Term Paper

Performance dynamics of Beximco Pharmaceuticals Ltd.

By Md. ---------------ID No. ----------------MBA Program Summer Semester 2010 MGT506: Strategic Management

School of Business United International University Dhaka Bangladesh 2010

1

Company profile 3. Relationship between Business Level Strategy and Performance 7. Historical Background 2. Possible Measures to Improve Performance 2 . Business level Strategy Pursued 6. Market Scenario 5.Table of Content Topic Page 03 03 03 04 05 06 07 08 1. Organizational Structure 4. SWOT Analysis 8.

Business Research and Development. of USA and now have grown to become nation's one of the leading pharmaceutical companies. Product Planning. ointment. from hypertension to diabetes for both national and international markets. They also contract manufacture for major international brands of leading multinational companies. Finance and Accounting. Sales. Organizational Structure BPL is completely governed and maintained by a corporate body. metered dose inhalers etc. dry syrup. supplying more than 10% of country's total medicine need. 3 . Bearing the demands of dynamic environment in mind BPL designed its organizational structure as highly adaptive and flexible. The firm started operation in 1980. adapt and change. cream. Company Profile Beximco Pharma manufactures a range of dosage forms including tablets. capsules. It is a Learning Organization that has developed the capacity to continuously learn. The organizational members share information openly and collaborate on work activities. ensuring high quality standards complying with the World Health Organization (WHO) approved current Good Manufacturing Practices (cGMP). and MIS departments each supervised by a director. They have minimal formalization with narrow span of control. The chief of the organization is the Chief Executive Officer and the total operation is divided into Marketing. from infection to asthma. the largest private sector industrial conglomerate in Bangladesh.Historical Background Beximco Pharma is a leading edge pharmaceutical company and is a member of the Beximco Group. Commercial. Directors of the departments report directly to the CEO. manufacturing products under the licenses of Bayer AG of Germany and Upjohn Inc. in several world-class manufacturing plants. Today Beximco Pharma manufactures and markets its own `branded generics' for almost all diseases from AIDS to cancer. large volume intravenous fluids. suppositories. In BPL employees are highly trained and empowered to handle diverse job activities and problems. powder. Manufacturing.

. Except Beximco Pharma other leading companies are Square Pharma.806 (BDT) . Marketing and in some cases by Director. The analysis of the two company’s financial data shows that for the year 2007-2008 gross profit of BPL was 1.. There are a number of reasons why BPL could not beat Square Pharma for the first position. Square Pharma has a range of 44 injectables and has sold 28.  Product Range: products. Etc.289.  Producing Injectables: Again BPL does not manufacture or market Injectables where this is a huge market.For internal communication.837(BDT) and Square Pharma was 3. Aventis Pharma Ltd. BPL follows Square Pharma at the 2nd position. Among them Square Pharma is the market leader at this moment.  Fewer Markets Served: Square Pharma serves a larger market than BPL while BPL concentrates on market focus. The most relevant of them are stated here.629. unlike Square Pharma BPL does not do business in the credit market. BPL follows a strictly formalized Intranet based electronic communication system as well as informal verbal communication.000 units in the year 2007-2008. The challenge faced in open market competition is the scarcity and unavailability 4 . BPL has a fewer range of products than Square Pharma does. Sales. They only serve the premium market.401. The national companies account for more than 65% of the pharmaceutical business in Bangladesh. Incepta Pharmaceuticals. mostly by Director. All the external communications are supervised. Navana Pharma Ltd. BPL manufactures only over 300 products in comparison to Square Pharma’s over 500 In international market the main competitors for pharmaceutical companies in our country are India and China.781. In contrast. Market Scenario In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors which is contributing in the country's economy.514. For external communication BPL uses both internet based electronic communication and an array of printed communication material. For example. Opsonin Chemical Industries Ltd.

