Term Paper

Impact of business level strategies on performance of a firm: A case study of Beximco Pharmaceuticals Ltd.

By Shekh Jahed Al Nayon ID.112 083 064 MBA Program Fall 2010 MGT-607(Strategic Management)

School of Business United International University Dhaka, Bangladesh 2010

Table of Contents
Name of Content Page no

1. Historical Background

01 02 04 06 06 07 07 08

2. Company Profile 3. Competitive Status of the Firm

4. Business Level Strategies Pursue 5. Trends of Performance 6. SWOT Analysis 7. Possible Measures to Improve Performance 8. Summary and Conclusion

1. Historical background
Beximco Pharma (BPL) is a leading edge pharmaceutical company based in Dhaka, Bangladesh, and is acclaimed for its outstanding product quality, world-class manufacturing facilities, product development capabilities and outstanding professional services. Its strategic strengths include strong recognition of brands, highly skilled work force and diversified business mix. Its two brands Neoceptin R (Ranitidine) and Napa (Paracetamol) are the top two selling brands in the Bangladesh Pharmaceutical market. BPL started operation in 1980, manufacturing products under the licenses of Bayer AG of Germany and Upjohn Inc. of USA and now have grown to become nation's one of the leading pharmaceutical companies, supplying more than 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, own branded generics for almost all diseases from AIDS to cancer, from infection to asthma, from hypertension to diabetes for both national and international markets. Beximco Pharma is also the largest exporter of pharmaceutical products from Bangladesh and received National Export Trophy (Gold), the highest national accolade for export, for record three times. BPL manufactures a range of dosage forms including tablets, capsules, dry syrup, powder, cream, ointment, suppositories, large volume intravenous fluids, metered dose inhalers etc. in several worldclass manufacturing plants, ensuring high quality standards complying with the World Health

Organization (WHO) approved current Good Manufacturing Practices (cGMP). It also contract manufactures for major international brands of leading multinational companies. The recipient of three times gold national export trophy, Beximco Pharma is the largest exporter of pharmaceuticals from Bangladesh. It is the only pharmaceutical company in Bangladesh that received this highest national accolade for export, for record three times. BPL markets its brands through its own professional sales and marketing teams in African, South Asian and other markets. It also supplies its products to renowned hospitals and institutions in many countries, including Raffles Hospital and K K Women & Childrens' Hospital in Singapore, MEDS and Kenyatta National Hospital (KNH) in Kenya, Jinnah Hospital, Agha Khan Hospital and Shaukat Khanum Memorial Hospital inPakistan. BPL is also an enlisted supplier of World Health Organization (WHO) and UNICEF. Brief Company History 1976: Registration of the company 1980: Started manufacturing and marketing of licensee products of Bayer AG of Germany and Upjohn Inc. of USA 1983: Launching of Beximco Pharmas own brands 1985: Listing in the Dhaka Stock Exchange (DSE) 1990: Commissioning of Basic Chemical (APIs) unit 1992: Started export operation with Active Pharmaceutical Ingredients (APIs) 1993: First export market operation with finished formulations 1996: Introduction of Sustained Release Dosage form 1997: Introduction of Suppository Dosage form; Commissioning of Metered Dose Inhaler (MDI) plant; Introduction of Metered Dose Nasal Spray 1998: First pharmaceutical company of the country achieving 'National Export Trophy (Gold)' for 1994-95 1999: UNICEF approval of Beximco Pharma as an enlisted supplier. 2000: Agreement to manufacture Metered Dose Inhaler (MDI) for Glaxo Smith Kline. 2001: Introduction of Small Volume Parenteral (SVP) products; establishment of Analgesic-Antiinflammatory bulk drug plant. 2002: Won the first prize of ICAB National Awards 2000 for 'Best Published Accounts and Reports' in Non-Financial Sector Category The first Bangladeshi company to supply pharmaceuticals to Raffles Hospital the most prestigious hospital in Singapore. 2003: Received National Export Trophy (Gold) for consecutive 2 years (1998-99, 1999-2000) Won the Silver prize of ICAB National Awards 2003 for 'Best Published Accounts and Reports' in Non-Financial Sector Category Won a tender to supply Neoceptin R and Neofloxin to Raffles Hospital of Singapore for whole Year's consumption Introduced AntiHIV drugs for the first time in Bangladesh. Diversification into Anti-Cancer therapeutic class.

