1.1 INTRODUCTION Even though there are a number of pharmaceutical companies in Bangladesh, most people do not get the proper medication here. For some particular treatment people still need to depend on the medicine imported from outside of the country. But it is really great news that some companies like Square Pharmaceuticals, Beximco Pharmaceuticals, ACME Laboratories Ltd. etc. are doing their best to fulfill the general needs of the medicine. And in this respect the pharmaceutical companies can be given the status "success". But still there are some lacking of professionalism in the pharmaceutical business. Square Pharmaceuticals is one of the best pharmaceutical companies of Bangladesh. 1.2 Origin of the report In order to fulfill the partial requirement of the BBA program, my respected teacher Liza Khanam, lecturer Department of Business Administration, University of NUB assigned me to study Business level strategy of Square Pharmaceuticals Ltd. followed by a detail report. 1.3 Scope of this report The scope of the report was based on the annual reports & web site, input from interviews of executives of the Square. To analyze the situation in question, I worked on focusing on Square Pharmaceuticals Ltd. Analyzing their objectives, market strategies, Market situations, product 1
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1.1 INTRODUCTION
Even though there are a number of pharmaceutical companies in Bangladesh, most
people do not get the proper medication here. For some particular treatment people
still need to depend on the medicine imported from outside of the country. But it is
really great news that some companies like Square Pharmaceuticals, Beximco
Pharmaceuticals, ACME Laboratories Ltd. etc. are doing their best to fulfill the
general needs of the medicine. And in this respect the pharmaceutical companies can
be given the status "success". But still there are some lacking of professionalism in
the pharmaceutical business. Square Pharmaceuticals is one of the best
pharmaceutical companies of Bangladesh.
1.2 Origin of the report
In order to fulfill the partial requirement of the BBA program, my respected teacher
Liza Khanam, lecturer Department of Business Administration, University of NUB
assigned me to study Business level strategy of Square Pharmaceuticals Ltd. followed
by a detail report.
1.3 Scope of this report
The scope of the report was based on the annual reports & web site, input from
interviews of executives of the Square. To analyze the situation in question, I worked
on focusing on Square Pharmaceuticals Ltd. Analyzing their objectives, market
strategies, Market situations, product mixes, etc. The analysis was based on the
exposed and available information only.
In-depth data were not always available on-demand due to some unavailable reasons.
SWOT analysis of the company has been done. Some recommendations also have
been worked out to improve the current situations for the company.
1.4 Objective of the study
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The specific objectives aimed for this report is to conceptualize the current Business
level strategy of SPL and to identify and suggest scopes of improvement in current
strategy.
1.5 Methodology
Information used to prepare this report has been collected from both the primary and
secondary sources which together provided more comprehensive information.
1.6 Collection of the data
An open discussion method was followed to gather primary information by informally
interviewing the various executives of the company. Participants were purposefully
selected as they commonly engaged in marketing directly or indirectly. Observations
were also used to collect primary data while working in different desks.
The secondary data was accumulated from two sources- a. internal and b. external.
The former sources were annual reports, periodicals, articles and brochures published
by the company. But in the later case, journals, research papers and articles from
various online sources.
1.7 Limitations of the Study
This report suffered from several limitations:
• The most important of them was “time constraint”. Time was not adequate
complete the study more perfectly.
• Another important limitation was “inaccessibility in many section of the
organization”. I confronted difficulties in getting appointment from the desired
respondents as well as appropriate response from the selected respondents due to
being confidential for the company.
• This report also suffered from inadequate secondary information.
• This report’s factual accuracy may be compromised due to out-of-date
information.
• The findings may not be generalized to the SPL as a whole.
2.1 Background:
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SQUARE Pharmaceuticals Limited (SPL) is the largest pharmaceutical company in
Bangladesh and is leading the Pharmaceuticals sector from the very beginning. It has
been continuously in the 1st position among all national and multinational companies
since 1985. It was established in 1958 and converted into a public limited company in
1991. The sales turnover of SPL was more than Taka 7.5 Billion (US$ 107.91
million) with about 16.92% market share having a growth rate of about 23.17%.
