products. In our Asian country India is very strong in Biotechnology, so
it is threat in our pharmaceutical industry.
• Biochemic is a threat to Pharma products: Bangladesh is a poor country, in this
country illiteracy people high they are believe to herbal medicine and Biochemic.
Biochemic is a threat to Pharmaceutical products in our country because village
people can’t believe pharmaceutical medicine.

2.1(c)4. Bargaining power of buyers: Low pressure because pharmaceutical industry is

very much responsible about their customer. They offer competitive price as like as

competitors offers their customer but maintaining quality.

• Brand identity exists and is in the hands of influencer (Doctors): If

Bangladeshi pharmaceutical industries have already brand identity exists and is in

the hands of influencer (Doctors) but people some time avoid Bangladeshi

company. Because some Bangladeshi company can’t maintain to there quality, in

this situation they need to more use influencer.

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• End consumers do not have bargaining power: Final consumers do not have

enough bargaining power in our country. Because they can’t take enough

substitute medicine to there sick. MNCs have some rules to medicine import and

export one country to another country, in this situation final consumer depended

to only local pharmaceutical medicine and there bargaining power very low.

2.1(b)5. Bargaining power of supplier: Low pressure they have much ability to

compete with other supplier in pharmaceutical industry. Bangladeshi pharmaceutical

industries have enough bargaining power to supplier, they are shift any time to there

necessary raw material supplier.

• Volume benefits occur: Pharmaceutical industries purchase there important raw
material large volume, in this situation they take volume benefit. If the supplier
bargaining to there products then they are shift supplier, sometimes it is difficult
because Bangladeshi pharmaceutical industries necessary raw material purchase
foreign country.
• Numerous suppliers- switching cost low: When the Bangladeshi pharmaceutical
company demand to high price then many suppliers switching cost low.
• Raw material cost constitute major portion of total expenses: We know
pharmaceutical industries raw material cost constitute major portion of total
expenses. In this situation pharmaceutical company try to there cost minimize
bargaining when purchase raw material.

Degree of actual and potential competition depends on first 3 forces and a rest 2 force

determines the relative bargaining power in input and output markets.

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2.2 MANAGEMENT ASPECT:

2.2.1 History Beximco Pharmaceuticals Limited

The company was incorporated in 1976 and commenced
operations in 1980 with the manufacturing and marketing
of products of Bayer AG, Germany and Upjohn Inc.,
USA under licensing arrangements. In 1983, the company
started manufacturing its own formulations and it launched export operation in 1992. In
2005 Beximco Infusions Ltd, the company that produces intravenous fluids was
amalgamated with the parent company. In the same year it completed the state-of-the-art
oral solid dosage plant in compliance with the US FDA and UK MHRA standards, which
has been approved by major global regulatory bodies. Today Beximco Pharma is the
largest exporter of pharmaceuticals in the country and the only company to win National
Export Trophy (Gold), the highest national accolade for export, for record three times.
The company is the largest producer of Metered Dose Inhalers (MDIs) in the country,
and the first to produce CFC free inhalers. BPL is also the first company to produce anti-
retroviral drugs (ARVs) locally. As a public limited company, its shares are actively
traded in Dhaka Stock Exchange and Chittagong Stock Exchange, and Beximco Pharma
has the unique distinction of being the only company in the country listed on AIM of
London Stock Exchange. 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.

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2.2.2 Company Profile at a Glance
Corporate Headquarters: 17 Dhanmondi R/A, Road No.-2
Dhaka-1205, Bangladesh
Operational Headquarters: 19 Dhanmondi R/A, Road No.-7
Dhaka-1205, Bangladesh
Factory: Auspara, Tongi , Gazipur

Year of Establishment: 1976

Commercial Production: 1980

Status: Public Limited Company

Business Line: Manufacturing and marketing of Pharmaceutical
Finished products and Active Pharmaceutical
Ingredients (APIs)
Overseas Offices And Associates: UK, USA, Pakistan, Myanmar, Singapore, Kenya,
Yemen, Nepal, Czech Republic, Vietnam, Cambodia
and Sri Lanka.
Export Outlets: Bhutan, Georgia, Germany, Hong Kong, Iran, Iraq,
Kenya, Malaysia, Myanmar, Nepal, Pakistan, Russia,
Singapore, Taiwan, Vietnam, Yemen, Czech
Republic, Mozambique, Philippines, Srilanka,
Thailand, Ukrain.
Authorized Capital in Taka: 9,100 million

Paid-up Capital in Taka: 1511.49 million

Turnover (net) in Taka of 2009: 4868.25 million

Number of Shareholders: 80,189 (as on Dec. 31, 2009)

Stock Exchange Listings: Dhaka, Chittagong

Number of Employees: 2,511
Source: Annual Report of BPL, 2009

2.2.3 Mission

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A mission statement broadly outlines the organization’s future direction and serves as a
guiding concept for what the organization is to do and to become.
“Each of our activities must benefit and add value to the common wealth of our society.
We firmly believe that in the final analysis we are accountable to each of the constituents
with whom we interact namely our employees, our customers, our business associates,
our fellow citizens and share holders.”

