4. Sequence of Presentation
1 • About the Study
2 • Organizational Overview
3 • Strategy Overview
4 • Evaluating External Environment of Beximco Pharma
5 • Evaluating Resources, Capabilities and Competitiveness
6 • Generic Competitive Strategy of Beximco Pharma
4
5. Sequence of Presentation
7 • Strengthening Company’s Competitive Position
8 • Strategies for Competing in International Market
9 • Diversification Strategies of Beximco
10 • CSR, Ethical Practices and Corporate Culture of BPL
11
• Building of the Organization Capable of Good Strategy
Execution
12 • Recommendations
5
7. Rationale of the Study
• Management practices as a strategic growth option is
particularly relevant in developing countries like Bangladesh,
because of:
• Insufficient strategic management knowledge
• Lack of best practices
• Less use of effective strategic management guides
• Less priority in top managements mind set
• Not achieving optimization in management processes
• As such, this study is highly significant to improve the efficiency
and effectiveness of strategic management practices in
Beximco Pharmaceuticals Ltd. (BPL).
7
8. Objectives of the Study
• Broad Objective
8
To conceptualize the current strategic
management practices and problems of
Beximco Pharma
To identify and suggest scopes of
improvement
To devise some recommendations to
improve the strategic manoeuvre of the
company
9. Objectives of the Study
• Specific Objectives
• To understand and analyze various concepts, tools and techniques of
strategic management to evaluate BPL’s overall strategy.
• To present and analyze the vision and mission statement.
• To analyze the objectives and core values.
• To conduct situation analysis considering external and internal
environmental factors.
• To identify the competitive business strategy of BPL.
• To identify on the strategies for diversification of BPL.
• To highlight BPL practices on ethics and CSR.
• To present an overview of the corporate culture in BPL.
• Offer some recommendations to improve the strategic management
practices of BPL.
9
10. Methodology
Primary
Source
• Current working experience
• Discussion with different levels of mid and high ranking officials;
Sample size: 35 (Directors, Head of Department, Senior
Managers and Managers)
Secondary
Source
• Annual reports, periodic reports, articles and brochures
• Journals, research papers and articles from various online
sources and websites
10
14. Top 10 Pharmaceutical Companies14
Ser Name of the Company Market Size (BDT) Market Share (%) Growth (%)
1 Square 19,722,066,693 19.50 12.55
2 Incepta Pharma 10,184,993,624 8.20 11.84
3 Beximco Pharma 8,967,999,031 7.70 8.04
4 Opsonin Pharma 5,302,711,389 4.80 4.77
9 Acme 3,954,249,448 4.80 5.76
6 Eskayef 4,547,963,290 4.60 4.28
5 Renata 5,056,968,911 4.50 8.75
8 ACI 4,263,630,198 4.50 8.69
7 Aristopharma 4,382,948,837 4.10 11.37
10 Drug International 3,924,562,931 3.90 10.51
15. Market Share of Top 10 Pharmaceuticals
in Bangladesh
15
SQUARE
19.5%
INCEPTA
8.2%
Beximco
7.7%
ACME
4.8%
OPSONIN
4.8%
ESKAYEF
4.6%
RENATA
4.5%
A.C.I.
4.5%
ARISTOPHARMA
4.1%
DRUG INT
3.9%
OTHERS
33.4%
Source: Source: IMS Health Survey
16. Key Company Information16
Year of Establishment : 1976
Country of Incorporation : Bangladesh
Commercial Production : 1980
Status : Public Limited Company
Business Lines : Manufacturing and Marketing of Pharmaceutical Products
Country of Operation : Bangladesh
Authorized Cap (Taka) : 9,100 million
Paid-up Capital (Taka) : 3,862.4 million
Number of Shareholders : Around 90,000
Stock Exchange Listings : DSE, CSE and AIM of London Stock Exchange
Number of Employees : 3,063
19. Core Business Focus
Branded Generics
Formulation products for local
and international markets
300+ generics in 500+
presentations
APIs
Local market share 70%
Paracetamol
Penicillins
High value APIs (pipeline)
Contract Manufacturing
Successful track record of
contract manufacturing for
global MNCs
Bayer, Upjhon, GSK, Novartis
20. Company Operations
• One of the largest pharmaceutical
companies in Bangladesh.
• In local market, BPL operates in
all over 64 districts.
• Largest exporter of
pharmaceutical products from
Bangladesh.
• Received National Export
Trophy (Gold), the highest
national accolade for export, for
the record 04 times.
