Presentation on Beximco Pharmaceuticals

Name of the presenters

 Faisal Bin Kamal 2009-3-10-057

 Quazi Aritra Reyan 2010-1-10-145
 Md. Nayeem Hossain 2010-1-10-149
 Tahrim Shahriar 2010-1-40-052
Background of the Company

Beximco Pharmaceuticals (BPL) is a leading edge pharmaceutical

company based in Dhaka, Bangladesh. BPL started its operation in
1980 and now have grown to become nation's one of the leading
pharmaceutical companies.
 BPL supplies more than 10% of country's total medicine need.
 It offers top notch product quality and has world-class
manufacturing facilities.
 BPL is the recipient of three times ‘gold’ national export trophy,
Beximco Pharma is the largest exporter of pharmaceuticals from
Bangladesh.
Background of the Company…
 Mission: BPL’s mission is to ensure that each of the activities of
the company benefits and adds value to the common wealth of our
society.

 Vision: Viewing the business as a mean of the social well-being of

the investor, employees and the society and customers is the main
vision of BPL.

 Goals: The innovation of new products and satisfying the ever-

changing need of consumers is the top priority goal of BPL.
Ensuring full effort to enhance shareholders highest returns and
growth of their asset is also a goal of the company.
Human side of The Business

Management: BPL has a three-tier management structure,

comprising the Board of Directors, the Executive Committee and the
Management Committee. There is an Audit Committee also,
constituted in 2006.

The things that are focused in Beximco Pharma’s management are-

 Entrepreneurial spirit
 Innovation power
 Team work
 Employee empowerment
Human side of The Business…

Leadership and Motivation Style: BPL believes in participative

management. In this light, BPL encourages each of its employees to be
the leader of his /her zone of actions.
BPL uses Management by Objective (MBO) system so that everyone
becomes Self-motivated. Apart from creating a healthy working
environment, employee empowerment, BPL offers a number of
benefits to motivate their employees.
The benefits offered by the company are given below:
 Education costs of the children
 Permanent job facility
 Leave facilities
 Promotion
 Yearly Employee Awards
 Foreign Travel with Family Offers
 Share from revenue etc.
Human side of The Business…

Organizational Structure:
Human side of The Business…

Training and Development program of BPL: It is done in 2 ways-

 On-the-job Training: Under the trainer’s supervision
 Apprenticeship Training
 Informal Learning
 Job Instruction Training
 Lectures
 Simulated Training
 Off-the-job Training: In an artificial environment.
 The Case Study Method
 Management Game
 Outside Seminars
 Behavior Modeling
Human side of The Business…

Performance Appraisal: At BPL appraisals are done by the Self-

appraisal system. Managers appraise the performance of their
subordinates through 5 points Graphic Rating Scale. 1 for
unsatisfactory, 2 for marginal, 3 for target, 4 for superior, 5 for
outstanding.

Employee Compensation: It has two main components-

 Direct financial payments: Wages, salaries, incentives e.t.c.
 Time based pay
 Performance based pay
Human side of The Business…

 Indirect payments: Financial benefits like employer-paid

insurance and vacations.
 Benefits and Rewards Package: Supplemental Pay Benefits,
Sick Leave, Vacations and Holidays, Parental Leave e.t.c
 Contribution to Workers' Profit Participation/ Welfare: 5% of
net profit before tax contributed by the company for workers.
 Insurance Scheme:Employees of the company are covered under
group life insurance scheme.
Production and Marketing

Contract Manufacturing: The severe price competition from the

generic manufacturers has prompted BPL to shift or outsource their
production from developed to developing and less developed
countries, because of huge cost advantage.

Product Mix: BPL has a wide product mix consisting of 18 product

lines. Most of the product lines are deep. The following table is the
product mix of BPL, showing some of its products.
Production and Marketing
Production and Marketing…

Marketing Strategy: Beximco Pharma has adopted several Corporate

Level Strategies regarding growth and market focus based on the
SWOT analysis with the view to achieving organizational goals.
Business level strategies developed by BPL help them to earn
competitive advantage through quality products, superior services,
and outstanding customer relationship. The things that are focused
in BPL’s business strategy are-
 Innovation strategies in product differentiation & promotion
 Marketing Approach rather than traditional Selling Approach
 Focus Strategy
 superior human resource and unique customer service
Production and Marketing…

Strength (Internal) Weakness (Internal)

1. Employee Empowerment 1.Insufficient Working Capital
2. Innovation & product 2.Not Operating in Low Cost
differentiation
3. Outstanding Product Quality Market.
4. World Class Professional
Service SWOT
Opportunities (External) Threats (External)
1.Ability to Retain Growth 1.Strong Competitors in Domestic
& market Focus In difficult & International Market.
Operating Situations 2.Political Instability
2.Ability to Exploit 3.Government & International
Opportunities of Patent Law Regulations.
as an LDC in International 4.Rising Trend of Material Price
Market.
Production and Marketing…