2.2.4 Vision

There activity must benefit and add value to the common wealth in our society. Socially
are committed ethical Company.
They are firmly believing that, in the final analysis they are accountable to each of the
constituents with whom they interact, namely: there employees, customer, business
associates, fellow citizens and shareholders

2.2.5 Management Hierarchy:

The Organizational hierarchy of the Beximco Pharmaceuticals Ltd. can be shown by the
following diagram:

Board of directors

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Managing Director (MD)

Deputy Managing Director
(DMD)

Executive Vice President
(EVP)

Senior Vice President (SVP)

Vice President (VP)

Senior Assistant Vice
President (SAVP)

Assistant Vice President
(AVP)

Senior Executive Officer
(SEO)

Executive Officer (EO)

Principal Officer (PO)

Senior Officer (SO)

Officer

Junior Officer (JO)

Chart 3: Organizational hierarch

2.2.6 Philosophy of Beximco Pharmaceuticals Ltd.

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“We firmly believe that in the final analysis we are accountable to each of the
constituents with whom we interact; namely, our customers, our employees, our
suppliers, our shareholders, and fellow citizens”.

2.2.7 Board and Management

2.2.7-a- Board of Director

Name Position
A S F Rahman Chairman
Salman F Rahman Vice Chairman
Nazmul Hassan MP Managing Director
Iqbal Ahamed Director
M A Qasem Director
O K Chowdhury Director
Dr.Farida Huq Director
Advocate Ahsanual Karim Director
Dr. Abdul Alim Khan Independent Director

2.2.7-b- Executive Committee

Name Position
O K Chowdhury Member of the board of Directors
Nazmul Hassan MP Managing Director
Rabbur Raza Chief Operating Officer
Ali Nawaz Chief Financial Officer
Afsar Uddin Ahmed Director, Commercial

2.2.7-c- Management Committee

Name Position
M Tahir Siddique Executive Director, Quality
Lutfur Rahman Director, Manufacturing
Zakaria S Chowdhury Director International Marketing
Rabbur Reza Chief Operating Officer
Nazmul HAssan MP Managing Director
O K Chowdhury Member of the board of Directors
Ali NAwaz Chief Financial Officer
Afsar Uddin Ahmed Director, Commercial
A R M Zahidur Rahman Executive Director, Production
Shamim Momtaz Executive Director, Manufacturing
Jamal Ahmed Chowdhury General Manager, Accounts & Finance

2.2.7-d- Company Secretary

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Md. Asad Ullah


2.2.8 Factories

Beximco Pharma manufacturing facilities are spread across a 20-acre (81,000 m2) site
located in Dhaka, Bangladesh. The facilities comprise of a number of purpose-built
plants, including a new Oral Solid Dosage (OSD) plant. The site includes manufacturing
facilities as well as a research laboratory and a number of warehouses. The plant and
machinery of the facilities were designed, produced and installed by partners from
Germany, Switzerland, Sweden, Italy and the United Kingdom, amongst others.

2.2.9 Departments of BPL and their Activities

BPL has highly qualified professional staffs for handling all the condition of the
company. Introduction of various divisions are as follows:

1. Central Product Management (CPM) Department
2. Purchase Department
3. Market Research & Statistical Cell (MRC) Department
4. Sales Department
5. Human Resource Department
6. Finance and Accounts Department
7. Sales & Training Department
8. Management Information System (MIS) Department
9. Multimedia Department
10. Medical Services Department (MSD)
11. International Marketing Department
12. BPL Factory (Works Department)

1. Central Product Management Department (CPMD):

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CPM stands for Central Product Management that takes care of the total marketing of the
products. Central Product Management (CPM) is the core department of BPL. This
department mainly focuses and gives emphasis on the strategies. Major functions of the
CPM Department are:

 Preparing product literature and promotional materials for doctor.
 Determining the packaging pattern, color, size.
 Setting target sales
 Conducting meeting with field workers
 Issuing budget in consulting with different department
 Setting price for each product

2. Purchase Departments:

This department interacts directly with the planning, production, and finance department.
Finance department develops a cash flow budget at the beginning of the year. The sales
department fixes the sales target. According to the demand, Purchase department starts
their operations which are mentioned below in the sequential basis:

 Being ordered from the planning department, the department establishes and
calculates the cost of raw materials necessary.
 It asks for cash to the finance department.
 Decide which product to purchase from the local market and which to import.
 It arranges for bidding to the suppliers which involves close interaction with the
planning department.

3. Market Research & Statistical Cell (MRC) Department:

Market Research & Statistical Cell (MRC) Department plays a vital role in looking for
market share of the company in the industry. The whole country is divided into 829
territories under 20 regions. The department discloses the trend of increasing or

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decreasing market share by compiling the received data from the market. Responsibilities
of the Market Research & Statistical Cell (MRC) Department:

 Forecasting future market share in response to the data from the market research
representative.
 Recruitment of research persons in consultation with the Human Resource
Department.
 Strategy developing for effective market survey.
 Arrange training for field force.
 Performance evaluation of the market researchers.

4. Sales Departments:

Sales department is forecasting the sales. The major responsibilities of this department
are, preparing the strategies for expense budget through CPM. The main goal of sales
department is sales achievement. The department divided the whole country into 20
regions and assigned 20 Regional Sales Executives to control sales activities. Main
activities of Sales Department are:

 Forecasting future sales in consultation with the CPM department.
 Recruitment of sales force in consultation with the HR department.
 Arrange training for field force.
 Handling critical customers.
 Ensuring product availability.
 Performance evaluation of the sales force.

