North South University

Course: BUS 505 Principles of Accounting

Semester: Summer, 2014

Dr. Mohammad Tareq

Introduction

Company Overview:
Square Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and it has
been continuously in the 1st position among all national and multinational companies since 1985.
It was established in 1958 and converted into a public limited company in 1991. The sales
turnover of SPL was more than Taka 13.78 Billion BDT (US $ 172.25 million) with about
19.18% market share (Till December 2013) having a growth rate of about 23.54%.

Square Pharmaceutical Ltd now has one of the largest and competent sales force and large
distribution network of its own, operated from 18 different locations throughout the country. A
most dynamic skilled and dedicated marketing team comprising of pharmacists and doctors are
at the core of the marketing operation. These highly skilled professionals play a crucial role in
providing the necessary strategic guideline for the promotion of its product.
Square Pharmaceuticals Limited has extended its range of services towards the highway of
global market. It pioneered exports of medicines from Bangladesh in 1987 and has been
exporting antibiotics and other pharmaceutical products. This extension in business and services
has manifested the credibility of Square Pharmaceuticals Limited.

Corporate Brief of Square Pharmaceuticals Ltd:

Year of Establishment (Initially as a Partnership)

: 1958

Incorporated as a Private Limited Company

: 1964

Technical Collaboration Agreement with Janssen Pharmaceuticals of

: 1974

Belgium (A subsidiary of Johnson and Johnson International Ltd.)

Technical Collaboration Agreement with F.Hoffman-La Roche and Co. Ltd.

: 1982

Converted into Public Limited Company

: 1991

Initially Public Offering (IPO) of shares of SQUARE Pharmaceuticals Ltd.

: 1994

Stock Exchange Listing (Dhaka and Chittagong)

: 1995

Agreement with M/s. Bovis Tanvec Ltd. of UK for implementation of Dhaka

: 1996

Plant
Awarded ISO-9001 Certificate

: 1998

SQUARE Pharmaceuticals Ltd., Dhaka Unit gets the UK MHRA approval

: 2007
2012

Awarded TGA Certificate

Authorized Capital
Paid-up Capital

TK 10,000
Million
Tk 4820 Million

Number of Employees
Subsidiary Company

5868
Square
Formulations Ltd.

Industry Overview:
The pharmaceutical industry in Bangladesh is one of the most developed high-tech sectors within
the country's economy. There are about 231 licensed allopathic drug-manufacturing units in the

country, out of which only 210 were in active production; others either closed down on their own
or were suspended by the licensing authority for drugs due to non-compliance to good
manufacturing practices or drug laws. The industry manufactures about 5,600 brands of
medications in different dosage forms. There are, however, 1,495 wholesale drug license holders
and about 37,700 retail drug license holders in Bangladesh. After the promulgation of the Drugs
(Control) Ordinance, 1982, the development of this sector was accelerated. The professional
knowledge, thoughts and innovative ideas of the pharmaceutical professionals working in this
sector are the key factors for this development. Due to recent development of this sector, the
industry is exporting medicines to global markets, including the European market. This sector is
also providing 97% of the total medicinal requirement of the local market. Some of the
companies produce insulin, hormones, and anticancer drugs, which were not previously
produced in Bangladesh. Leading pharmaceutical companies are expanding their business with
the aim to expand into the export market. Recently, a few new industries have been established
with high-tech equipment and professionals to enhance the strength of this sector.

Brief of the Industry:

Inception: Around 1950

No of Companies: 231
Market Size: 76.5 Billion BDT

Market Growth: 24.30 %

nd

Position: 2

(after Garments) in Industry Sector

Demand Covers: 97% of Domestic Market

No. Of Medicine Brand: 5600
Market Share: Domestic 80% and MNC 20%
Exports: 72 Countries

Methodology
Objective:

Broad Objective:
To analyze the business strategy of Square Pharmaceuticals Limited

Specific Objectives:

To identify the generic business model they follow

To find out the strategic intent of Square

To identify the dominant trait of the industry

To find out the drivers of change of industry

To identify the external environment of Square Pharmaceutical

To identify the internal environment of Square Pharmaceutical

To analyze the balanced scorecard of the company

Methodology:
Primary Data:

To conduct this study, primary data were collected by informal interview of corporate
professionals who are working in different pharmaceutical industry. We also tried to contact
with some pharmacy, doctors and drugstore owners regarding the issue.