20
21. Performance Analysis of 2014
Launched 28 products (24 generics) in the domestic market
Introduced Oral Soluble Film (OSF) technology
Entered 02 new markets (Romania and Uganda)
A total of 55 new registrations done in 15 different countries
Net sales increased to BDT 11,206.9 million, registering a y-o-y
growth rate of 6.8%
Net Profit after tax increased 8.8% to BDT 1,528.3 million
EPS rose by 8.64% to BDT 4.15
21
23. Vision Statement of Beximco Pharma23
“We will be one of the most trusted, admired and successful
pharmaceutical companies in the region with a focus on
strengthening research and development
capabilities, creating partnerships and building
presence across the globe”
24. Analysis of BPL’s Vision Statement
• Characteristics:
• Easy to communicate
• Graphic
• Directional
• Focused
• Flexible
• Feasible
24
• Shortcomings:
• Too generic
• Too broad
• Not easy to memorize
25. Mission Statement of BPL
“We are committed to enhancing human health and
well-being by providing contemporary and affordable
medicines, manufactured in full compliance with global
quality standards. We continually strive to improve our
core capabilities to address the unmet medical
needs of the patients and to deliver outstanding
results for our shareholders.”
25
26. Analysis of BPL’s Mission Statement
1. Who we are? Does not clearly identify the company.
2. What we do? Enhancing human health and well-being by
providing contemporary and affordable medicines.
3. Why we are here? To address the unmet medical needs of the
patients.
4. Who is satisfied? Human health, patients and shareholders.
5. What is satisfied? Enhancing human health and well-being,
address unmet medical needs of the patients and deliver
outstanding results for the shareholders.
6. How is satisfied? By providing contemporary and affordable
medicines, manufactured in full compliance with global quality
standards; by continually striving to improve their core capabilities.
26
29. Financial Objectives
1. A 10% increase in annual revenues.
2. Annual increases in after-tax profits of 10%.
3. Annual increases in earnings per share of 10%.
4. Annual dividend increases of 15%.
5. Profit margins of 10%.
6. A 10% return on capital employed (ROCE).
7. To ensure strong bond and credit ratings and larger cash flows.
8. Increased shareholder value-in the form of an upward-trending
stock prices.
29
30. Strategic Objectives
1. To achieve large volume of sales and increase market
coverage.
2. To introduce wider product line and superior on time delivery.
3. Improving innovation and flexibility through improved
knowledge creation and sharing .
4. Continuous learning and developing a learning organization.
5. Explore and keep on exploring new markets for products.
6. Meet and exceed our customer requirements and expectation.
7. Increase networking with partners.
8. To contribute to the personal wellbeing of its employees.
30
32. Balanced Scorecard32
Perspective Strategic Theme: Smart, Profitable Expansion
Objective Measure Target Initiatives
Financial
Increase
10% of
Revenue
from Custom
Products
% of Revenue from
custom orders
initiated in last 3
years
> 30% year 1
Marketing to new
target markets> 50% year 3
Avg. number of days
to cost recovery
< 160 days year 1
Operations
review
< 130 days year 3 Project selection
Increase
Sales
Efficiency
Revenue per order
delivery
> 30% more
revenue year 1
Priority based
project
development
> 50% more
revenue year 3
33. Balanced Scorecard33
Perspective Strategic Theme: Smart, Profitable Expansion
Objective Measure Target Initiatives
Customer
Acquire New
Customers
Avg. Number of local
customers
> 30K in first 6
mos.
Local
marketing/PR
campaigns
> 50K in first year
> 200K by year 3
Avg. Number of long
term custom clients
> 10K in first 6
mos.
Value added
service like
optimization,
auto bill
> 20K in first year
> 80K by year 3
Avg. number of
foreign development
clients
> $ 3K year 1
Free subscription
for some existing
customer
> $ 10K year 3
Targeted
marketing for
start-ups
34. Balanced Scorecard34
Perspective Strategic Theme: Smart, Profitable Expansion
Objective Measure Target Initiatives
Process
Fact-based
Project
Selection
Market trends and
new technology
adaptation
< 90 days year 1
Design &
software
Outsourcing
< 70 days year 3
Research on
existing projects
Streamline
Development
Process
Project duration,
project acquisition to
delivery
< 365 days year 1 Standardize
design/build
processes
< 300 days year 3
% of project delivered
on schedule
> 93% year 1 Web-based
project
management
> 95% year 2
35. Balanced Scorecard35
Perspective Strategic Theme: Smart, Profitable Expansion
Objective Measure Target Initiatives
Learning
and Growth
Use
Business
Intelligence
Systems
% Eligible employees
trained
>90% year 1
In-house system
training
>99% year 2
Integrated
Knowledge
Management
Online forms/surveys
< 200 year 1
Corporate digital
nervous system
< 100 year 2
< 5 year 3
36. Strategic Intent
1. Strives to provide quality health care products, at the least cost
reaching the lowest rungs of the economic class of people.