5. Human Resource Departments (HRD):

The objectives of Human Resource Department (HRD) are-
 Recruitment policy and procedure

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 Placement of employees
 Career planning
 Hiring and firing
 Job description preparation
 Conducting appraisal at the end of each year
 Maintaining and developing employees personal files
 Safety and security
 Welfare activities for employees

6. Finance and Accounts Department:

There are three wings under the Finance & Accounts Department. These ares-
• Treasury Accounts
• Financial Accounting
• Management Accounting

i) Core functions of Treasury Wings:
• Fund management
• Maintaining banking transactions loan and leases
• Party payments
• Employee payroll

ii) Core functions of Financial Accounting Wings:
• Day to day transaction recording
• Monthly Reports
• Auditing
• Handling Tax related matters
• Maintaining legal compliance

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• Maintaining SEC rules
• Preparing Financial Reports

iii) Core functions of Management Accounting Wings:
• Budgeting
• Costing
• Internal Reporting

7. Sales & Training Department:

The Department has the responsibility of providing training to the firm’s employees and
management. There one Manager and two Officers in this department. The department
basically offers four types of training programs:

 Induction Training Programs
 Supervisory Management Programs
 Advanced Supervisory Management
 Refresher Training Programs for everyone in sales

8. Management Information System (MIS) Departments:

The MIS Department takes care of total automation of BPL. It supports the hardware and
software network of the company and the factory. This department provides services
through SNA Server, WIN NT Server, and SQL Server. BPL operational headquarters is
linked to the corporate headquarters through fiber optic cable. The department also
established a Wide Area Network (WAN) with the 12 depots around the country. MIS
department develops the access Control & attendance monitoring System internally.

9. Multimedia Departments:

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BPL is the only pharmaceutical company that has a Multimedia Department. This is
helping in the product promotion. It designs medical videos for the doctors. Major
functions of the Multimedia Department are:

 Web page designing.
 Developing multimedia presentation for presentation programs.
 Making videos of conferences, meeting etc.
 Designing the cover page of annual report.
 Making video for products.
 Making video for company.
 Keeping the records of annual meeting and other meeting.
 Copying literature, promotional tools, and medical in CDs to gift it to doctors.

10. Medical Services Department (MSD):

This department is a unique department in this industry as BPL established this first ever
in order to create easy relationship through using the professional linkage with the
doctors, the ultimate customer of the pharmaceutical companies. It arranges seminars on
different issues such diseases and their cures in different parts of the country. It publishes
a special ‘Medical Newsletter’ quarterly and sends the current issues to the enlisted
doctors at free of cost.

11. International Marketing Departments:

In 1991, the company took the challenge to venture into the international arena. At first it
started exporting only formulation products. Then in 1996 this company first started
exporting their finished goods. This department is concerned with the international
promotion and marketing of BPL finished products and basic chemicals.

12. BPL Factories (Works Department):

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Beximco Factory Complex (a manufacturing plant in Auspara, Tongi, Dhaka) has 7 acres
of land and a total covered space of 160,000 sq. ft. Total manpower in the factory
complex is 450. It has three different types of plants:

• Raw materials Plants: Produce raw materials of Plants.
• Basic Chemical Plants: Produces raw materials of Antibiotics.
• Beximco Infusions Ltd.: Produces Intravenous (IV) Fluids.

2.3 Key Milestones

1976 Registration of the company.
1980 Started manufacturing and marketing of license products of buyer
AG of Germany and Upjohn Inc. of USA.
1983 Launching of BPL’s own products
1985 Listing in the Dhaka Stock Exchange (DSE) as a Public
Limited Company (PLC).
1990 Commissioning of Basic Chemical Unit.
1992 Started export operation with Active Pharmaceutical Ingredients
(APIs).
1993 First export market operation with finished pharmaceutical
products.
1994-1995 Achievement of National Export Trophy (Gold) as the first
pharmaceutical company of the country.
Introduction of 20 new products.
1996 Introduction of sustained release dosage form in the market.
1997 Commissioning of Metered Dose Inhaler (MDI) plant and
introduction of suppository dosage form.
1998 Introduction of Metered Dose Nasal Spray.
1999 UNICEF approval of BPL as an enlisted supplier.
2000 Contract manufacturing agreement of Metered Dose Inhaler (MDI)
with Glaxo SmithKline.
2001 Introduction of small volume parenteral products (Injectables).

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Establishment of Analgesic-Anti inflammatory plan.
2002 The first Bangladeshi company to supply pharmaceuticals to
Raffles Hospital- the most prestigious hospital of Singapore.
2003 Introduced Anti-HIV drugs for the first time in Bangladesh.
Diversification into Anti-Cancer therapeutic class.
2005 Only company in Bangladesh to get listed on Alternative
Investment Market (AIM) of London Stock Exchange through
issuance of GDRs.
Construction of state-of-the-art USFDA standard oral solid dosage
facility was completed.

