Decision Making and Strategy Analysis of Beximco Pharmaceuticals

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LETTER OF TRANSMITTAL
May 11, 2014

Mrs. Sutapa Bhattacharjee

Assistant Professor

Institute of Business Administration

University of Dhaka  

Dear Madam:  

We, students of Group- 06 from BBA 22nd, have prepared this report on ‘Strategies and Decisions of Beximco Pharmaceuticals’ that you had assigned to us two months ago as a requirement for completion of the ‘Principles of Management’ course (course code: W201). Our study of the practice of decentralisation in Beximco Pharma is based on our own understanding of the theoretical concept, published and unpublished ‘year-in-review’ reports of the company, face-to-face interview with Mr. Md. Ali Nawaz, Chief Financial Officer of Beximco Pharmaceuticals and also various interviews with experts on the field.

Preparing this report has been an important experience for us, as we have thoroughly mastered the various concepts taught in the course through exposure to real corporate world. We appreciate your help and moral support in this regard.

Please note that this report has been prepared under your supervision. Under no circumstances will this report be produced for any other BBA (IBA) course ever. No part of this report will be shared or republished without your authorization.

Sincerely Yours,

Arshad Bin Ekram (ZR-11)

Md. Farhanuzzaman (ZR-13)

Tasin Islam (ZR-17)

Sadek Newaz (ZR-29)

Md. Mahirul Quddus (ZR-37)

Table of Contents

Executive Summary

Beximco Pharma is a leading manufacturer of Pharmaceuticals - both finished formulations and Active Pharmaceutical Ingredients (APIs). The state-of-the-art manufacturing facility of the company are certified by major global regulatory bodies, and today Beximco Pharma is a leading exporter of Pharmaceuticals in the country having a global footprint in more than 50 countries. While operating, the company makes different kinds of plans and formulates various strategies to achieve these plans. Since the scope of this report is limited, the primary focus is on the strategies the company has for achieving its primary goals and overcoming its current problems. The different strategies used to overcome the company's problems and the factors kept in mind while making decisions are highlighted here.

Introduction

Beximco Pharma Ltd. is a leading manufacturer of finished formulations and active Pharmaceutical ingredients in Bangladesh. The company belongs to Beximco group, the largest private sector industrial conglomerate in the country. Incorporated in the late 70s, Beximco Pharma began its journey as a distributor, importing products from global MNCs like Bayer, Germany and Upjohn Inc, USA, which were later manufactured under licensing arrangements. Today, Beximco Pharama is the largest exporter of Pharmaceuticals in the country winning National Exports trophy (Gold) a record four times. Company’s state of art manufacturing facilities are certified by the regulatory authorities of Australia, European Union, Gulf nations and Brazil, among others and it has visible and growing presence across regional markets of Asia, Africa and Central America. Beximco Pharma is the only Bangladeshi company to get enlisted on AIM of London Stock Exchange. The company is consistently building upon its portfolio and currently producing more than 300 generics in over 500 strengths and dosage forms.

Mission

Beximco Pharma is committed to enhancing human health and well being by providing contemporary and affordable medicines, manufactured in full compliance with global quality standards. The company continually strives to improve its core capabilities to address the unmet medical needs of the patients and to deliver outstanding results for the shareholders

Vision

Beximco Pharmaceuticals will be one of the most trusted, admired and successful Pharmaceutical companies in the region with a focus on strengthening research & development capabilities, creating partnerships and building presence across the globe.

Core Values
The core values guide the company to take decisions and help realize individual and corporate aspirations:
Commitment to quality
Customer satisfaction
People focus
Accountability
Corporate social responsibility

SWOT ANALYSIS

Strengths

• Strong brand image and global recognition
• Medicines exported to 50 countries; supplied to reputed hospitals and institutes globally
• Highly cost effective manufacturing; one of the lowest in the world
• World Class facilities certified by global major regulatory bodies such as TGA, AGES, ANVISA & GCC
• Focus on technology-driven specialty products such as Metered Dose Inhalers, Sterile Ophthalmics, Lyophilized Injectibles, Prefilled Syringes etc.
• The cheapest white collar professionals, e.g. Pharmacists, engineers, microbiologists, chemists etc. available at a fraction of a cost compared to developed countries
• Long and successful track record of working with global MNCs

Weaknesses

• Narrower product line than most of the principal competitors
• Have a huge number of employees and monitoring individual performance gets tough
• Insufficient working capital
• Net operating in low market

Opportunities

• New product lines
• Use of new technologies for better and faster production
• Expanding the number of global clients
• Better marketing opportunities