Square Pharmaceuticals Limited is an organization with equal emphasis on
Leadership, Technology, Quality and Passion. Square Pharmaceuticals Ltd. is the
leading branded generic pharmaceutical manufacturer in Bangladesh producing
quality essential and other ethical drugs and medicines.
SQUARE today symbolizes a name - a state of mind. But its journey to the growth
and prosperity has been no bed of roses. From the inception in 1958, it has today
burgeoned into one of the top line conglomerates in Bangladesh. Square
Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position
in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to
becoming a high performance global player.
2.2 Management Apparatusmanagement Apparatus
BOARD OF DIRECTORS
Mr. Samson H. Chowdhury ChairmanMr. Samuel S. Chowdhury Vice ChairmanMr. Tapan Chowdhury Managing DirectorDr. Kazi Harunar Rashid DirectorMr. M. Sekander Ali Independent DirectorMs. Ratna Patra DirectorMr. Anjan Chowdhury DirectorMr. Kazi Iqbal Harun DirectorMr. K. M Saiful Islam Director
AUDIT COMMITTEE
Mr. M. Sekander Ali ChairmanMr. Samuel S. Chowdhury MemberMr. Kazi Iqbal Harun Member
MANAGEMENT COMMITTEE
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Mr. Tapan Chowdhury ChairmanMr. K M Saiful Islam MemberMr. Parvez Hashim MemberMr. M. Ashiqul Hoque Chawdhury MemberMr. Muhammadul Haque MemberMr. Md. Kabir Reza, FCMA Member
SENIOR CORPORATE OFFICIALS
Mr. Md. Kabir Reza, FCMA Chief Financial OfficerMr. Khandaker Habibuzzaman, MBA, ACS Company SecretaryMd. Majibur Rahman Bhuiyan, M.Com Head of Internal Audit
Square Biotech’s Ltd. National Housing Finance and Investment Ltd.Central Depository
Bangladesh Ltd.Square Hospitals Ltd.
Square Knit Fabrics Ltd.
Square Fashions Ltd.
Square Informatics’ Ltd.
BALANCE SHEET
As at 31 March 2009 31-03-09 31-03-08ASSETS:
Non-Current Assets: 9,407,730,001 8,291,290,984Property, Plant and Equipment-Carrying Value 4,899,679,832 4,088,432,171Capital Work-in-Progress --- 591,114,649Investment - Long Term (at Cost) 4,508,050,169 3,611,744,164
Current Assets: 3,843,512,855 4,411,836,436Inventories 2,098,755,231 2,026,736,322Trade Debtors 477,562,002 360,245,646Advances, Deposits and Prepayments 260,330,162 288,806,440Investment in Marketable Securities (at Cost) 20,250,000 20,250,000Short Term Loan 693,157,720 1,510,502,334Cash and Cash Equivalents 293,457,740 205,295,694TOTAL ASSETS (TK.) 13,251,242,856 12,703,127,420
Current Liabilities: 2,640,868,554 3,500,845,103Short Term Bank Loans 1,534,345,782 2,669,693,184Long Term Loans - Current Portion 295,590,601 297,002,646Trade Creditors 124,222,699 100,953,258Liabilities for Expenses 69,573,702 32,290,235Liabilities for Other Finance 617,135,770 400,905,780
TOTAL SHAREHOLDERS EQUITY AND LIABILITIES (Tk) 13,251,242,856 12,703,127,420
INCOME STATEMENT
For the Year Ended 31 March 2009
2008-2009 2007-2008
GROSS TURNOVER 11,363,597,928 9,565,715,902Less: Value Added Tax 1,545,801,360 1,307,872,163
____________ ____________NET TURNOVER 9,820,796,568 8,257,843,739COST OF GOODS SOLD (5,672,565,973) (4,856,061,933) _____________ ____________GROSS PROFIT 4,148,230,595 3,401,781,806
Selling and Distribution Expenses (1,319,362,317) (1,220,979,268)Administrative Expenses (460,431,051) (471,496,720)
