ISSN: 2079-567X
Banglavision
Vol. 4 • No. 1 • December 2010
Growth Trend of Pharmaceutical Industry in Bangladesh: A Case
Study on Square Pharmaceutical Limited
Dr. Subrata Kumar Dey
Abstract
This article describes the growth and status of the pharmaceutical industry in Bangladesh
and how it relates and compares with the global pharmaceutical industry. Pharmaceutical
sector of Bangladesh is a massive and very much promising sector in Bangladesh. This
sector takes a new horizon in the economic growth of Bangladesh. Pharmaceutical industry
plays an immense role in the exporting earnings of Bangladesh. The growth of this sector is
increasing at a higher rate and making new opportunities regarding employment and foreign
earnings and ensuring the locall health care by providing essential drugs at a minimum
price.
Introduction
Bangladesh is a developing country in the world. The per capita income of the people is low.
But healthcare is the basic need of human being. Most of the people of the country can’t
maintain their basic needs in time. So, the annual per capita drug consumption in Bangladesh
is one of the lowest in the world. However, the industry has been a key contributor to the
economy of Bangladesh since independence. With the development of healthcare
infrastructure and increase of health awareness and the purchasing capacity of people, this
industry is expected to grow at a higher rate in future. Steady economic growth is likely to
encourage the pharmaceutical companies to introduce newer drugs and newer research
products, while at the same time maintaining a healthy creativeness in respect of the most
essential drugs.
Many established entrepreneurs of Bangladesh today started with pharmaceutical companies
and contributed a huge amount of foreign currency to our national ex-chequer.
Dr. Subrata Kumar Dey, Associate Professor of Accounting and Information Systems, Jatiya Kabi Kazi
Nazrul Islam University, Trishal, Mymensingh.
60 Banglavision Vol. 4, No. 1, 2010
Pharmaceutical sector of Bangladesh is one of the most developed hi-tech sectors which are
contributing to the country’s economy. After the promulgation of Drug (Control) Ordinance
1982, the development of this sector was accelerated day-by-day. The professional
knowledge, thoughts, and innovative ideas of the pharmacists working in this sector are the
key factors for these developments. Due to the recent development of this sector,
pharmaceutical industries are exporting pharmaceutical products to the global market. Now,
this sector provides 97% of the total pharmaceutical products requirement of the local
market. Leading pharmaceutical companies of Bangladesh are expanding their business with
the aim to expand export market. Recently, few new pharmaceutical industries have been
established with hi-tech equipments and professionals which are enhancing the strength of
this sector.
Distribution channel of pharmaceutical products in Bangladesh has evolved in a unique way.
The industries are retail oriented and the bulk of distribution is done by the companies
themselves. They distribute their products from their own warehouses located in different
parts of the country. Wholesalers play a limited role in this regard since companies supply
goods to both retailers and wholesalers.
The exporting of pharmaceutical products is still in an infant stage although a number of
private pharmaceutical companies have already entered the export market with their basic
materials and finished products. They export their products to Vietnam, Singapore,
Myanmar, Bhutan, Nepal, Sri Lanka, Pakistan, Yemen, Oman, Thailand, and some other
countries of central Asia and Africa.
Growth and Drug (Control) Ordinance’ 1982
Following the Drug (Control) Ordinance of 1982, many local pharmaceutical companies
improved the range and quality of their products considerably. The Drug Act of 1940 and its
rules formed the basis of the country’s drug legislation. At that time, the pharmaceutical
industry was dominated by the foreign companies.
In early 1980’s there were 166 licensed pharmaceutical manufacturers in our country, but
their production was highly dominated by 8 (eight) multinational companies which
manufactured about 75% of the products. A positive impact of the Drug (Control) Ordinance
of 1982 was that the limited available foreign currency was exclusively utilized for importing
pharmaceutical raw materials and finished drugs, which are not produced in the country. In
2000, the pharmaceutical companies of Bangladesh produced 5,600 brands of medicines in
different dosage forms.
The major positive impact of Drug (Control) Ordinance is the rapid development of local
manufacturing capability. Under the Drug (Control) Ordinance 1982, the Government fixed
the maximum retail prices of the locally manufactured products. It is interesting to note that
even after the withdrawal of price control from many products, prices have not shot up;
healthy competition has been keeping the prices within affordable levels.
