Answer to the question no.

Competitive forces in an industry can be analyzed by using the Porters 5 forces model. This
model helps to determine how strong or weak the competing forces in an industry are. There are
5 elements in the model as the name suggests and relating those with the pharmaceutical industry
would give a clear overview about the current scenario of the competition in the industry.

 Threat of substitute products- In the pharmaceutical industry, the threat of substitute

products are very high as numbers of companies may produce the same medicine and if
the customer in unable to find one brands medicine or the price of that brands medicine is
higher compared to others, they may easily switch to other brands.
 Bargaining power of buyers- Here, the threat of bargaining power is very low.
Companies are free to set up any price for their medicines as they want unless it is a live
saving one. The price of extreme necessary drugs is usually set by the government and no
companies are allowed to charge more than that. Therefore, the scope for customers to
bargain is very low.
 Threat of new entrants- Pharmaceutical industry is a heavily capital intensive sector and
also, licensing, compliance and numerous regulatory permissions are required to set up a
new company. And most importantly, customers who are taking medicines of a specific
brand for a long time or that brands medicine is prescribed by the doctor they usually do
not want to change the brand of the medicine until and unless they are bound to do it. All
these add up to create a heavy entry barrier in the industry and hence, the threat of new
entrants is very low for pharmaceutical sector.
 Bargaining power of suppliers- Currently 99.5% of the raw materials for this industry
are imported from China and India. There are options to import raw materials from other
places like Europe but that increases the cost of the raw materials and eventually will
increase the price. Therefore, switching suppliers is very costly in this sector and hence
the bargaining power of suppliers is high. However, Bangladesh is preparing plants to
supply raw materials for the pharmaceutical industry which will lower the dependence on
imports of raw materials and is likely to reduce the bargaining power of suppliers in the
future.
  Rivalry among competitors- There are handful of players in the industry and 20
companies hold majority shares in the market. Most of the companies have same
medicines under their brand names and all are competing to grab others market share. So,
the rivalry among competing firms is high. \

Answer to the question no.2

According to the recent most statistic available of 2018 of top 10 pharmaceutical companies in
Bangladesh, Square pharma holds a market share of 17% with a staggering revenue of $33.76
billion, on the second position is Incepta pharma which holds a market share of 11.1% with an
annual sale of $22.73 billion, third is Beximco with 8.26% and an annual sale of $16.94 billion,
forth is Renata with 5.2% and an annual sale of $10.66 billion, Healthcare holds almost the same
market share as Renata at 5.17% and is in the fifth position with an annual sale of $10.61,
Opsonin is holds 5.08% with an annual turnover of $10.42 billion, sixth is the ACI with 4.38%,
in seventh is Eskayef with 4.37%, eighth is Aristopharma with 4.11%, ninth is Acme with
3.52%. The pharmaceutical industry in Bangladesh is heavily concentrated and is dominated by
large companies. Almost 70% of the market share is hold by the 9 companies mentioned above
and the rest is divided among all the other existing companies. Square pharma has been the
market leader since the last 32 years and it is continuing. However, due to increased competition
all the companies other than Opsonin and Acme had witnessed a negative sales growth in 2018.

Below is a Strategic Group Mapping that illustrates where some of the big players of the
markets are located.
High

Square
Reneta Incepta

Price

Beximco

Health
Aristo care
Pharma

Low

Low Product line High

Answer to the question no.3

Key factors that are driving the pharmaceutical industry are:

 Industry growth due to increase in GNI per capita- GNI is the Gross National Income,
and the GNI of Bangladesh has been increasing for the last 10 years, the GNI per capita
grew at a rate of 6% in the last 10 years. This indicates that people have more money now
than they had 10 years back, and as the income grew people will have more money to
allocate for medical expenditures.
  Population growth and rapid urbanization- The current population of Bangladesh is
approximately around 19 crores. Bangladesh is a densely and over populated country, this
has several drawbacks but however the growing population is perfect for businesses. As
the population is growing the demand for medicines are also likely to increase.
 Upward demand for generic drugs- Bangladesh is one of the fastest growing
economies in the world with a GDP growth rate of almost 7%, this has led to a growth for
pharmaceutical industries as well, and the demand is at a growing level.
 Increase in modern healthcare facilities- Modern technologies is being adopted by the
pharmaceutical companies of Bangladesh which will help to increase the growth of the
industry.
 Health awareness of mass people and change in lifestyle- People are being more health
cautious and are changing their lifestyle to a healthy lifestyle which was not the case for
Bangladesh even a few years back, this change will impact the pharmaceutical industry as
this is likely to improve the demand for some drugs.
 Demographic shift- Life expectancy among the people are significantly increasing. In
2002 the average life expectancy was 66.4 years old, whereas in 2017 it rose to 72.81
years old. This change indicates people are living more which means the demand for
drugs will hold for a longer period of time.
 Increase in exports- Bangladesh exports medicines to more than 147 countries currently
and the trend is on the rise. The exports have been increasing for pharmaceutical
industries which make it one of the key drivers of the industry.

Answer to the question no.4

Key factors for future competitive success are:

 Backward linkage- Bangladesh is heavily dependent of importing raw materials for

manufacturing pharmaceutical products, this dependency on imports affects the level of
exports as well. If the dependency on importing of raw materials could be lowered by
setting up plants to source their own raw materials this could create a price stability and
 the price competitiveness among other countries would also increase. This would lead to
a more increased and stable exports.
 More greenfield investment are going to lead a highly fragmented market- Many
international pharmaceutical companies are showing interests to set up their
manufacturing plants in Bangladesh. This would increase the competitiveness and rivalry
among existing firms with the new entrants. The new firms will produce the same drugs
which are already being produced by the local manufacturers and the local firms would
be bound to meet quality standards as well as keeping the price in check. This
competitiveness will improve the scopes for the local manufacturers to be more
successful in exports as well.
 Cutting promotion cost to reduce price- One of the main cost of this industry is the
promotional costs. Small firms with weaker financial capacities are less likely able to
compete with the large ones on this. And therefore, many small firms might not be able to
sustain in the long run and which increases the scopes for large pharmaceutical
companies to hold a larger market share.

Answer to the question no.5

Value chain consists of 2 activities. Primary activities and support activities. There are several
components of the value chain in the pharmaceutical industry. Here are few of the value chain
components for pharmaceutical industry:

1. Importing API (Raw materials).

2. Converting API into finished goods (Manufacturing)
3. Promotion
4. Selling the drugs/ medicines to both local and foreign markets.
5. Improvement in technological factors and adopting modern facilities.
6. Hiring employees.
7. Improving facilities of the factories by installing more equipment.
Inbound Inventory Operations Marketing & sales Outbound Inventory Service

1 2 3 4

Administrative activities and management

Human resource management 6
Technology development 5
Procurement 7