2006 Launched CFC free HFA inhalers for the first time in Bangladesh
2007 New Oral Solid Dosage (OSD) facility was commissioned
according to US FDA standards.
2008 First and only Bangladeshi company receives GMP Clearance from
Therapeutic Goods Administration (TGA) Australia, and Gulf
Central Committee for Drug Registration, for GCC member state.
Technology transfer arrangement to manufacture Roche’s ARV
drug Saquinavir.

2009 Only Bangladeshi company to receive GMP Certification from
ANVISA, Brazil
ION unit was launched for producing injectables, ophtalmics and
nebulizer solutions.


2.4 Services………
2.4(a) Corporate Social Responsibility

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The guiding philosophy of there CSR activities is doing the best in what they do and at
the same time helping others in doing what they do. With this in mind, there CSR
strategy is that they should manufacture highest quality medicines, there modus operandi
should be compassionate for all the people and all there activities should be such that
these are benevolent for our society and benign to our environment.
2.4(b) Protracting our Environment

Beximco Pharma does not view its success and achievements in financial terms only, but
also in terms of its deep relationship with the society and environment. It is one of there
core values that they should take maximum care for environment and should reduce
environmental effects of manufacturing activities to a practical minimum.
2.4(c) Scientific Seminar Series

The Medical Department arranges seminars and workshops covering a wide range of
medical topics. These events are led by team of medical service experts, and are attended
by members of the medical profession. It also organizes a good number of National
Symposia on specialized medical topics, which are attended by country's renowned
physicians and scientists.

2.4(d) Special Publications

The Dept. has published a number of handbooks on specialized medical areas and drug
products namely Infectious Diseases Handbook, ECG handbook, Drugs in Pregnancy,
Therapeutic Index etc. All these publications are distributed free among the academic
physicians.
2.4(e) Continuing Medical Education

Beximco jointly organizes Training programs in the form of symposia, workshops or 2-7
day courses with national academic institutions. The main objectives of these programs
are to retrain general practitioners in major medical problems, to update their knowledge,
and bring the highlights of new techniques, therapies and procedures to their doorsteps.
2.4(f) Responding to Doctors' Queries

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Beximco takes great care in answering queries from doctors. The Medical Department's
team of highly dedicated professionals is well trained to attend to these queries. The
company encourages doctors to send their queries in postage paid envelopes attached to
every copy of the Newsletter, or on a specific query form distributed in each clinical
meeting. Currently, most of the doctors' queries are met through its own Internet
facilities.
2.4(g) Medical Illustration and Audiovisual Aids

To assist physicians in sharing the results of their academic research and experiences
with the larger medical community, Beximco extends its services, to a great extent, in
preparation of presentation packages including slides, transparencies and texts.
2.4(h) Medical Research Update

Abstracts of recent publications in different fields of medical science are printed and
distributed quarterly to doctors according to their specializations.
2.4(i) Collaborative Research

From time to time research proposals are solicited from scientists or clinicians on basic
science, pre-clinical, and clinical topics. A few years back, two research projects, one on
in-vitro effects and another on in-vivo effects, of Ciprofloxacin were conducted at Dhaka
Shishu Hospital and Institute of Post Graduate Medicine and Research respectively. The
results of both studies were published in reputed international journals. Beximco also
sponsors a number of other research projects at various institutions of the country.
Studies recently done in collaboration with BPL Medical Dept. include:

• "Screen out cervical cancer by Pap smear"
• "Isolation of Staph. aureus from wound of diabetic patient"
• "H. pylori project"
• "Early diagnosis of tuberculosis by PCR"
• "Association of widal positivity in viral hepatitis patients"

2.5 Future Plans

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The Medical Department plans to strengthen its activities further through widening the
range of customers and services. The future plans include:
• Setting up electronic information services in regional centers for better and faster
information exchange with the headquarters and the rest of the world.
• Providing more specialized services to doctors of various disciplines.
• Publication of scientific research journal.

2.6 New Product Update

• Beximco Pharma introduces Nasomet Nasal Spray
• Beximco Pharma launches three new Respirator
solutions
• Beximco Pharma launches two new HFA Inhalers
• Beximco Pharma introduces four new Cardiovascular Drugs for the “First Time”
in Bangladesh.
Beximco Pharma introduces three new HFA Inhalers “First Time” in Bangladesh.

2.7 Blockbuster Products of BPL

Napa Highest selling drug in Bangladesh Pharmaceutical
Market in terms of unit.
Neoceptin-R Highest selling drug in Bangladesh Pharmaceutical
Market in terms of value.
Bextrum / Bextrum Gold Emerged as the most admired & highest selling
nutritional supplement in Bangladesh

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Pharmaceutical Market in just one year.
Amdocal Highest selling cardiovascular drug in Bangladesh
Pharmaceutical Market in terms of value.
Tofen Highest selling oral anti-asthma drug in Bangladesh
Pharmaceutical Market in terms of value.
Azmasol Highest selling Metered Dose Inhaler brand in
Bangladesh Pharmaceutical Market in terms of
value.


2.8 Position of Beximco Pharmaceutical Ltd. in overall Bangladeshi
Pharmaceutical Industry

Ten companies are occupying more than 60 % of market share,
where there are more than 250 (registered and unregistered)
companies in Bangladesh Pharmaceutical Market. Out of these
top ten pharmaceutical companies in Bangladesh, eight are
local companies, while only two are multinational companies
(MNC’s). The top two domestic manufacturers, namely Square
and Beximco Pharmaceuticals are having a combined market
share of about 25% of the total pharmaceutical market of the
country.