A Laconic Scenario of Square Pharmaceuticals Ltd. Bangladesh (SPLB)
Square Pharmaceuticals Ltd. Bangladesh (SPLB) plays a dominant role in the field of
pharmaceuticals sector of Bangladesh. SQUARE is the leading & the largest pharmaceutical
industry of Bangladesh and it has been accorded Gold Award as an achiever of industrial
pharmaceutical products amongst the SAARC countries for the year 2007 by Ceylon
National Chamber of Industries (CNCI).
Growth Trend of Pharmaceutical Industry in Bangladesh 61
The management team of the concern leads the entire range of activities with dedication,
deft, dependability, determination, donation, dexterity, dignity, diligence, discipline,
discretion, destination, drive, dutifulness and dynamism that are rarely available in a society
of Bangladesh.
The concern is committed to its working people, and gives full concentration on offering the
highest return to the provider of capital i.e., Shareholders.
At the same time, the Management of SPLB maintains an endeavor to run the business with
full transparency and ethical codes and assures the social responsibility to the Government.
The vision of SQUARE is to produce quality product, social well being of the inventors,
employees and the society at large, leading to an accretion of wealth through financial and
moral gains as a part of the process of the human civilization. The mission of SPLB is to
produce and provide quality & innovative healthcare relief for people, maintain stringently
ethical standard in business operation and ensure benefit to the shareholders and stakeholders
and the society at large. The main objectives of SQUARE are to conduct transparent business
operation based on market mechanism within the legal & social framework of the country.
Square Pharmaceuticals Limited (SPL) owns and operates a modern Pharmaceuticals factory
and produces and sells pharmaceutical drugs and medicines. The company has a separate
Division to operate a modern Basic chemical Factory and produce basic chemical products. It
has also an Agro Vet Division, producing Agro Vet products. The subsidiaries own Textiles
Spinning Mills and manufacture yearn.
Objectives of the Study
The main objective of this paper is to expose the growth of pharmaceutical industry in
Bangladesh. Other related objectives are:
I. To identify the Growth of national market and the growth of SPLB;
II. To explore the growth of export (turnover) of SPLB; and
III. To highlight the growth of total assets and shareholders’ equity of SPLB.
Research Method
This study is concerned with the analysis of the growth of the pharmaceutical industry in
Bangladesh. In order to achieve the above objectives, an assessment of the pharmaceutical
sector of Bangladesh is necessary. Moreover, research method is deployed to examine the
annual reports of SPLB. The necessary quantitative and qualitative information has been
obtained from the secondary sources at both national and international levels. Various
statistical tools like mean, standard deviation, co-efficient of variation and growth model are
applied to satisfy the objectives.
Data Analysis and Interpretation
Collected data has been processed and analyzed in accordance with the objectives of the
study. Processed and analyzed data have been summarized and interpreted to find out the real
facts of the concern.
Comparison of Growth Rate
The national pharmaceutical market growth and that of the SPLB during the past 08 years are
given below:
62 Banglavision Vol. 4, No. 1, 2010
Table -01
Comparison of Growth Rate (%) During 2000 to 2008
Year National Market Growth Rate SPLB ’s Growth Rate
2000 27.79 29.95
2001 22.46 22.70
2002 10.18 11.70
2003 05.90 15.91
2004 08.60 13.08
2005 17.50 14.30
2006 04.08 23.17
2007 15.80 28.60
2008 11.65 21.00
Total 123.96 180.41
Average 13.77 20.05
SD 07.83 06.68
CV (%) 56.82 33.34
Source: Annual Reports of Square Pharmaceuticals Ltd. Bangladesh
It is revealed from the table 1 that the average national market growth is 13.77%, whereas the
growth of SQUARE is 20.05%. As a result, it is clearly visualized that the growth rate of
SPLB is higher than national market share. On the other hand, the tremendous variation is
observed in the case of national market growth rate (CV=56.82%); whereas, the variation in
growth of SPLB (CV=33.34%) is lower than the national market growth.