PROFIT FROM OPERATIONS 2,368,437,227 1,709,305,818Other Income 665,520,915 604,628,504Financial Expenses (397,135,963) (351,868,423)NET PROFIT BEFORE WPPF 2,636,822,179 1,962,065,899Allocation for WPPF (125,562,961) (93,431,709)NET PROFIT BEFORE TAX 2,511,259,218 1,868,634,190Provision for Income Tax (592,644,226) (409,660,827)Provision for Deferred Income Tax (28,562,063) (77,110,270)NET PROFIT AFTER TAX (TK) 1,890,052,929 1,381,863,093 (Transferred to the Statement of Changes in Equity)Earnings per Share (EPS) (TK) 156.56 114.47
CASH FLOW STATEMENT
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For the Year Ended 31 March 2009 2008-2009 2007-2008
Cash Flows from Operating Activities:RECEIPTS:Collection from Sales 9,706,402,257 8,231,097,525
Others 466,326,850 449,727,661 10,172,729,107 8,680,825,186PAYMENTS:Purchase of Raw and Packing Materials 4,595,248,761 4,434,614,344Manufacturing and Operating Expenses 2,152,581,352 2,075,086,488Bank Interest 397,135,963 351,868,423Income Tax 475,997,448 458,227,366Workers Profit Participation Fund 60,192,228 58,051,027Others 7,684,822,669 7,379,996,482
Net cash provided by operating activities 2,487,906,438 1,300,828,704
Cash Flows from Investing Activities:Purchase of Fixed Assets (877,960,724) (1,106,201,471)Disposal of Fixed Assets 8,806,250 8,985,055Investment in Square Hospitals Ltd. (500,000,000) (500,000,000)Investment in National Housing Finance & Investment Ltd. ---- (3,157,800)Investment in Square Biotech’s Ltd. (150,000,000) (316,400,000)Investment in Square Multi Fabrics Ltd. (249,500,000) ----Capital Work-in-Progress ---- (109,875,230)Sale of Marketable Securities 67,289,225 ----Interest Received 89,551,011 112,595,980Dividend Received 42,007,687 40,197,168
Net cash used in investing activities (1,569,806,551) (1,873,856,298)
Cash Flows from Financing Activities:Long Term Loan Received 151,162,607 414,288,000Long Term Loan Repaid (305,401,660) (237,046,566)Short Term Bank Loan Increase/Decrease (1,135,347,402) 850,915,306Short Term Loan Increase/Decrease 817,344,614 (91,608,631)Dividend Paid (357,696,000) (298,080,000)
Net cash (used)/provided by financing activities (829,937,841) 638,468,109
Increase in Cash and Cash Equivalents 88,162,046 65,440,515Cash and Cash Equivalents at the Opening 205,295,694 139,855,179
Cash and Cash Equivalents at the Closing (TK) 293,457,740 205,295,694
SWOT ANALYSIS
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The SWOT Analysis comprises of the organizations internal strengths, weaknesses,
external opportunities, and others. SWOT analysis is an important tool for
evaluating the company’s strengths, weaknesses, opportunities, and others. It gives
an organization an insight of what they can do in future and how they can compete
with their existing competitors. This tool is very important to identify the current
position and performance of the organization relative to others, who are playing in
the same field and used in the strategic analysis of the organization.
SWOT ANALYSIS
4.1 STRENGTHS:
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
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Square is the largest private sector industrial conglomerate in Bangladesh. Square is more efficient and leading company in pharmaceutical industry for their strengths. Their strengths are given below:
The well qualified employees are strength of Square.
Huge experience in the pharmaceutical market
Used modern and sophisticated technology
Strong research and development division
Highly Skilled workforce, efficient management
Strong brand recognition, outstanding service
Price of Cephalosporin is very competitive
World class manufacturing facilities.