2. Strives for the protection of shareholders’ capital, ensure
highest return and growth of their assets.
3. Strives for best compensation to all the employees.
4. Strives for the best cooperation of the creditors and debtors;
the suppliers, utility service providers and the customers.
5. Try to understand client’s needs and to fit in with the
competitive advantage.
6. Try to face customers’ real-life issues through R&D.
7. Strives for practicing good-governance in every sphere.
36
37. Strategies at Different Levels37
Corporate Strategy
Mission & Vision
Long-Term Value Creation
Business Strategies
Functional Strategies
R&D, Marketing, Manufacturing, HR,
Finance, etc.
Operating Strategies
Regions, Plants, Departments within
Functional Areas
Board of Directors
10 member
Executive Committee
4 member
Management Committee
10 member
Departmental Heads
Source: Primary
39. Value Proposition
• One of the best quality drugs manufacturer in the country.
• Benchmarked to the highest global regulatory standards, TGA,
Australia, AGES (EU), Health Canada (Canada), ANVISA
(Brazil), TFDA (Taiwan) and finally the US FDA authority.
• Continually strive to provide access to safe, effective and
affordable medicines.
• Able to respond to the needs of physicians, patients, and
health care providers, both therapeutically and economically.
• Continue to expand its product portfolio; strong differentiation
in specialized dosage delivery systems.
• Strong research orientation in generic formulation development,
which are very difficult to imitate.
39
44. Drivers of Change
in Pharma
Industry
Regulatory
Influences and
Government
Policy
Technological
Change
Changes in the
Long-term
Industry Growth
Rate
Manufacturing
Innovation
Marketing
Innovation
Changes in Cost
and Efficiency
The Internet and
e-commerce
Technologies
Socio-cultural
Changes
Increasing
Globalization of
the Industry
44
46. PESTLE Analysis46
• Political.
• A troubled political history since
1971.
• Political instability is blighting its
prospects for economic growth.
• Political situation of Bangladesh
is calm and quite now.
• But very recent political
instability caused a great
harm to pharmaceutical
business.
47. PESTLE Analysis47
• Economical.
• Rapidly developing market-based economy.
• Inflation pulled demand (GDP) growth is significantly
potential for growing market.
• The economy has grown at the rate of 6-7% per annum
over the past few years.
• Buying power of Bangladeshi people is increasing.
• Health conscious buyer is increased too.
• Pharmaceutical market size is around 12,000 Crore BDT.
48. PESTLE Analysis48
• Social.
• Unplanned urbanization and the changing lifestyle, taking
of more and more fast foods and soft drinks by the urban
people is the main cause of diabetes in the country.
• The death rate of non-infectious diseases like
diabetes or cardiac disease in Bangladesh is more than
two times higher than infectious ones.
• As such, the social values and practices in Bangladesh is
influencing the industry product requirements.
49. PESTLE Analysis49
• Technological.
• Major companies are very
much aggressive to introduce
any technological change
through strategic alliance and
joint venture.
• Application of new
technologies in planning,
process, distribution and
other activities have become
common in this industry.
50. PESTLE Analysis50
• Legal.
• DGDA is the Drug Regulatory Authority of the country.
• DGDA supervises and implements all prevailing Drug
Regulations in the country
• Two pricing method for locally manufactured items;
controlled and decontrolled category.
• In controlled category, govt. fixes the MRP and in
decontrolled category, company does the same.
• At present, the legislation and regulation in pharmaceutical
industry is favourable to boost the industry.
51. PESTLE Analysis51
• Environment.
• Have to handle different kinds
of drugs, chemicals etc. which
are very harmful for both the
people, who are dealing with
it, as well as for the
environment, when it is
exposed.
• Many of the pharmaceuticals
companies have world class
'Effluent Treatment Plant
(ETP)'.
54. Strategic Group Mapping54
Low Medium High
Product Quality
ProductLine
NarrowMediumWide
Square
Incepta
Beximco Pharma
Renata
Opsonin
Acme
SK+F
Aristopharma
ACI
Drug International
Sanofi Aventis
Gaco
Navana
RAK
Somatec
Rangs
56. SWOT Analysis
Strengths
• Strong Brand Image and
favourable corporate image
• Decentralized decision-making
structure.
• An attractive loyal customer
base.
Weakness
• Excessive overhead cost, and
hence low profit margin.
