Performance Dynamics of Beximco Pharmaceuticals Ltd
Historical Background Beximco Pharma is a leading edge pharmaceutical company and is a member of the Beximco Group,the largest private sector industrial conglomerate in Bangladesh. The firm started operation in 1980,manufacturing products under the licenses of Bayer AG of Germany and Upjohn Inc. of USA andnow have grown to become nation’s one of the leading pharmaceutical companies, supplying morethan 10% of country’s total medicine need.
Today Beximco Pharma manufactures and markets its own`branded generics’ for almost all diseases from AIDS to cancer, from infection to asthma, fromhypertension to diabetes for both national and international markets. Company Profile Beximco Pharma manufactures a range of dosage forms including tablets, capsules, dry syrup,powder, cream, ointment, suppositories, large volume intravenous fluids, metered dose inhalers etc. inseveral world-class manufacturing plants, ensuring high quality standards complying with the WorldHealth Organization (WHO) approved current Good Manufacturing Practices (cGMP).
They alsocontract manufacture for major international brands of leading multinational companies. Organizational Structure BPL is completely governed and maintained by a corporate body. The chief of theorganization is the Chief Executive Officer and the total operation is divided into Marketing,Sales, Commercial, Manufacturing, Finance and Accounting, Product Planning, BusinessResearch and Development, and MIS departments each supervised by a director. Directors of thedepartments report directly to the CEO.
Bearing the demands of dynamic environment in mind BPL designed its organizational structure ashighly adaptive and flexible. It is a Learning Organization that has developed the capacity tocontinuously learn, adapt and change. In BPL employees are highly trained and empowered to handlediverse job activities and problems. They have minimal formalization with narrow span of control. The organizational members share information openly and collaborate on work activities. 3 For internal communication, BPL follows a strictly formalized Intranet based electroniccommunication system as well as informal verbal ommunication. For external communication BPLuses both internet based electronic communication and an array of printed communicationmaterial. All the external communications are supervised, mostly by Director, Marketing and insome cases by Director, Sales. Market Scenario In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors which iscontributing in the country’s economy. The national companies account for more than 65% of thepharmaceutical business in Bangladesh.
Except Beximco Pharma other leading companies areSquare Pharma, Incepta Pharmaceuticals. Navana Pharma Ltd. , Opsonin Chemical Industries Ltd. ,Aventis Pharma Ltd. Etc. Among them Square Pharma is the market leader at this moment. BPL follows Square Pharma at the2 nd position. The analysis of the two company’s financial data shows that for the year 2007-2008gross profit of BPL was 1,629,514,837(BDT) and Square Pharma was 3,401,781,806 (BDT) . There are a number of reasons why BPL could not beat Square Pharma for the first position.
The most relevant of them are stated here. ? Fewer Markets Served: Square Pharma serves a larger market than BPL while BPLconcentrates on market focus. For example, unlike Square Pharma BPL does not do businessin the credit market. They only serve the premium market. ? Producing Injectables: Again BPL does not manufacture or market Injectables where this is ahuge market. In contrast, Square Pharma has a range of 44 injectables and has sold28,289,000 units in the year 2007-2008. ? Product Range: BPL has a fewer range of products than Square Pharma does.
BPLmanufactures only over 300 products in comparison to Square Pharma’s over 500products. In international market the main competitors for pharmaceutical companies in our country areIndia and China. The challenge faced in open market competition is the scarcity and unavailability Possible Measures to Improve Performance Any organization is deeply effected by its environment. The macro political and economicenvironment of our country is so full of uncertainty that the managers of businessorganizations of Bangladesh face very difficult challenges to cope with the ever changing situations.
The biggest challenge for the managers in the pharmaceuticals industry is the competition. Bangladesh is now self dependent in the pharmaceuticals the political and economic instabilitythere are other factors like international and domestic laws and regulations, rising trend of material price, high rate of inflation, obsolete technology, increased security problem, dire countryimage etc which effect the job of managers in our country most.