4.2 WEAKNESSES:
The chain of command of Square is elongated, which takes long time to take any decision. In reality Square has insignificant weakness in strategy
Need more smooth distribution channel Less prescription share compared to the competitors. ,t Ineffective and inefficient
detailing of FPs In case of product launching Square is follower rather than to become pioneer. Some of the Cephalosporin’s are showing negative growth
4.3 OPPORTUNITIES:
The pharmaceutical market of Bangladesh is booming rapidly, so Square has a huge scope to do better.
Today technology is more advanced and sophisticated which opens the door of the new generation of medicine.
More and more health care centers and hospital are being established Square has scope to penetrate in those.
Globalization opens the door of new era for Square.
Established & Growing market segment.
Can be penetrated easily in the market
4.4 THREATS:
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There are lots of big pharmaceutical companies established in market in the country, which create more competition .So that is a threat for Square.
Increase the price of raw material
Lack of availability of raw material
Huge import tax
Competitor increase day by day
5.1 Conclusion:
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The purpose of this paper has been to analyze the market expansion activities of Square
Pharmaceuticals Ltd. SPL is a very big business organization. Therefore, it’s very difficult
on my part to analyze its each and every strategy precisely in this small study.
There can be various ways through which a business organization can achieve success in
the market, after scanning its external & internal environment and considering all
alternatives, I have tried my level best to sort out the best way as per my thinking ability
for SPL to run ahead.
But finally I can say this much that it has a large potential both in the short and long run due to its sound distinctive competencies.
5.2 Recommendations:
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New Category Opinion Leader
Doctors are the only opinion leader in SPL’s present strategy. It may be partially good, but
can not be perfect as the completion becomes more intense day by day. There are some
other parties who have the scope and ability to act as “opinion leader” and to motivate the
buyer. These potential “opinion leaders” are remaining unexploited. SPL has enough
resources to let them add value to the company.
Customer Once, Client for ever
Client is more profitable than customer in terms of both transaction as well as positive
word-of-mouth communication. He himself can be an opinion leader. So, I am suggesting
adopting some programs that will let its customers be transformed into clients. The
following model would better describe this concept:
SPL has a strong brand image in pharmaceutical industry. It will facilitate this strategy. I
am citing some instances here which may be useful for this strategy:
a. Mobile Hospital service with free treatment and medicine.
b. Health awareness program in rural area.
c. Modernization of educational institute or public hospital etc.
Keep Pace with the Race
Today’s world is changing very rapidly, in every sphere. Therefore, updating production
plant alone is not enough to cope with the new environment. SPL has to have a keen eye if
there is any change in HR development, transport, information technology, consumer
relation management, medical science and so on.
Integrate Greatly
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SPL imports 80% raw materials of its total requirements. This is a weakness if it wants to
consistently expand its market. So it requires either more API plants or increase in present
production capacity.
Discover the undiscovered
Pharmaceutical value chain is a bit different from traditional value as it includes an
additional step “Discovery”. In the start this step is a vital strength of any pharmaceutical
company. SPL lacks this component in its value chain
Innovation is the Destination
Pharmacy is on the brink of a scientific and technological revolution that will ultimately
transform both the nature of the medicines it makes and how it makes them. In future, then,
Pharmacy will not only make the white powders, creams and tablets it has traditionally
produced, it will manufacture a complete mix of biopharmaceuticals, parenterals and
diagnostics. Making targeted treatment solutions will generate greater revenues than
conventional drugs and offset the increasing competition from generic producers. But it
will also require the restructuring of the entire pharmaceutical value chain, including the
fixed asset base and downstream distribution.
Segment the Current Market Segment
SPL is in need of more segmentation tools in an ongoing effort to establish close and
sustainable relationships with customers.
Bibliography
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⇒ Annual Reports of Square Pharmaceuticals Ltd.
⇒ www.squarepharma.com.bd
Glossary
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In this report, we use some technical words and these are flowing with explanation:
SPL: Square Pharmaceuticals Ltd. IMS: Information Medical Statistics
WTA: World Trade Agreement
MRPC: Market Research Planning & Cell
API: Active Pharmaceutical Ingredients. DDA: Directorate of Drug Administration.