• Fragile share market images to
customers.
• Lack of proper integration
between functional units.
Opportunity
• Faster market growth.
• Government regulations are in
favour of local manufactures.
• Opportunity to enter in the
biggest market like US market.
Threats
• Intense competition.
• Highly regulated market.
• Strong competitors are
working on backward linkage
for API production.
56
64. Key Success Factors (KSFs)
Manufacturing Related KSFs
• Zero defect manufacturing.
• High capacity utilization.
• Availability of skilled labour.
• Low cost product design and
engineering.
Marketing Related KSFs
• Breadth of product line and
product selection.
• In time filling of customer
orders.
• Attractive style and packaging
design.
Skills Related KSFs
• Expertise in R&D and
technology.
• Ability to develop innovative
products.
• Quality control know-how.
Technology Related KSFs
• Technical capability to make
innovative improvements in
production process.
• Product innovation capability.
• Research expertise in
introducing new products.
64
66. Broad Differentiation Strategy
R&D capabilities with
successful
development of
difficult-to-make
formulations
Created strong
differentiation by
offering technology-
driven, specialized
drug delivery
systems
Focusing on
innovation,
differentiation and
diversification of
products for a broad
cross section of
customer segments
including the global
customers
66
• Metered dose inhalers
• Dry powder inhalers
• Prefilled syringes
• Lyophilized injectable etc.
• Multi-layer tablet
• Sustained release formulation
• Dispersible tablet etc.
68. Offensive Strategy
Key to the offensive strategy - Innovation and
Differentiation.
Continuously developing its diversified manufacturing
capabilities.
In 2014, Beximco Pharma expanded its portfolio with 24
new generics in a total of 28 presentations across 09
different therapeutic categories; 03 products were
launched for the first time in Bangladesh.
68
69. Red Ocean Strategy
• Difficult for a technology driven pharmaceutical company to find
or create a new uncontested market space.
• BPL competes in existing market place & beats the competition.
• Exploits existing demand, makes the value cost trade-off and
align its activities with its strategic choice of broad
differentiations.
• The domestic market is highly concentrated and competitive.
• BPL continuously thrives its efforts to increase its existing
market share competing with Square and Incepta.
• Offensively exploring the international market and trying to
enter in the regulated market.
69
70. Merger of Beximco Pharma and Beximco
Infusions (2005)
• Went for an 'amalgamation scheme' of merger on June 2, 2005.
• Strategy to grow and lead in pharmaceuticals export at a
competitive price.
• Benefits:
• Improved organisational capability
• Combination of people having diverse skills, talent and vast
experience.
• Rationalised overhead costs, use of raw-material and HR
ensuring ‘value for money’.
• Reducing cost and improving efficiency.
70
73. Outsourcing Value Chain Activities
I&I Service is the distribution partner of BPL, which help
achieving excellence in product distribution to customers
Outsource the printing materials, their design, technical
training to the technical person (SMSRC, IMS, Chlorofil),
Software to run the business
It does not create hollow out effect of company
It does not lose its touch to the value chin activities that are
critical for long term sustainability
73
74. Integrating the Backward & Forward Linkage
Backward Linkage
Manufacturing API
like amoxicillin,
paracetamol,
cloxacillin,
flucloxacillin to meet
own demand and
also supplying to
other local
manufactures and
MNCs.
Forward Linkage
Possessing Suktara
Printers and
Packaging Unit that
is providing the
secondary
packaging materials
like packaging
carton, leaflet,
brochures, annual
reports etc.
74
76. Export Strategies
• Aggressively pursuing the export
operation as a strategy to
compete in international market.
• A global footprint in 45
countries.
• Growing presence in different
countries across Africa, Latin
America, Asia, Middle East and
Central America.
• Received National Export
Trophy "Gold" for a record 4
times for its outstanding
achievement in export.
76
78. Latin America &
Central America
Brazil3
Mexico
Venezuela
Paraguay
Ecuador
Uruguay
Bolivia
Cuba
Peru
Costa Rica
Honduras
Panama
Dominican Republic
Guatemala
Africa
Tanzania
Cameroon
Botswana
Togo
Namibia
Swaziland
Madagascar
DR Congo
Gabon
Mauritania
Zimbabwe
Tchad
Sierra Leone
Asia
Indonesia
Taiwan
MENA
Saudi Arabia2
Kuwait2
Bahrain2
Oman2
Qatar2
UAE2
Iraq
Algeria
Libya
Tunisia
Australia1 &
New Zealand1
USA4
1Received GMP clearance and product approvals from TGA Australia 4Subject to approval by USFDA2Received GMP approval from GCC 3 Received GMP approval from ANVISA, Brazil
Expanding Global Footprint Across all the Continents
Canada
North America
Europe
79. Licensing Strategies
• Beximco Pharma was
incorporated in the late 1970s,
and began as a distributor,
importing products from global
MNCs like Bayer, Germany
and Upjohn Inc., USA and
selling them in the local market,
which were later manufactured
and distributed under
licensing arrangements.