Afghanistan. Their Short Term plan to build facility to manufacture Small Volume Parenterals (SVP). Africa and Central America and have registered 107 products in different markets. Beximco Pharma is the pioneer in pharmaceutical export from Bangladesh and has received National Export Trophy (Gold). Opthalmic and Nebulizer Solutions has progressed as scheduled. Beximco Pharma has adopted several Business Level Strategies regarding growth and market focus with the view to achieving organizational goals. Kiribati and Solomon Islands. So. the highest national accolade for export. is a leading edge pharmaceutical company is acclaimed for its outstanding product quality. companies in our country have to import these materials from abroad (India. world-class manufacturing facilities. Their strategic strengths include strong recognition of brands. Besides. BPL signed a Long Term Arrangement with the Global Supply Division of UNICEF (Denmark) to supply 60. for record three times. highly skilled work force and diversified business mix. Their two brands . Business level Strategy Pursued Beximco Pharmaceuticals Ltd. China and a few countries from Europe) at high price.Neoceptin R (Ranitidine) and Napa (Paracetamol) are the top two selling brands in the Bangladesh Pharmaceutical market.of raw materials in local market. Middle East. 5 . the privileges of being LDC as a result of the Patent Law will no longer be in effect after 2015. During the first quarter of 2008. Besides. Pacific Islands. As Growth Strategy BPL have decided to enter into nine new international markets in Asia. BPL has entered into 3 new international marketsnamely. They are planning to commence marketing of these products by first quarter of 2009. product development capabilities and outstanding professional services.000 units CFC free metered dose inhaler product over a two year contract period.

Beximco Pharma is the largest exporter of pharmaceuticals from Bangladesh. BPL also believes in Focus Strategy and concentrates on a particular segment of the market. superior services. BPL has developed unique customer service through their Unbiased Medical Service.Relationship between Business Level Strategy and Performance Beximco Pharma (BPL) is a leading edge pharmaceutical company is acclaimed for its outstanding product quality. highly skilled work force and diversified business mix. Agha Khan Hospital and Shaukat Khanum Memorial Hospital in Pakistan. In this spirit. Jinnah Hospital. They are the only pharmaceutical company in Bangladesh received this highest national accolade for export. BPL has also developed superior human resource for earning competitive advantage in the market. This new plant will also offer contractmanufacturing facility to leading pharmaceutical companies. The recipient of three times `gold' national export trophy. world-class manufacturing facilities. product development capabilities and outstanding professional services. Innovation strategies have been the key to their success both in product differentiation and in product promotion. In particular they are very interested in developing a strong export market in USA and Europe. BPL had been the first-mover to bring Marketing Approach rather than traditional Selling Approach in local pharmaceuticals industry. MEDS and Kenyatta National Hospital (KNH) in Kenya. The firm also supply products to renowned hospitals and institutions in many countries. To meet the future demand they have invested over US 50 million dollar to build a new state-of-the-art manufacturing plant. 6 . especially from Europe and US. for record three times. Beximco Pharma has a strong market focus and is anticipating continued future growth by leveraging business capabilities and developing superior product brands and markets. including Raffles Hospital and K K Women & Childrens' Hospital in Singapore. South Asian and other markets. Business level strategies developed by BPL help them to earn competitive advantage through quality products. They market their brands through their own professional sales and marketing teams in African. They strive to retain existing customers as well as to attract new ones. Being a Learning Organization the core essence of Beximco Pharma is its entrepreneurial spirit in every sphere of its management. confirming to USFDA and UK MHRA standards. the tasks of each managerial function are carried out through Management by Objective approach. Its strategic strengths include strong recognition of brands. and outstanding customer relationship. Beximco Pharma is also an enlisted supplier of World Health Organization (WHO) and UNICEF.

Threat Strong Competitors in Domestic & International Market. Political Instability Government & International Regulations. Rising Trend of Material Price 7 . Opportunities Ability to Retain Growth & market Focus In difficult Operating Situations Ability to Exploit Opportunities of Patent Law as an LDC in International Market.Swot Analysis Strength Employee Empowerment Capability to Bring Innovation & product differentiation Outstanding Product Quality World Class Professional Service Weakness Insufficient Working Capital Not Operating in Low Cost Market.