Bangladesh can substantially increase pharmaceuticals export if the government extends support tolocal producers after this year when WTO rules on pharmaceuticals for developed and developingnations comes into effect. From the next year, the developing countries will lose their patent rights tosell products. The main challenge for Beximco Pharma is now to bring down production cost to offer medicines in the international market at a competitive price. For this, raw materials must be producedlocally.
Producing countries will lose their rights to sell pharmaceutical ingredients at current pricesafter 2004 due to the WTO rules. However, the least developed countries do not have to provide anypatent protection for pharmaceuticals until 2016 as the WTO has extended the deadline only for themthrough Trips (Trade-Related Aspects of Intellectual Property Rights). In the changed scenario, pricesof ingredients will increase significantly, so countries will certainly loss their export markets. Atpresent Bangladesh imports 80 percent of total raw materials required for the industry.
Of therequirement, 70 percent comes from India while the rest comes from China, England, Switzerland,Germany and Malaysia. Countries like Kenya, Tanzania, Malawi and Uganda have a hugepharmaceuticals market for Bangladesh. At present, Bangladesh is exporting pharmaceutical productsto over 50 countries of the world. The major markets for Bangladesh’s pharmaceutical exports includeKorea, Brazil, the Netherlands, Myanmar, Sri Lanka, Pakistan, Yemen, USA, India, South Africa,Ukraine, Vietnam, Kenya, Norway, Sweden, Indonesia and Hong Kong.
To be successful, relentless contribution and dedication of the organizations management is verymuch needed. To compete in international as well as in local market in adverse situation themanagers work has become much more difficult in today’s ever changing business environment. Developing plans in a dynamic situation demands critical analysis of the situation and strict adheringto the core principal of the organization. As Beximco Pharma is decentralized organization and core values are cherished by everyone within the organization, operating in dynamic situation is easier thanit seems.
The pharmaceutical industry in this country is undoubtedly one of the most promisingindustries. However, the industry is not operating without any problems. This part of the report statesthe possible steps that could be taken to mitigate the gravity of the difficulties that threat theindustry. As one of the leading pharmaceutical company Beximco Pharma also faces theseproblems that are bar to achieve organizational goals effectively. To sort out these problemshere some suggestions are recommended.
Coping with Instable Economic State: To cope with the ever changing economic environment,the management of BPL should always be watchful and should constantly analyze theorganization’s overall environment. As a learning organization BPL should keep their practices of flexibility to encourage innovation for the times of much needed change. Again, as Government isgoing to pass a new version of law, involving the pharmaceutical industry Beximco Pharma shouldprepare their arrangements to cope with the coming changed business environment. Handling Competitions:
Since, BPL’s business strategy is to focus on particular segments of thetotal market they should be operating with the view to becoming the market leader of those areas. Inthe mean time, they should look forward to grow their business as much as possible both in nationaland international market. Negotiating with the Government: In order to ensure more prospects in the import and exportactivities of raw materials Beximco needs to negotiate to adjust several business laws and regulationswith the Government. Such approach can be proved as a benefit of the company. Market Diversification:
After 2015, privileges as LCD regarding Patent Act will expire. SoBPL must get ready to compete in a more challenging situation in the international marketwhere, India will be the biggest contestant. BPL will have to concentrate on the Genericmedicines that are the products that are produced in mass scale and marketed by several companiesunder different brand name, where the formulation of this product is almost same. Prices of the products are under this category are competitive. Bangladesh mainly concentrates on thiscategory, as labor cost is one of the lowest in the world.
Again, Beximco pharma can operate on off-patent products as after years of business the formulations of Patent Medicines are sold in the marketso that others can go into mass production. Thus the company can take a better position bymaximizing profit in an open market economical condition. Conclusion In recent highly competitive medicine manufacturing sector, streamlined operations and effectivebusiness relations are essential. To improve information exchange with its many partners, BeximcoPharmaceuticals Ltd. decided to introduce leading-edge supplier and customer relationshipmanagement capabilities.