Pharmaceutical Companies Market Share in Terms of Sales
Square Pharmaceutical Ltd. 14.5%
Beximco Pharmaceuticals Ltd 10.0%
Acme 8.0%
Aventis 6.0%
Incepta 5.0%
SK+F 4.5%
Glaxo SmithKline Bangladesh 4.3%
Opsonin Chemical Industries Ltd. 4.0%
Drug International 3.8%

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ACI 3.7%
Others 36.2%

Table-2: Top Ten Pharmaceutical Companies in Bangladesh

Market Share in Terms of Sales

Square Pharmaceutical
Ltd.
Beximco Pharmaceuticals
Ltd
Acme
14.50%
Aventis

36.20% Incepta
10.00%

SK+F

8.00% Glaxo SmithKline
Bangladesh
6.00% Opsonin Chemical
3.70%
Industries Ltd.
3.80% 5.00%
Drug International
4.00% 4.50%
4.30% ACI

Others

Figure-3: Shares of Top Ten Pharmaceutical Companies
Source: Md. Nazmul Hossain, Asst. Product Manager, CPM Department, BPL

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2.9 Beximco Pharmas Differential Edge

• World class manufacturing facilities
• Highest GMP standards
• Outstanding product quality
• Sophisticated formulation technology
• Diversified dosage forms & products
• Significant investment in R&D
• Excellent customer services
• Responsible care for the environment
• Commitment to the people & the society

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3. Profitability Analysis of Beximco Pharmaceuticals Limited

3.1 Multiple Regression Analysis:

Multiple Regression Analysis helps in the Net
Income of Beximco Pharmaceuticals Ltd. and
Internal Factors effect. 15 years financial data are
used for this purpose to identify the influence of
number of employers, amount of assets, amount
of interest, amount of expenses, amount of sales
in Beximco Pharmaceuticals Ltd., and a multiple
regression analysis has conducted by using SPSS
12 software.

Here,

Dependent variable (Y) = Net Income in Beximco Pharmaceuticals Ltd.
Independent variable (X 1
) = Numbers of Employers of Beximco Pharmaceuticals
Ltd.
) = Amount of Assets of Beximco Pharmaceuticals Ltd.
) = Amount of Interest of Beximco Pharmaceuticals Ltd.
) = Amount of Expenses of Beximco Pharmaceuticals Ltd.
) = Amount of Sales of Beximco Pharmaceuticals Ltd.

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3.1(a) Multiple Regression Equation

The equation is generally, Y = a + bx.
Where: a = constant,
b = slope.
Y = 3094003 – 1.567X 1
– 1.035X 2
+ .188X 3
– .824X 4
+ 2.339X 5

This equation indicates if Beximco Pharmaceuticals Ltd’s number of employee increases
for 1 unit, Net Income of Beximco Pharmaceuticals Ltd. will decrease by Tk. 1.567. So,
here a negative relationship exits between Net Income in Beximco Pharmaceuticals Ltd.
and Numbers of Employers of Beximco Pharmaceuticals Ltd. The equation also indicates
that if amount of assets of Beximco Pharmaceuticals Ltd. increases for 1 unit the Net
Income in Beximco Pharmaceuticals Ltd. will decrease by Tk. 1.035. If the amount of
interest of Beximco Pharmaceuticals Ltd. increases for 1 unit the Net Income in Beximco
Pharmaceuticals Ltd. will increases Tk. 0.188. If the amount of expenses of Beximco
Pharmaceutical Ltd. increases for 1 unit the Net Income in Beximco Pharmaceuticals Ltd.
will decrease Tk. 0.824; and if amount of sales of Beximco Pharmaceuticals Ltd.
increases for 1 unit the Net Income in Beximco Pharmaceuticals Ltd. will increase by Tk.
2.339.

3.1 (b) R = Co-efficient of multiple correlations

Here,
R = .947
We know that,
0 – Absence of relationship
.01 - .29 – Very low degree of relationship
.30 - .49 – Low degree of relationship
.50 - .69 – Moderate degree of relationship
.70 - .89 – High degree of relationship
.90 - .99 – Very high degree of relationship

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1 – Perfect relationship.

It indicates that there exists a very high degree of positive relationship among number of
employers, amount of assets, amount of interest, amount of expenses, and amount of
sales and net income by Beximco Pharmaceuticals Ltd.
3.1 (c) R 2
= Co-efficient of multiple determinations

Here,
R 2
= .896

R 2
indicates that number of employers, amount of assets, amount of interest, amount of
expenses, and amount of sales explain 89.6% of the variation in the net income by
Beximco Pharmaceuticals Ltd. which is very influential as it is higher than 50%.

3.1 (d) ANOVA

The ANOVA table indicates that the relationship among number of employers, amount of
assets, amount of interest, amount of expenses, and amount of sales and net income by
Beximco Pharmaceuticals Ltd. is statistically significant as the test is significant at 0.000
level which less than 0.05.