Promotional Activities: Beximco Pharma is very technical when it

comes to promotional activities. They know how to turn their
weaknesses into their strengths. As an example, Beximco
Pharmaceuticals Limited (BPL) is the biggest CFC and HFA MDI
manufacturer in Bangladesh but on the awareness raising of CFC-free
alternatives in Bangladesh BPL came forward before anyone else. The
target audiences of a normal promotional activity are-
 primary care physicians and specialists
 non-government organizations
 pharmacists
 patients and patient groups
 government organizations
 medical and pharmacology colleges
 the general public and media
Production and Marketing…

Pricing: Beximco Pharma believes in quality, service and consumer

satisfaction. In case of pricing Beximco Pharma never does price
based competition as they believe in quality. They focus on
attaining consumer loyalty.
Business Environment

Core Values:
 Trust and reliability to the products
 Quality in manufacturing according to the rules of the WHO
 Hiring competent branch of people
 promoting new products through research and bringing cost
efficiency
 Sense of responsibility to keep the highest standards of products

Good products, however, are only one side of BPL’s commitment.

BPL believes that their responsibility lies even more in ensuring
that the society gets benefited while they continue to grow.
Business Environment…

Corporate Social Responsibilities: Corporate social responsibility is

an integral part of BPL’s business strategy which is reflected in its
mission statement. Each year, an increasing amount of contribution
is ploughed back into social causes, demonstrating Beximco
Pharma's commitment to the nation. Some examples of BPL’s
Corporate social responsibilities are-
 Partnership with NGOs working for AIDS patients
 Supporting sports
 Raising disease awareness among the people
 Donating 5000 pieces of Oseflu (Oseltamivir) capsule to ICDDRB
 Donation of medicines to victims of earthquake in Pakistan and
victims of tsunami in Sri Lanka
Accounting & Finance

Accounting Basis-
The financial statements have been prepared on the Historical Cost
Basis except land, building and plant and machinery, and therefore,
do not take into consideration the effect of inflation.

Reporting Currency-
The financial statements are prepared and presented in Bangladesh
Currency (Taka), which is the company's functional currency. All
financial information presented have been rounded off to the nearest
Taka except where indicated otherwise.

Reporting Period-
The financial period of the company covers one calendar year from 1st
January to 31st December consistently.
Accounting & Finance…

Going Concern-
The Company has adequate resources to continue in operation for the
foreseeable future. For this reason, the directors continue to adopt going
concern basis in preparing the accounts.

Statement of Cash Flows-

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

Depreciation on Fixed Assets-

Depreciation is provided to amortise the cost of the assets after
commissioning, over the period of their expected useful lives, in
accordance with the provisions of IAS 16: Property, Plant and
Equipment. Depreciation is provided for the period in use of the
assets. Depreciation is provided at the following rates on reducing
balance basis:
Building and Other Construction 5% to 10%
Plant and Machinery 7.5% to 15%
Furniture & Fixtures 10%
Transport & Vehicle 20%
Office Equipment 10% to 15%
Accounting & Finance…

Income Tax Expense-

Income tax expense comprises current and deferred tax. Income tax
expense is recognized in profit and loss account and
accounted for in accordance with the requirements of IAS 12 : Income
Tax.

Current Tax:
Current tax is the expected tax payable on the taxable income for the
year, and any adjustment to tax payable in respect of
previous years. The company qualifies as a “Publicly Traded
Company”, hence the applicable Tax Rate is 27.50%.
Accounting & Finance…

Deferred Tax:
The company has recognized deferred tax using balance sheet method in
compliance with the provisions of IAS 12 : Income Taxes. The company's
policy of recognition of deferred tax assets/ liabilities is based on
temporary differences (Taxable or deductible) between the carrying
amount (Book value) of assets and liabilities for financial reporting
purpose and its tax base, and accordingly, deferred tax income/expenses
has been considered to determine net profit after tax and earnings per
shares (EPS).
Foreign Currency Transactions:
Foreign currency transactions are recorded at the applicable rates of
exchange ruling at the transaction date.The monetary assets and liabilities,
if any, denominated in foreign currencies at the balance sheet date are
translated at the applicable rates of exchanges ruling at that date.
Exchange differences are charged off as revenue expenditure in
compliance with the provisions of IAS 21 : The Effects of Changes in
Foreign Exchange Rates.
Accounting & Finance…

The rates of relevant foreign exchanges at year end are :