Ukraine. prices of ingredients will increase significantly. the least developed countries do not have to provide any patent protection for pharmaceuticals until 2016 as the WTO has extended the deadline only for them through Trips (Trade-Related Aspects of Intellectual Property Rights). Sweden. so countries will certainly loss their export markets. Sri Lanka. 70 percent comes from India while the rest comes from China. rising trend of material price. Switzerland. The biggest challenge for the managers in the pharmaceuticals industry is the competition. Myanmar. The main challenge for Beximco Pharma is now to bring down production cost to offer medicines in the international market at a competitive price. USA. England. At present Bangladesh imports 80 percent of total raw materials required for the industry. India. However. Pakistan. South Africa. increased security problem. The major markets for Bangladesh's pharmaceutical exports include Korea. Bangladesh is exporting pharmaceutical products to over 50 countries of the world. obsolete technology. Kenya. Indonesia and Hong Kong. Of the requirement. The macro political and economic environment of our country is so full of uncertainty that the managers of business organizations of Bangladesh face very difficult challenges to cope with the ever changing situations. To compete in international as well as in local market in adverse situation the managers work has become much more difficult in today’s ever changing business environment. the developing countries will lose their patent rights to sell products. Vietnam. Countries like Kenya. Bangladesh can substantially increase pharmaceuticals export if the government extends support to local producers after this year when WTO rules on pharmaceuticals for developed and developing nations comes into effect.Possible Measures to Improve Performance Any organization is deeply effected by its environment. As Beximco Pharma is decentralized organization and core 8 . raw materials must be produced locally. Malawi and Uganda have a huge pharmaceuticals market for Bangladesh. At present. For this. the Netherlands. Germany and Malaysia. Brazil. high rate of inflation. Norway. Tanzania. To be successful. Developing plans in a dynamic situation demands critical analysis of the situation and strict adhering to the core principal of the organization. Yemen. dire country image etc which effect the job of managers in our country most. Bangladesh is now self dependent in the pharmaceuticals the political and economic instability there are other factors like international and domestic laws and regulations. From the next year. relentless contribution and dedication of the organizations management is very much needed. In the changed scenario. Producing countries will lose their rights to sell pharmaceutical ingredients at current prices after 2004 due to the WTO rules.

As one of the leading pharmaceutical company Beximco Pharma also faces these problems that are bar to achieve organizational goals effectively. 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. Market Diversification: After 2015. Such approach can be proved as a benefit of the company. Bangladesh mainly concentrates on this category. involving the pharmaceutical industry Beximco Pharma should prepare their arrangements to cope with the coming changed business environment. India will be the biggest contestant. Thus the company can take a better position by maximizing profit in an open market economical condition. Handling Competitions: Since. Negotiating with the Government: 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. The pharmaceutical industry in this country is undoubtedly one of the most promising industries. where the formulation of this product is almost same. the management of BPL should always be watchful and should constantly analyze the organization’s overall environment. 9 . Beximco pharma can operate on offpatent products as after years of business the formulations of Patent Medicines are sold in the market so that others can go into mass production. the industry is not operating without any problems. In the mean time. This part of the report states the possible steps that could be taken to mitigate the gravity of the difficulties that threat the industry. as labor cost is one of the lowest in the world. As a learning organization BPL should keep their practices of flexibility to encourage innovation for the times of much needed change.values are cherished by everyone within the organization. So BPL must get ready to compete in a more challenging situation in the international market where. However. Again. they should look forward to grow their business as much as possible both in national and international market. Prices of the products are under this category are competitive. privileges as LCD regarding Patent Act will expire. To sort out these problems here some suggestions are recommended. operating in dynamic situation is easier than it seems. as Government is going to pass a new version of law. Again. Coping with Instable Economic State: To cope with the ever changing economic environment. BPL will have to concentrate on the Generic medicines that are the products that are produced in mass scale and marketed by several companies under different brand name.

Conclusion In recent highly competitive medicine manufacturing sector. 10 . decided to introduce leading-edge supplier and customer relationship management capabilities. streamlined operations and effective business relations are essential. Beximco Pharmaceuticals Ltd. To improve information exchange with its many partners.

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