3.1 (e) Beta Co-efficient

The beta co-efficients of number of employers, amount of assets, and amount of interest,
amount of expenses, and amount of sales reflect that adoption of amount of sales is the
most important variable which has higher influence on amount of net income by Beximco
Pharmaceuticals Ltd.

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3.2 Financial Performance Analysis of Beximco Pharmaceuticals
Limited

3.2.1 Ratios Analysis
3.2.1(a) Short Term Liquidity Ratios

Current Ratio 2006 2007 2008 2009

Current assets 3357393266 2923775458 2861891654 6916737893
Current liability 2527420798 1627972936 2602032267 2321451642

1.33:1 1.80:1 1.10:1 2.90:1

The current ratio measures the company’s ability to pay off its current liability. Here we
can see that current ratio was highest in 2009 with compare in preceding years. But it also
denotes that company has huge idle money, so it is not good sign for the Beximco
Pharmaceuticals Ltd. So in a concluding note I would like to say company should utilize
there idle money in a profitable manner.

Acid Test Ratio 2006 2007 2008 2009

(Total Current Assets – (3357393266 – (2923775458 – (2861891654 – (6916737893 –
Inventory) 1754440288 ) 1652480291) 1505288093) 1722953284)
Average Current 2527420798 1627972936 2602032267 2321451642
Liability

0.63:1 0.78:1 0.52:1 2.24:1

Acid-test ratio is the most conservative ratio in calculating liquidity position. Here we can see
that acid-test was quite stable in first three years, but it was increased dramatically in 2009.

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The company’s current liquidity position is more then satisfactory. Again I say that
companies should decrease their idle money.

Average 2006 2007 2008 2009
Collection Period
(A/R x 360 days) (430240095 x 360) (499680792 x 360) (503916401 x 360) (430240095 x 360)
3702317159 3597024812 4010167059 4868254915
Total Credit Sales

41.83 days 50.01 days 45.24 days 51.33 days

This ratio helps to find out average collection period of accounts receivables. The lower the
collection periods the higher the management efficiency measure collect the account
receivables. We see that average collection period was better in 2006. But in 2009 it was
increased due to increase of sales volume.

A/R Turnover 2006 2007 2008 2009

360 days 360 days 360 days 360 days 360 days
Average Collection 42 days 50 days 45 days 51 days
Period

8.57 times 7.2 times 8 times 7.06 times

Account receivable turnover is the relationship between the amount of an asset and some
measure of its use. Accounts receivables turnover is measure the number of times per year
that the average amount of receivables is collected and transfers the cash amount. If the
organization account receivable turnover increase then the average collection period
decrease and vice-versa. Here we see that in 2006 account receivable turnover highest and
average collection period less. Here average collection period was more or less same so
account receivable turnover was stable.

Inventory 2006 2007 2008 2009
Turnover
Cost of Goods Sold 1971231333 1967509975 2002871181 2566206626

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Average Inventory (3438162347)/2 (3406920579)/2 (3157768384)/2 (3228241377)/2

1.15 times 1.16 times 1.27 times 1.59 times

Inventory turnover ratio measures how fast the inventory become cash or accounts
receivable. If the turnover number is more then the company’s position is good and vice
versa. In 2006 it is 1.15 times and in 2007 1.16 times in 2008 it is 1.27 times in 2009 it is
1.59. Here we see the turn over is increasing over the time. It shows a positive impact on
their management efficiency but the speed is very slow .It should be more fast.

Average Payment 2006 2007 2008 2009
Period
(A/P x 360 days) (365255938 x 360) (271814118 x 360) (263176822 x 360) (409898122 x 360)
Total Credit 1521651955 1459653540 1626964288 2402117132
Purchase

86.41 days 67.04 days 60.14 days 61.43 days
Average payment period tell about how many time a company takes to pay its accounts
payable. If a company quickly pays the accounts payable then it means they can’t use their
capital properly on the other hand if it take too much time to pay its accounts payable then it
will hamper their reputation toward its debtors. It wills create problem for further loan. Here
we have seen their average payment period is decreasing over the year. In 2009 the period
slightly increases then the previous year. The over all position is good.

3.2.1(b)Capital Structure and Long-term Solvency Ratios

Total Debt to 2006 2007 2008 2009
Total Capital
(Total Liabilities (3962592062 x 100) (3702479293 x 100) (4387463296 x 100) (9006006808 x 100)
x100) (7949920425 + (8250939647 + (10450202145 + (10885706614 +
(Equity Capital + 3962592062) 3702479293) 4387463296) 9006006808)
Total Liability)

33.26% 30.97% 29.57% 45.27%

Total debt to total capital ratio measures the total capital against how much liabilities
(suppliers, lenders, creditors and obligors) have committed to the company versus what the

RONI BHOWMIK


shareholders have committed. To a lower the percentage, total debt to total capital ratio
means that a company is using less leverage and has a stronger equity position. Beximco
Pharmaceutical Ltd. in 2009 the more the company is burdened by liability. Here we see that
total debt to total capital ratio were quite stable exception in 2009.