2004: Signed contract with Novartis to manufacture their liquid, cream, ointment and suppository products under Toll Manufacturing agreement. 2005: Merger of Beximco Infusions Ltd. with Beximco Pharmaceuticals Ltd. Admission to Alternative Investment Market (AIM) of London Stock Exchange (LSE). 2006: New USFDA standard Oral Solid Dosage (OSD) Plant Commissioned Successfully relocated/outsourced penicillin and cephalosporin manufacturing facilities as per cGMP guidelines Introduced generic oseltamivir in Bangladesh Launched CFC free ozone benign HFA inhalers as the first company in Bangladesh

2. Company Profile
Year of Establishment: Commercial Production: Status: Authorized Capital (Taka): Paid-up Capital (Taka): Number of Shareholders: Stock Exchange Listings: Number of Employees: Business Lines: 1976 1980 Public Limited Company 2,000 million 1,145.07 million Around 54,000 Dhaka, Chittagong and AIM of London Stock Exchanges 2,384 Manufacturing and marketing of pharmaceutical Finished Formulation Products, Large Volume Parenteral and Active Pharmaceutical Ingredients (APIs). Overseas Offices & Associates: Australia, Bhutan, Cambodia, Chile, Ghana, Hong Kong, Indonesia, Jordan, Kenya, Malaysia, Myanmar, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, Vietnam and Yemen. Facilities: BPLs manufacturing facilities are spread across a 20 acres site located in and around Dhaka, Bangladesh. They comprise of a number of purpose built plants, including the new Oral Solid Dosage (OSD) plant. The land and buildings are wholly owned by the company and approximately 13 of the 20 acres of land are currently in use. The site includes facilities for manufacturing intravenous fluids, liquids, creams, ointments, suppositories, metered dose inhalers, active pharmaceutical ingredients as well as the existing and new OSD plants for tablets and capsules, the research laboratory and a number of warehouses. The plant and machinery throughout the site has been designed, procured and installed by partners from Germany, Switzerland, Sweden, Italy and the United Kingdom, amongst others.

Product profile
Allergic disorders The journey of Beximco Pharma in this arena began with the licensing arrangement with Bayer AG of Germany for the manufacture and marketing of Incidal in Bangladesh Analgesics Beximco Pharma is the largest provider of analgesic medicines in Bangladesh, led by the strong performance of Napa , a preparation of paracetamol. Paracetamol is the safest analgesic in the world for more than 50 years. Napa is the number one brand in terms of unit sales in Bangladesh and is available in 13 forms and strengths. Anti-infectives The anti-infective products of Beximco Pharma are offered in different dosage forms: Tablet, Capsule, Large volume and Small volume parenterals for systemic administration and Cream and Ointment for topical administration. Beximco Pharma is the only company is Bangladesh to manufacture antiviral products to treat most serious infections of HIV (AIDS). Cardiovascular Beximco Pharma has always been the leader in Bangladesh cardiovascular market with innovative product offerings to treat almost all type of cardiovascular diseases like Hypertension, Coronary Artery Diseases, Hyperlipidemia, Heart Failure, Arrhythmia etc. Beximco Pharma's amlodipine brand Amdocal is the number 1 cardiovascular brand since 1996. Central nervous system Beximco Pharma has a wide range of CNS medication provide effective treatment of different diseases involving CNS including anxiety, depression, migraine, epilepsy, insomnia, schizophrenia, dementia etc Cough & cold products Wide product range of Beximco Pharma offers the doctors freedom to choose the right medication for different types of cough: dry cough, chesty productive cough and other cough associated with common cold. Diabetes Beximco Pharma offers wide range of products ensuring effective treatment of type II diabetes. It has the generic versions of all the leading research molecules including Glipizide, Gliclazide, Metformin, Glimepiride, Pioglitazone Repaglinide etc. Gastro intestinal Beximco Pharma's Neoceptin-R, which is a H2 blocker used in the treatment of ulcer, GERD, and other hyperacidity disorders, is the number one brand in Bangladesh Pharmaceutical Market. Beximco Pharma will continue to build on its strengths in gastrointestinal category.

Musculoskeletal Osteoarthritis, Rheumatoid arthritis, Muscle spasm, pain of musculoskeletal origin are some of the diseases that limit the activities of daily life of millions of patients. Beximco Pharma with its wide range of products in the musculoskeletal category offers effective treatment solution for those patients. Oncology Beximco Pharma manufactures a generic version of Tamoxifen (Tamona) which is being used successfully world wide for the treatment of breast cancer disease. The company also has a proven drug for the treatment of nausea and vomiting associated with cancer therapy.

3. Competitive Status of the Firm

Business level strategies developed by BPL help them to earn competitive advantage through quality products, superior services, and outstanding customer relationship. Innovation strategies have been the key to their success both in product differentiation and in product promotion. BPL had been the first-mover to bring Marketing Approach rather than traditional Selling Approach in local pharmaceuticals industry. BPL also believes in Focus Strategy and concentrates on a particular segment of the market. They strive to retain existing customers as well as to attract new ones. BPL