Threats

• Timely manufacturing of the products
• Timely delivery & shipment of manufactured products
• Shortage of supply for the products to be delivered
• Some of the products not living up to the expected quality
• Cost fluctuation
• Foreign currency depreciation

Strategies

• Goal of the company is to manufacture drugs and Pharmaceutical formulations
• 3-5 year budget is planned; focused on global generic drug industry. It is estimated that around $150 million worth of brand name drugs will go off patent by 2015. Beximco is expected to take advantage of this with generic drug skills and global accreditation.
• Different kinds of strategies are applied for home & international markets.
• At home, sales force carries out a vital task of providing doctors with free samples of products. Doctors are the potential clients as it is their recommendations that patients mostly rely on. Different chemists and Pharmacies have to be supplied perfectly, provided discount to encourage buy & credit also prolonged.
• Continuous monitoring is needed in management of stock as well as employees. A total of 2800 employees need continuous monitoring.
• Market research is carried out to decide what to focus on.
• In the year 2012, Beximco registered 36 new products in 12 countries & commenced exporting medicine to 7 new countries. In terms of targeting exports, focus is on emerging & developed markets, while competing with other generic companies, Beximco also focuses on value added products. Beximco also became the first Bangladeshi company to launch Salbutamol HFA Inhaler in Singapore. All the planning for international market depends on the industry performance as a whole. It is also taken into accounts how others are planning. Based on all these, a new production line with new technology is set. This is a capital expenditure for better marketing opportunities.
• 26 new products were also launched in 2012. Making Beximco’s basket products robust and contemporary has always been the top priority. Company is committed to prudent investment particularly in R&D, and expansion of capacity, and also registration in international market.
• While opening new factories or launching new products risks are imminent, but unavoidable. Therefore, all the risk factors are thoroughly analyzed. For a factory these factors include amount of manufactured product, quality of product, requirement to production ratio etc. In case of a new product most emphasis is put on the current market and general need for that product.

Strategies of Launching Products:

• For products that are new, if Beximco is the first to release such a product a complete survey is taken among the doctors to analyze the effectiveness of the product
• For products that have been already operating in the market, effective market research is carried out and demand of the product is taken into account
• Previously released products are usually considered on basis of their performance over the past 3 years. If these products have been able to achieve a minimum profit then they are further released into market
• For loss making products, R&D strives to bring about improvements to overcome the problems. If the products are still not satisfactory then their production is discontinued
• Beximco Pharma takes up several projects to introduce several exciting drug delivery systems to enrich its product portfolio
• New products are specially handled by genetic engineers to further strengthen any Pharmaceutical ingredients before releasing into market

Primary Clients:

Doctors:
Doctors are the most potential clients for any Pharmaceutical company as they prescribe the medicines to the patients. Beximco Pharmaceuticals Limited supplies the doctors with free medicines and gives them incentives items to keep them pleased.

Pharmacists:
Pharmacists supply the medicines to the patients. Beximco follows the same strategy as they do in case of doctors.

Problems

Procurement Problems

• Making sure that the manufactured goods are delivered to the buyers in due time and avoid losses
• Shortage in the amount of product to be supplied
• Quality of the manufactured goods aren’t up to the expected standard
• Cost fluctuation

Sales Problems

• It’s a highly competitive market in the Pharmacy field and gaining profit can become quite the challenge sometimes
• Doctor preferences to the patient is important for sales as most of the patients depend on doctor preference to buy drugs
• Frequent visits have to be made by the sales representative of the company to the doctors’ chambers
• Foreign currency depreciation as in a country’s currency losing its value lowers the amount of profit the company makes

Export Problems

• Manufacturing products that will be exported needs to be finished in time or else there could be a big loss
• Missing an export order proves to be huge loss as the products that were made become mostly useless as the production costs are not offset by any income
• Registering a product in the global market is necessary
• Managing sales representative is important for the export business to run efficiently and without problems
• Controlling the whole process through a third party can be problematic at times

Problem Solving Strategies:

Procurement:

• Storage in every district in case of supply disruptions
• Store necessary goods in case of shipment delay
• Ensuring the quality of the products with the help of experts & analysts

Sales:

• Keeping the doctors and chemists content by offering them attractive discounts
• Beximco Pharma maintains three departments (Market Research Department, Medical Department, Sales Force Department) to manage the sales representatives. The sales force receives efficient training and acts according to the contingencies faced

Export:

• Maintaining timely delivery
• Managing the distributor’s work
• Keeping regular contacts with third parties involved

Political Turmoil:

• Stock more products
• Reduce other costs
• Take police protection to supply the products
• Use alternative conveyance available like ‘rickshaw’ to deliver certain products

# In case of political turmoil there will be reduction of sales which cannot be overcome