79
84. Related Diversification
• Beximco Group is the largest private sector industrial
conglomerate in Bangladesh.
• Beximco comprises of 05 publicly listed companies and 16
private companies.
• The Group turnover in 2008 was BDT 18.5 billion.
• Beximco employs 48,000 people and has 230,000
shareholders.
• Beximco’s shares constitute 4.34% of the market
capitalization of DSE.
• No related diversification; diverse unrelated diversification.
84
88. Corporate Social Responsibility (CSR)88
Responsibility to the
Community at Large
Responsibility to the
Environment
Responsibility to the
Stakeholders
89. Responsibility to the Community at Large
• Mobile Alliance for Maternal Action
(MAMA).
• Extending Support to Jaago
Foundation.
• Support to Rana Plaza Victims.
• Free Medicines for UN Health Camps.
• Sponsoring to Promote Maternal and
New-born Health.
• Sponsoring National Campaign on
Healthy Living.
89
Support to Jaago Foundation
MAMA Campaign
90. Responsibility to the Community at Large
• Support for Developing Low
Cost Mechanical Prosthetic
Hand.
• Sponsoring ‘Spreading Care’.
• Universal Children’s Day, 2014.
• World Osteoporosis Day, 2014.
• World Heart Day, 2014.
90
Universal Children’s Day, 2014
91. Responsibility to the Environment
• World Environment Day, 2014.
• Path to Protecting the Ozone
Layer.
• CFC gases used in inhalers have
ozone-depleting properties.
• In 2006, BPL were the first
Bangladeshi company to proactively
make the shift to HFA inhalers.
• Beximco Pharma and Bangladesh
Lung Foundation, designed an
effective awareness raising strategy
for CFC-free MDIs for asthma and
COPD patients.
91
92. Ethical Practices in Beximco Pharma92
Promote
ethical
business
practice
Ensure equal
opportunities
Provide a
safe and
healthy work
environment
Value
diversity in
the
workplace
Do business
ethically
93. We Don’t Practice in Beximco Pharma93
Faulty oversight that implicitly
allows the overzealous pursuit
of personal gain, wealth, and
other self-interests
Heavy pressures on company
managers to meet or beat
performance targets
A company culture that puts
profitability and "good"
business performance ahead
of ethical behaviour
94. A Strong and Healthy-Culture Company
The Managing Director (MD), established consistent
and sensible values, principles, and practices
A sincere, long-standing company commitment to
operating the business according to these established
traditions
A genuine concern for the well-being of the
organization’s three biggest constituencies -
customers, employees, and shareholders
94
95. Building of Beximco Pharma; An Organization
Capable of Good Strategy Execution
95
96. 10 Basic Tasks of Strategy Execution Process
1
• Staffing the organization with the right people for executing the strategy
2
• Build the organizational capabilities required for successful strategy
execution
3
• Establish a strategy supportive organizational structure
4
• Allocate sufficient resources to the strategy execution effort
5
• Institute policies and procedures that facilitate strategy execution
96
97. 10 Basic Tasks of Strategy Execution Process
6
• Adopt best practices and business processes that drive continuous
improvement
7
• Install information and operating systems that support strategy
execution activities
8
• Tie rewards and incentives directly to the achievement of strategic and
financial targets
9
• Instill a corporate culture that promotes good strategy execution
10
• Exercise strong leadership to propel strategy execution forward
97
98. Recommendations
1. A top level, highly empowered “Strategic Value Chain Optimization Team” may
be formed in Beximco Pharma, in order to coordination the entire value chain activities
of the company to enhance cross-functional coordination in order to attain maximum
supply chain surplus.
2. Measures may be taken to form “Joint Venture” with foreign leading
pharmaceuticals companies and develop Active Pharmaceuticals Ingredients (APIs)
manufacturing capability internally; thereby to improve the backward integration, in
order to reduce absolute dependency on input suppliers and external environment.
3. The company may strengthen their focus in “Differentiated Promotional
Approach” by providing medical representatives with more professional knowledge
based training and communication materials (beyond company’s traditional sales aids)
to develop and increase the hoard of MR knowledge of Beximco Pharma.
98