Company % has developed unique customer service through their Unbiased Medical Service. BPL has also
developed superior human resource for earning competitive advantage in the market. Square 15.29 Beximco Pharmaceuticals Ltd is the leading edge pharmaceutical manufacturer and the pioneer pharmaceutical exporter of Bangladesh. BPL is highly acclaimed for its quality medicines at home Beximco 10.34 and abroad. BPL is also the only pharmaceutical company of the country to receive 'National Export Trophy (Gold)' for record three times. Beximco Pharma, as the first company of Bangladesh, started export operations in Myanmar in 1996. Incepta 6.87 The Company's products are sold to retail outlets, medical institutions and other pharmaceutical manufacturers in Bangladesh, in regional markets such as Pakistan, Nepal, Bhutan, Cambodia and ACME 5.37 Myanmar and in other markets overseas, principally in East Africa and South East Asia, including Singapore. Drug International 4.57

SK+F

4.50

Opsonin

3.99

Renata

3.74

SanofiAventis

3.74

Aristopharma ACI

3.56 3.28

4. Business-Level Strategy Pursue

The companies that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. Companies following this strategy place emphasis on cost reduction in every activity in the value chain. It is important to note that a company might be a cost leader but that does not necessarily imply that the company's products would have a low price. In certain instances, the company can for instance charge an average price while following the low cost leadership strategy and reinvest the extra profits into the business.

They strive to retain existing customers as well as to attract new ones. BPL has developed unique customer service through their Unbiased Medical Service. BPL has also developed superior human resource for earning competitive advantage in the market.

5. Trends of Performance
The company offers significant cost advantage as a manufacturer, as the average wage in Bangladesh is probably the lowest in the world, and at least two to three times lower than that in China or India. skilled manpower at a very low cost, low energy cost, Govt. policy support, investor friendly environment Prospective partners can benefit themselves with competitive advantages like availability of highly etc. Completion of additional three Oral Solid Dose ("OSD") lines at the Track II plant. Setting up a new Metered Dose Inhaler ("MDI") Unit with a capacity of 20 million units per annum. Setting up a new Dry Powder Inhaler ("DPI") plant. Expanding the current small capacity Nasal Spray facility. Capacity expansion of the existing multi-purpose Active Pharmaceutical Ingredient ("API") plant. Setting up a new Paracetamol API Unit. Capacity expansion of Large Volume Parenterals production facility. Construction of a new 55,000 sq feet warehouse. Increase in working capital to support the increased level of sales.

6. SWOT Analysis
Strength 1. The highest national accolade for export, for record three times. 2. A national company with very good market reputation. 3. Wide market coverage (both Bangladesh and abroad) 4. Good company image. 5. Availability total range (oral solid, liquid and IV dosage forms). 6. Became the first Bangladeshi pharmaceutical company to enter Latin America Weakness 1. Irregular promotion.

2. Lack of targeted promotion. 3. Less focus on rural area. 4. Not enough field force. Opportunity 1. Less retail coverage. 2. Market is positively growing both in Bangladesh and abroad. Threat 1. Less penetration to the intern doctors. 2. Competitive market environment. Existing competitors are very aggressive.

7. Possible Measures to Improve Performance

Focused promotion in front of general practitioners. Introduction of suspension (Taste-masked granules). Increased promotion in the rural market. Extended intern doctor coverage. Extended hospital-indoor coverage.

8. Summary and Conclusion

Beximco Pharma (BPL) is a leading edge pharmaceutical company based in Dhaka, Bangladesh, and is acclaimed for its outstanding product quality, world-class manufacturing facilities, product development capabilities and outstanding professional services. Beximco Pharmaceuticals Ltd is the leading edge pharmaceutical manufacturer and the pioneer pharmaceutical exporter of Bangladesh. BPL is highly acclaimed for its quality medicines at home and abroad. BPL is also the only pharmaceutical company of the country to receive 'National Export Trophy (Gold)' for record three times. The company with the lowest costs would earn the highest profits in the event when the competing products are essentially undifferentiated, and selling at a standard market price. Companies following this strategy place emphasis on cost reduction in every activity in the value chain. It is important to note that a company might be a cost leader but that does not necessarily imply that the company's products would have a low price. The company offers significant cost advantage as a manufacturer, as the average wage in Bangladesh is probably the lowest in the world, and at least two to three times lower than that in China or India. Skilled manpower at a very low cost, low energy cost, Govt. policy support, investor friendly environment Prospective partners can benefit themselves with competitive advantages like availability of highly etc. The strength which gives the firm competitive advantages are: the highest national accolade for export, for record three times, A national company with very

good market reputation, Wide market coverage (both Bangladesh and abroad),Good company image, Availability total range (oral solid, liquid and IV dosage forms), Became the first Bangladeshi pharmaceutical company to enter Latin America They strive to retain existing customers as well as to attract new ones. BPL has developed unique customer service through their Unbiased Medical Service. BPL has also developed superior human resource for earning competitive advantage in the market. So, eventually we can say that increased promotion in the rural market, extended intern doctor coverage, extended hospital-indoor coverage, Focused promotion in front of general practitioners, Introduction of suspension (Taste-masked granules) will be helpful for improving the performance of Beximco Pharma Ltd.

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