Secondary Data:

Source of secondary data are websites, printed material, articles, catalogs and online social media
of various company. Annual reports of Square Pharmaceutical Limited were also used.

Scope:
The study is focused on the pharmaceutical industry of Bangladesh. This study will explain the
aspects and strategies of pharmaceutical industry of Bangladesh as well as a leading
pharmaceutical company. So it would be very useful for different users.
The purposes this study will serve such as

Provide a brief idea about market structure to the onlooker about pharmaceutical industry

Provide a cross-sectional view of market situation of current trend

Help a new entrant in this business to understand the market trend

Will provide Food for Thought to new researchers like us

Basically anyone studying the report will get firsthand information about square pharmaceutical
ltd and the whole pharmaceutical industry which he can use in developing various products
available and soon to come in near future.

Limitation:
During the preparation of this report we had to face a few problems. These disrupted the
preparation of the report. They are discussed below.

Time Constraint

The websites were are less organized regarding our topic

There was huge amount of data to sort out and managing those data in a proper manner
required quite a lot time

Square Pharmaceuticals Limited: The

Market Leader
Vision Mission and Objectives:

Vision Statement:

We view business as a means to the material and social wellbeing of the investors, employees
and the society at large, leading to accretion of wealth through financial and moral gains as a part
of the process of the human civilization.

Mission Statement:
Our Mission is to produce and provide quality and innovative healthcare relief for people,
maintain stringently ethical standard in business operation also ensuring benefit to the
shareholders, stakeholders and the society at large.
Objective:
Our objectives are to conduct transparent business operation based on market mechanism within
the legal and social framework with aims to attain the mission reflected by our vision.

Basic Generic Strategy

Square pharmaceutical Ltd being the market leader of pharmaceutical industry of Bangladesh
follows a unique set of strategies. They did not confine themselves into only one strategy
follower; rather they focused on different generic strategy for different category of product. So
they kind of diversified their portfolio among different segments of the market.
Cost leadership strategies:

We found that square pharmaceuticals follows cost leadership strategies for a specific set of
product category. Because cost leadership strategy is an integrated set of actions taken to
produce goods or services with features that are acceptable to customer at the lowest cost,
relative to that of competitors. Square using the cost leadership strategy to sell no-frills,

standardized products to the industrys most typical customers. Squares products have
competitive levels of differentiation in term of features that they create value for customers.
Indeed emphasizing cost reductions while ignoring competitive levels of differentiation is
ineffective. Square pharmaceutical also carefully examines all support activities to find
additional sources of potential cost reductions. Developing new systems for finding the
optimal combination of low cost and acceptable quality in the raw materials required to
produce the drugs.
Focused Differentiation:

Square pharmaceutical limited also focuses on market niche, concentrating competitively on a

specific market segment. These types of products are usually charged with premium price and
only a few numbers of companies produces or imports those drugs. In this regard square
pharmaceuticals achieved a good reputation in medicine sector.

Corporate Culture
SPL, with its progressive business outlook, believes and practices corporate work culture with a
classic blend of efficiency and equity. SPL believes in company growth by increasing efficiency
level of employees and for that offering excellent environment and support for skill and
knowledge upgradation. SPLs Business Motivation is Being Good by Doing Well and to
conduct transparent business operations based on market mechanism within the legal, ethical &
social framework with aims to attain the mission reflected by the companys vision. It values
productivity as the spontaneous contribution of Human Resources.

Strategic Human Resource Development Programs are the energy sources for SQUARE HR for
running towards the zenith of success. Flow of clear and specific information and justification of
queries play the vital role to ensure the market reputation of SQUARE as the most trusted and
transparent company and it enriches the motivation level of HR who are the real contributors and
owners of his / her own jobs. At SPL, HRD symbolizes the unique blending of professionalism
as well as sharing the stress and success equally like a family where every member has deep
concern, feelings and pride for their own company SPL. HR ensures the strong supporting role to
develop & implement HR policy guidelines for ensuring uninterrupted operation and
spontaneous participation to achieve organizational objective as well as fulfillment of employee
needs. HR is maintaining an effective way to deal with labor union and still no unrest has been
recorded as dispute maintaining a progressive labor policy. SPL follows

laws and encourage work environment that welcomes diversity and also follow nondiscrimination & fair treatment policy both in the recruitment & selection process and
performance management system Personnel working here are taking care of SPL as if it is their
own family. Employee-employer relation is cordial and supporting always. SPL does not allow
any female employees during night shift operations & strictly prohibits any form of forced
labor. It actively pursues the policy of No child labor in SPL.