Long-term Debt to 2006 2007 2008 2009
Equity Capital
LongtermDebt 1159409947 1776449778 1446600500 1924933065
X 100 X 100 X 100 X 100 X 100
EquityCapital 7949920425 8250939647 10450202145 10885706614

14.58% 21.53% 13.84% 17.68%
Long-term debt to equity capital ratio helps to keep the measure relationship to long-term
debt and equity capital. If the company this ratio result 1:1then says, that 1 TK. equity capital
against 1 TK. long-term debt. In 2007 Beximco Pharmaceuticals Ltd. has per taka equity
capital against 0.2153 taka long-term, this is not good sign, but in 2006, 2008, and 2009
good.

Times Interest Earned 2006 2007 2008 2009

EBIT 802724636 674403942 999481358 1200268790
253318784 254742392 249654298 289427992
Interest


Creditors, especially long-term creditors, want to know whether a borrower can meet its
required interest payments when these payments come due. Times interest earned ratio is an
indication of such ability, if the lower the ratio, the more the company is burdened by debt
expense. In lieu of the market, Beximco Pharmaceuticals Ltd has earned enough income to
pay of the interests of the creditors. But in 2007 the company did not have enough income.
Another side in 2009 Beximco Pharmaceuticals Ltd. per taka interest pay for interest and
income before interest stable their fund 4.15 TK. For the investor and creditor this means
the company has little chance of defaulting on their investments and borrowings.

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3.2.1(c)Return on Investment Ratios

Return on Total 2006 2007 2008 2009
Assets
EBIT 802724636 674403942 999481358 1200268790
X 100 X 100 X 100 X 100 X 100
TotalAssets 11912512487 11953418940 14819665441 19891933422

6.74% 5.64% 6.74% 6.03%

Return on total assets indicates how profitable a company is relative to its total assets. It also
indicates the management efficiency to utilize total assets to make profit. Return on total
assets highest in 2009, but Beximco Pharmaceuticals Ltd. should utilize their fixed assets
very efficiently.
Return on Equity 2006 2007 2008 2009

NetIncomeforStockholder 470658563 353067878 545341273 624740307
X 100 X 100 X 100 X 100 X 100
EquityCapital 7949920425 8250939647 10450202145 10885706614

5.92% 4.28% 5.22% 5.74%

Return on equity is the measurement of shareholders wealth maximization. It indicates how
much shareholders earned from their investment. The higher the ratio indicates higher the
shareholders wealth maximization. Return on equity was highest in 2006 and then it has a
decreasing trend in 2007 and 2008. In 2009 Beximco Pharmaceuticals Ltd. is back in right
track with 5.74%.

3.2.1(d) Profitability (Operating Performance) Ratios

Gross Margin Ratio 2006 2007 2008 2009

Gross Pr ofit ( M arg in ) 1731085826 1629514837 2007295878 2302048289
X 100 X 100 X 100 X 100 X 100
Sales 3702317159 3597024812 4010167059 4868254915

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46.76% 45.30% 50.05% 47.29%

Gross margin ratio is used to analyze how efficiently a company is using its materials, labor
and manufacturing related fixed assets to generate profits. A higher gross margin percentage
is a favorable profit indicator and vice-versa. This ratio helps organization to fix their
product price. If the ratio minimum percentage then indicates the product market price
lower or product production cost high. Here we see that gross margin ratio was quite stable
and it is good sign for Beximco Pharmaceuticals Ltd.

Operating Profit to 2006 2007 2008 2009
Sales
EBIT 802724636 674403942 999481358 1200268790
X 100 X 100 X 100 X 100 X 100
Sales 3702317159 3597024812 4010167059 4868254915

21.68% 18.75% 24.92% 24.65%
Operating profit to sales ratio helps to find out per 100 Tk. sales to how much taka
operating profit. By subtracting selling, general and administrative, or operating expenses
from a company’s gross profit number, we get operating profit. This ratio measure efficiency
in management has much more control over operating expenses. If the high percentage then
indicates the administrative and selling expenses lower and vice-versa. Here we see that
Beximco Pharmaceuticals Ltd. operating profit to sales ratio were quite stable exception in
2007.

Net Income to 2006 2007 2008 2009
Sales
NetIncome 470658563 353067878 545341273 624740307
X 100 X 100 X 100 X 100 X 100
Sales 3702317159 3597024812 4010167059 4868254915

12.71% 9.82% 13.60% 12.83%

Net income to sales ratio is very important in operating performance measurement. This
ratio is helpful in identifying the proportion of sales unit that remains after the deduction of
all expenses. This ratio indicates the net amount of profit on each sales taka. The amount of
net income includes all types of non operating items that may occur in a particular period.
The ratio dropped in 2007, then increase in 2008. But it again fell in 2009.

RONI BHOWMIK


3.2.1(e) Asset Utilization Ratios

Sales to Cash 2006 2007 2008 2009

Sales 3702317159 3597024812 4010167059 4868254915
Cash Balance 581098945 85698910 73647728 1058433574


Every organization needs minimum cash money to running their sales activity. Sales to cash
ratio helps to measure every taka uses and how much amount sales. If ratio is high then the
organization sales ratio to cash deposit minimum and vice-versa.
Here we can see, in 2006 and 2009 there were proper utilization of cash balance and it
generates good sales. But in 2007 to 2008 their cash balance has no usage due to political
and economical instability.