2008 2007
1 US Dollar $ = Tk. 69.4500 69.2000

Report of the Directors to the Shareholders:

For the year ended 31 December 2008

The Directors are pleased to present their report to the shareholders

together with the audited accounts of the Company for the year
ended 31st December, 2008 along with Auditors' Report thereon.
Accounting & Finance…

Financial Results and Profit Appropriations:

Accounting & Finance…

Dividend
The Board of Directors has recommended 10% cash and 20% stock
dividend for approval of the shareholders for the year ended 31
December, 2008.
Directors
Mr. A. S. F. Rahman, Director of the company retires by rotation as per
Articles 126 and 127 of the Articles of Association of the Company
and being eligible offers himself for re-election. Mr. A.B. Siddiqur
Rahman, Director of the company retires by rotation as per Articles
126 and 127 of the Articles of Association of the Company and
being eligible offers himself for re-election being the nominee of
Beximco Holdings Ltd. Advocate Ahsanul Karim, Director of the
Company also retires by rotation as per Articles 126 and 127 of the
Articles of Association of the Company and being eligible offers
himself for re-election being the nominee of Bangladesh Export
Import Company Ltd.
Accounting & Finance…

Board Audit Committee

The Company has an audit committee, which met twice in 2008, to
consider its Annual Financial Statements for the year ended 31
December 2007 and Half-Yearly Report for the half-year to 30 June
2008. The Committee comprises Mr. M A Qasem as Chairman and
Dr. Abdul Alim Khan and Advocate Ahsanul Karim as Members.
Accounting & Finance…
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Accounting & Finance…

The sources of fund-

1. Issued share capital
2. Profit/Sales
3. Long Term Borrowing
This Consists of :
(a) Project Loan
(b) Interest and PAD Block
(c ) Obligation Under Finance Leases
4. Short Term Borrowings
(a) Janata Bank:
Cash Credit-Pledge Cash Credit-Hypothecation
(b) Citibank NA
(c) Standard Chartered Bank (d) IPDC
(e) Loan from Beximco Holdings Ltd.
Accounting & Finance…

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

Distribution of fund-
1. Production
2. Cash paid suppliers & employees
3. Interest paid
4. Income tax paid
5. Investing activity (Acquisition of property, plant & equipment)
6. Creditors & other payable
7. Maintenance of plant, machinery & other accessories.
8. Administrative expenses.
9. Selling, Marketing & Distribution.
10. Contribution to workers welfare fund.
11. Dividend paid
12. Social welfare activity, etc.
Accounting & Finance…

Ratio Analysis-
Current Ratio = Current assests/Current liabilities
= 2861891654/ 2602032267
= 1.09
Working Capital Ratio = Working Capital/ Current Liabilities
= 259859387/2602032267
=.09
Quick Ratio = Quick Assets/ Current liabilities
= 1,505,288,093/2602032267
= 0.58
International Business

Beximco entered international market with the export of Active

Pharmaceutical Ingredients (APIs) to Hong Kong in 1992 and
finished formulation products in 1993. The activities that BPL
performs in international market are-
 selling products to retail outlets and supplying products to renowned
hospitals and institutions
 Contract manufacturing for major international brands of leading
multinational companies.

In international market the main competitors for pharmaceutical

companies in this country are India and China. The challenge faced
in open market competition is the scarcity and unavailability of raw
materials in local market. So, companies in our country have to
import these materials from abroad (India, China and a few
countries from Europe) at a high price.
International Business…
International Business…

The Obstacles Faced by BPL in International Market:

 International Laws and Regulations: For example, to import
necessary raw materials from India 30% duty has to be paid
 Patent Laws: After 2015 BPL or any other pharmaceutical company
will not be able to do business in international market with Patent
Medicines.
 Business Laws: As an example, because of the regulatory
restrictions of the banks, BPL was unable to open letter of credit
(LC) for the whole year of 2006 which resulted in its insufficient
working capital facility.
Conclusion

Recommendations:
Beximco Pharma maintained standard quality in every sphere of their
organization. Here we have some recommendations to improve policies
of BPL, Bangladesh.
 The company should follow both on-the-job and off-the-job training
method when they are training their employees.
 As a learning organization BPL should keep their practices of flexibility
to encourage innovation for the times of much needed change.
 Since, BPL’s business strategy is to focus on particular segments of the
total market they should be operating with the view to becoming the
market leader of those areas. In the mean time, they should look forward
to grow their business as much as possible both in national and
international market.
 In order to ensure more prospects in the import and export activities of
raw materials BEXIMCO needs to negotiate to adjust several business
laws and regulations with the Government.
Conclusion…

Pharmaceutical Industry has grown in Bangladesh in the last two

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