Transparency & business ethics is the core value of SPL and it is strictly followed at every step
of the business processes. Every business in SPL is modeled in a way that enables the
management to ensure highest degree of both financial and behavioral accountability. SQUARE
pursues Zero Tolerance policy against all kinds of corruption. SPL's activity goes well beyond
the sphere of business. As socially conscious and responsible corporate body SQUARE is
committed to the improvement of the society as a whole.

Internal Analysis

SWOT analysis:

Strength:
The strength of Square Pharmaceuticals Ltd. lies in its diversified products and dosage forms.
Square has been producing solid products like tablets and capsules and liquid products like
syrup, suspension and solution, as well as semisolid products like cream and ointment. It is the
pioneer company to manufacture and market nasal sprays, inhalation aerosols and suppositories
in Bangladesh. Its strengths can be analyzed as under.

SPL has skilled scientists/technicians/management personnel at affordable cost leading

to low cost of innovation/ manufacturing/expenditure to run cGMP(current Good
Manufacturing Practice) compliance facilities and high quality documentation and
process understanding.

SPL has well developed chemistry, R and D and manufacturing infrastructure with
proven track record in advanced chemistry capabilities, design of high tech
manufacturing facilities and regulatory compliance.

The healthy domestic market with rising per capita expenditure is another significant
strength enabling achievement of economies of scale. Square also has a strong

marketing and distribution network.

It has Company Strength and product strength, Company strengths effects positively on
the product, and products strength also effects positively on the Company.

Square has highly skilled sales forces and very efficient and wide distribution channels.

Square ranked and held the First position in Pharmaceuticals Industry since 1985, which
means it is in the top for last 29 years,

Being in the top for this long time resulted in a very positive impression for all
the products in the minds of the doctors and patients already, it occupies a good
position it their minds.

The built in positive impression on our products which is in the minds of the doctors and
patients helps Square Pharmaceutical to get a very good response from the market for
any product they introduce in the market.

Square has the number of sales force of the company, their capability, Training and selling
skills are in better condition and position than any other company in the industry.

Square follows very transparent marketing activities; there is no misleading or fraud,

that why it enjoys a good reputation in the market.

Square maintains high quality standards for its products

In production of Squares Omeprazole Injection and DMP quality issues are followed and
maintained properly.

Weakness:
The weakness of the Square is the analysis of the internal industry components that are not
providing significant added value or are in need of improvement. The internal components can
include physical resources, human capital or features the company can control. For example, the
SPLs weaknesses could include high-risk business modeling, disengaged Board of Directors,
dated medical equipment, poor branding, low staff morale or diseconomies of scale. More
weakness given below:

Square has introduced some Injections like Omerprezol late in the market

Those Injection has introduced already by Incepta and popular before Square

Square has lost the opportunity to be the first introducer of various products but they
couldnt capitalized the benefits of it

Square needs to consider the loss of late introduction and work on market considering
this disadvantage.

Low investments in innovative R&D continue to be a major weakness of Square

Pharmaceutical Ltd.

Square lacks the ability to compete with MNCs for New Drug Discovery, research
and commercialization of molecules on a worldwide basis due to lack of resources.

Strong linkages between industry and academia which are essential for growth of the
industry is lacking in Square

Rapidly increasing costs of skilled manpower such as scientists/ regulatory

compliance personnel / pharmaceutical lawyers/ international business development

personnel is pushing up the cost of innovation.

Sales and marketing knowledge is inadequate due to lack of understanding

of international Pharmaceutical marketing/pricing practices and market environment in
various countries.

Inadequate manufacturing practices

Opportunity:
The opportunity of the Square is the analysis of the external industry components that provide a
chance for the company to grow in some capacity or gain a competitive edge. The external
components should be environmental factors or aspects outside the companys control, yet
reflective of the business marketplace. It can be analyzed as under.

In the market, the number of Antiulcer patients is increasing, when the number of
patients increases the possibility of a good return from the required drug increases.