Graph 01
Comparison of Growth Rate (% )
NMGR CGR Linear (CGR) Linear (NMGR)
35
30
y = 0.0538x - 87.836
Growth Rate (%)
25
R2 = 0.0005
20
15
10
5 y = -1.419x + 2857.4
R2 = 0.2465
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Ye ar
Source: Annual Reports of Square Pharmaceuticals Ltd. Bangladesh
It is exhibited in graph No. o1 that the trend of Growth Rate of SPLB is slightly upward
since the constant value of the equation is positive. On the other hand, the trend of
national market growth rate is downward because the constant value of the equation is
negative. As a matter of fact, it may be affirmed that the national growth trend is not
satisfactory; but the growth trend of SPLB is satisfactory.
Growth Trend of Pharmaceutical Industry in Bangladesh 63
Growth of Export (Turn-over)
In an effort to expand the market for the pharmaceutical products beyond the border, the
company has been successful in exporting to several countries at an increasing ratio of its
turnover as indicated below:
Table -02
Growth Trend of Turnover during 2001-2008
Year Gross Turnover Growth (%)
2001 9,09,638 -
2002 7,21,503 -0.79%
2003 11,17,898 1.55%
2004 15,58,865 1.39%
2005 22,01,919 1.41%
2006 27,26,173 1.24%
2007 34,02,586 1.25%
2008 46,02,659 1.35%
Total 1,72,41,241.00 0.07
Average 21,55,155.13 0.01
SD 13,58,189.07 0.01
CV (%) 63.02 88.78
Source: Annual Reports of Square Pharmaceuticals Ltd. Bangladesh
It is revealed from the table-02 that the gross turnover is significantly increasing with the
passage of time. The variation in gross turnover is 63.02% and it happens due to the
increasing of gross turnover year by year. As a matter of consequence, the growth rate is also
increasing with the passage of time and the variation in growth rate is also high (88.78%). In
fact, the trend of gross turnover and the trend of growth rate are very momentous and highly
satisfactory.
Growth Rate of Total Assets and Shareholders’ Equity
Table-03
Growth of Total Assets and Shareholders’ Equity during 2001-2008
Year Total Assets Shareholders' Equity Ratio Growth (%)
2001 3,810,860 16,93,731 2.25 -
2002 45,26,115 19,22,437 2.35 18.77
2003 51,64,320 21,78,089 2.37 14.10
2004 60,21,497 27,51,766 2.19 16.60
2005 79,07,933 32,73,714 2.42 31.33
2006 92,98,987 38,51,098 2.41 17.59
2007 1,04,86,940 45,90,142 2.28 12.78
2008 1,27,03,127 55,68,790 2.28 21.13
Total 5,99,19,828 2,58,29,820 2.32 132.29
Average 54,47,257 23,48,165 2.32 18.90
SD 38,62,595 16,72,524 2.31 6.15
CV (%) 70.91 71.23 1 32.55
Source: Annual Reports of Square Pharmaceuticals Ltd. Bangladesh
64 Banglavision Vol. 4, No. 1, 2010
It is shown in the table 03 that the total assets are more than two times of shareholders’
equity. In fact, it may be assured that SPLB is the thick levered firm in the pharmaceutical
sector. The variations in total assets and shareholders’ equity are almost same i.e., 70.91%
and 71.23% respectively. It is certainly true that variations in total assets and shareholders’
equity have occurred due to the increasing trend of the said variables. Moreover, the average
growth rate (18.90) is highly satisfactory and the variation in growth rate (32.55%) is
happening for the aforesaid causes.
Eventually, the growth trend of total assets and shareholders’ equity is enviable for the firm
and as well as for the stakeholders of the firm.
Graph-02
Growth Trend of Total Assets and Shareholders' Equity
Total Assets Shareholders' Equity
Linear (Total Assets) Linear (Shareholders' Equity)
14000000 Linear (Shareholders' Equity)
y = 1E+06x - 3E+09
12000000
R2 = 0.9686
10000000
8000000
Value
6000000
4000000
y = 547678x - 1E+09
2000000
R2 = 0.9607
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Year
Source: Annual Reports of Square Pharmaceuticals Ltd. Bangladesh
It is clearly exposed in the graph-02 that the trend of growth in respect of total assets and
shareholders’ equity is upward since the constant values of both the variables are positive.