Sales to Account 2006 2007 2008 2009
Receivable
Sales 3702317159 3597024812 4010167059 4868254915
Account Receivable 430240095 499680792 503916401 694111730


Sales to account receivables develop the relationship between sales and account receivables.
It indicates the organizations credit policy. The higher the ratio, indicate hard the credit
policy and vice-versa. Sales to account receivable were quite stable.

Sales to Inventories 2006 2007 2008 2009

Sales 3702317159 3597024812 4010167059 4868254915
Inventories 1754440288 1652480291 1505288093 1722953284


RONI BHOWMIK


Beximco Pharmaceuticals Ltd. is a production related organization. So sales to inventories
ratio is very important in BPL. It indicates the sales against 1 unit of inventory. It helps to
keep the optimum level of inventory. The higher the ratio indicates the lower the inventory
and vice-versa. Here sales to inventories were more or less same and inventory level was
stable.
Sales to Fixed Assets 2006 2007 2008 2009

Sales 3702317159 3597024812 4010167059 4868254915
Fixed Assets 8513136381 8992942393 11921072697 12966587178


Every organization fixed assets is very important. Sales to fixed assets ratio indicate the sales
against per unit of assets. It helps to keep the optimum level of fixed assets. The higher the
ratio indicates the lower the fixed assets and vice-versa. Here sales to assets were more or
less same and assets level was stable.
Sales to Total Assets 2006 2007 2008 2009

Sales 3702317159 3597024812 4010167059 4868254915
Total Assets 11912512487 11953418940 14819665441 19891933422


Sales to total assets ratio indicate the sales against per unit of total assets. It helps to keep the
optimum level of total assets. The higher the ratio indicates the higher the assets utilization
and vice-versa. Here sales to total assets were more or less same and assets level was stable.

3.2.1(f) Market Measures Ratios

Price Earning Ratio 2006 2007 2008 2009

Market Price Per Share 53.7 58.9 167.7 155.8
Earning Per Share 4.11 3.08 3.61 4.13


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Price earning ratio is the most widely used indictors in investment decision. It indicates how
much an investor would be paying for every taka earnings. Price earning ratio was height in
2008 but it has decreasing in 2009. So it means market price of BPL was fall in 2009.

Earning Yield 2006 2007 2008 2009

EarningPerShare 4.11 3.08 3.61 4.13
X 100 X 100 X 100 X 100 X 100
Market Pr icePerShare 53.7 58.9 167.7 155.8

7.65% 5.23% 2.15% 2.65%
Earning yield measures the earning rate from actual invests of an investor. Earning yield
ratio was height is 2006 but in 2008 and 2009 was decrease because in proportion to market
price per share, earning is not favorable.

Dividend Payout Ratio 2006 2007 2008 2009

DividendPerShare 1.5 1.5 3 1 .5
X 100 X 100 X 100 X 100 X 100
EarningPerShare 4.11 3.08 3.61 36.32

36.50% 48.70% 83.10% 36.32%

Dividend payout ratio is an indicator of how well earnings support the dividend payment.
Here we see that in 2008 pay highest dividend but in 2009 is also decrease. So company is
not moving towards shareholders wealth maximization.

Earning Per Share 2006 2007 2008 2009

Net profit After Tax 470658563 353067878 545341273 624740307
No. of Outstanding 114507043 114507043 131149296 131149296
Shareholder
4.11 Tk 3.08 Tk 3.61 Tk 4.13 Tk

Shareholders are mostly concern about earning per share (EPS), because EPS is widely used
indicator in investment decision. In 2006 EPS was TK. 4.11 but in next two years it was not
that much good. Beximco Pharmaceutical Ltd. was back in right track in 2009 with EPS
TK.4.13.
3. 3 Performance Analysis of BPL with Graph

RONI BHOWMIK


In this graph presentation I have use Beximco Pharma 15 year’s financial data. Net profit,
total sales, operating expenses, interest, liability, and assets presented serially.

3.3.1. Net Profit

1995
700000000
1996
600000000 1997
1998
500000000 1999
2000
400000000 2001
2002
300000000
2003
200000000 2004
2005
100000000 2006
2007
0 2008
Year Net Profit
2009

Here we can see that net profit is increasing constantly till 2001. Then it decreased
dramatically in next 3 years due to decrease in sales. Furthermore expenses were higher than
preceding years. Management were very inefficient in those years, cost of capital was also
higher. Again it may happen due to investment in property, plant, and equipment (PP&E).

RONI BHOWMIK


The impact of investment in PP&E was seen in next couple of years. And it continued
thereafter and process goes on and on. In terms of profitability BPL set benchmark in 2009.
They are moving towards shareholders wealth maximization.

3.3.2. Sales

1995
5000000000
1996
4500000000 1997
4000000000 1998
3500000000 1999
3000000000 2000
2001
2500000000
2002
2000000000 2003
1500000000 2004
1000000000 2005
500000000 2006
2007
0
Year Sales 2008
2009

Profit is consequence of sales. The more the sales the more the profit, if everything is going
accordingly. Again sales are increasing constantly till 2002. In 2003 sales decreased and

RONI BHOWMIK

Profitability analysis of beximco pharmaceutical s limited

Profitability analysis of beximco pharmaceutical s limited

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Profitability analysis of beximco pharmaceutical s limited