Incredible export potential

New innovative therapeutic products

Drug delivery system management

Income is increasing day by day

Clinical trials and research

Due to the cost advantage in contract manufacturing & Research multi-national

companies find it compelling to shift their production bases to countries offering such
cost advantage

Licensing deals with MNCs for NCEs (New Chemical Entities) and NDDS (New
Drug Delivery Systems) offer new opportunities for Square

Marketing alliances for MNC products in domestic and international market is

another emerging opportunity

There is a possibility of greater returns from other countries of the world by exporting

Threat:
The threat of the pharmaceutical industry is the analysis of the external industry components that
could create an opportunity for the SPL to decline, atrophy or lose some competitive edge. The
external components should be environmental factors or aspects outside the industrys control,
yet reflective of the business marketplace. For example, the pharmaceutical industrys threats
could include increased government regulation, a declining economy, increasing research and
development (R&D) costs or a decrease in the global population. The threats of Square
Pharmaceutical Ltd are discussed below.

R&D efforts of Bangladeshi pharmaceutical companies are hampered by lack of enabling

regulatory requirement

Export effort is hampered by procedural hurdles in Bangladesh as well as non-tariff

barriers imposed abroad

Lowering of tariff protection has increased competition in domestic markets resulting in

erosion of profitability

Mergers and acquisitions by other companies may completely change condition of the
pharmaceutical market

Small number of discoveries

Competition from MNCs

Transformation of process patent to product patent (TRIPS)

Outdated Sales and marketing methods

Limited knowledge and experience base.

Pricing and reimbursement level could restrict use

Conclusion

Pharmaceutical is the second largest revenue generating industry in Bangladesh after

readymade garments (RMG) and the industry is doing really well. Pharmaceutical industry is
enjoying some patent advantages as the introduction and continuation of TRIPs agreement
from 2005 up to 2016. These eleven years will be very crucial and important for the
pharmaceutical industry.

The overall attempts of the assignment were to find out and to give a clear idea about the
practical practice of business strategy of Square Pharmaceutical Limited. In the assignment we
tried our best to do so and presented a competitive scenario of the company as well as the
pharmaceutical industry.

Government support is very important for the growth and expansion of the sector at this stage.
Investment to introduce newer drugs and newer research products is crucial, while at the same
time maintaining a healthy competitiveness among pharmaceutical companies is essential.

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References
Websites:
http://www.squarepharma.com.bd/
http://www.pr-inside.com/the-pharmaceutical-market-bangladesh-r2197082.htm
http://www.scribd.com/doc/81931957/A-Report-on-Square-Pharmaceuticals-Ltd
http://www.assignmentpoint.com/science/pharmacy/practice-of-strategicmanagement-square-pharmaceuticals-limited.html
http://www.pharmamirror.com/knowledge-base/company-profile/squarepharmaceuticals-limited/
http://thepharmaceutical-news.com/why-is-the-bangladeshi-pharmaceutical-industrypotentially-under-threat-in-the-near-future
http://en.wikipedia.org/wiki/Pharmaceutical_industry_in_Bangladesh
http://en.wikipedia.org/wiki/International_Pharmaceutical_Federation
http://www.thedailystar.net/newDesign/news-details.php?nid=105557
http://www.thefinancialexpress-bd.com/more.php?news_id=87308
http://gurumia.com/2010/01/19/pharmaceutical-sector-of-bangladesh-forecast-to-

grow-by-13-per-cent-in-2010/
http://www.piribo.com/publications/general_industry/pharmaceutical_market_trends_
2008_2012.html

http://www.bioportfolio.com/search/2010-Top-Generic-Drug-Companies.html
http://www.fiercepharma.com/slideshows/pharmas-top-10-blockbuster-drugs?

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http://www.biospectrumasia.com/content/130710SGP13065.asp
Reports:
Annual Report of Square Pharmaceutical Limited-FY 2012-2013, 2012-2011, 2011-2010.
Pharma Mirror magazine, published in may 8, 2013
Corporate Brochure of SPL, published in 15th July, 2007.
Abul K. Azad; Bangladesh Pharmaceutical Sector: Present and Potential, BAPA Journal;
July 2006.
Chakroborty, Rinton; Executive, PMD; Report on Plant Orientation Program-Dhaka Unit;
June 2010.

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