Furthermore, the value of coefficient of determinations in both the cases is significant (R2 =
0.9686 in the case of Total assets and it is 0.9607 in the case of shareholders’ equity).
Findings of the Study
In Bangladesh, the growth of pharmaceutical industry is shown very rapid since the last three
decades. It is revealed from the table 1 that the average national market growth is 13.77%,
whereas the growth of SQUARE is 20.05%. As a result, it is clearly visualized that the
growth rate of SPLB is higher than national market share. On the other hand, the tremendous
variation is observed in the case of national market growth rate (CV=56.82%); whereas, the
variation in growth of SPLB (CV=33.34%) is lower than the national market growth.
Growth Trend of Pharmaceutical Industry in Bangladesh 65
It is exhibited in the graph no. o1 that the trend of Growth Rate of SPLB is slightly upward
since the constant value of the equation is positive. On the other hand, the trend of national
market growth rate is downward because the constant value of the equation is negative.
As a matter of fact, it may be affirmed that the national growth trend is not satisfactory; but
the growth trend of SPLB is satisfactory.
It is revealed from the table-02 that the gross turnover is significantly increasing with the
passage of time. The variation in gross turnover is 63.02% and it has happened due to the
increase of gross turnover year by year. As a matter of consequence, the growth rate also
increases with the passage of time and the variation in growth rate also high (88.78%). In
fact, the trend of gross turnover and the trend of growth rate are very momentous and highly
satisfactory. Sufficient assets are available against the shareholders’ equity. Probably, it is
hoisted because of huge amount of retained earnings and capital reserve or it has happened
due to the thick leverage policy of the firm. The variation in assets and equity is almost the
same due to the same increasing growth of two variables.
Eventually, the growth trend of total assets and shareholders’ equity is enviable for the firm
and as well as for the stakeholders of the firm.
Recommendations
From the above analysis and interpretation of the table and graphs, the researcher has some
observations about the firm. The firm has been doing its business very sincerely since its
commencement i.e., 1958. So, the author deserves the following recommendations for the
more betterment of the firm in future.
➢ Ensure to meet the market demand & smooth supply of fast moving products or
seasonal products;
➢ Should launch block buster products – anti cancer & anti- AIDS;
➢ Install more sophisticated plants to produce more for crisis recovery during pick
season;
➢ Strengthen existing distribution network & ensure smooth operation of distribution
network;
➢ Try to establish new product & latest strategy to beat the competitors;
➢ Keep close monitoring on competitor’s activities in the market & take action
accordingly to keep up the position & also enhance the customer satisfaction;
➢ Give more concentration on new products to generate more prescription as well as
business;
➢ Increase party coverage & ensure the satisfaction of periphery customers like Doctors
& Chemists, even the retail sellers of the product;
➢ Increase the remuneration of employees which will enhance motivation & increase
productivity;
➢ Give more concentration on products’ quality and financial liquidity.
66 Banglavision Vol. 4, No. 1, 2010
Conclusion
The Pharmaceuticals industry is a gigantic & very much promising sector in Bangladesh. It is
contributing a great deal to the economy of the country. SPLB began its marketing after or
during independence. It is one of the oldest names in Pharmaceuticals sector, and is
renounced throughout the country. This pharmaceutical industry has been providing very
comprehensive and time tested products in the market in accordance with the need of the
society. With its strong distribution network, Square has reached almost every corner of
Bangladesh supported by 18 depots strategically located in different places of the country to
ensure customer satisfaction. The superior quality of SPLB’s products has been possible
because of support from its advanced technology and an international standard of strict
quality. Moreover, its management has introduced good governance to establish, maintain
and monitor standard qualities and policies for ethics and business practices as a model of the
pharmaceutical sector of Bangladesh.
References :
SPLB’s Publications:
SPLB: Annual Reports, 2000 to 2008, Dhaka, Bangladesh.
SQUARE’S Website: www.squaregroup.com
SPLB: Market Research & Planning, Dhaka, Bangladesh.
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