There are several sectors on which Bangladesh can be proud of and undoubtedly the pharmaceutical sector is one of these sectors, rather it is the sector, which is the second-largest contributor to the government exchequer. There are about 231 companies in this sector and the approximate total market size is about Taka 30,000 million per year of which about 95% of the total requirement of medicines is created by the local companies and the rest 5% is imported. The imported drugs mainly comprise of the cancer drugs, vaccines for viral diseases, hormones etc.
In fact, the real growth of local pharmaceutical industries started after the “Drug Control Act” was promulgated in 1982 in Bangladesh to restrict massive import of drugs and to encourage local manufacturing of the same. A lot of multinational companies (MNCs) became unhappy for this development.
In Bangladesh, pharmaceutical is now one of the fastest growing sectors. In 2004, the total size of the pharma market of Bangladesh was estimated to be Tk. 28,416 Million. With an annual growth rate of about 10%, Bangladesh Pharmaceutical Industry is now heading towards self-sufficiency in meeting the local demand. Bangladesh pharmaceutical industry is the second highest contributor to the national exchequer after garments, and it is the largest white-collar intensive employment sector of the country.
There are about 450 generics registered in Bangladesh. Out of these 450 generics, 117 are in the controlled category i.e. in the essential drug list. The remaining 333 generics are in the decontrolled category, The total number of brands /items that are registered in Bangladesh is currently estimated to be 5,300, while the total number of dosage forms and strengths are 8,300.
Bangladesh pharmaceutical industry is mainly dominated by domestic manufacturers. Of the total pharmaceutical market of Bangladesh, the local companies are enjoying a market share reaching around 80%, while the MNCs are having a market share of 20%. Out of the top ten pharmaceutical companies in Bangladesh, eight are local pharmaceutical companies, while only two are MNCs. The top two domestic manufacturers, namely Square and Beximco Pharma are having a combined market share of about 25% of the total pharmaceutical market of the country.
The Bangladesh Association of Pharmaceutical Industries – BAPI (Bangladesh Aushad Shilpa Samity in Bengali), established in 1972 with just 33 members, has been playing a very vital role for development of this sector. Today, BAPI is a very strong organization having as many as 144 companies (as listed at Annexure-I) as its members.
2. OVERSEAS MARKET
The history of pharmaceutical export from Bangladesh dates back to late 80’s. At that point in time, only one or two pharmaceutical companies of Bangladesh took proactive efforts to initiate export of pharmaceuticals from Bangladesh. Despite the fact that there was no support or incentive from the Govt., these companies with their own initiative started exporting finished formulations to some of the neighboring less regulated overseas markets like Myanmar, Sri Lanka and Nepal.
After being successful in these less-regulated markets, in early 90’s few major companies of this country also took initiative to explore some of the more-regulated markets like Russia, Ukraine, Georgia and Singapore. Success in registering and marketing these products in these countries was a major breakthrough for Bangladesh pharmaceutical industries.
Today, Bangladesh pharmaceutical industry has successfully started exporting its quality products to about 52 countries across four continents. Although volume wise the amount may not appear to be huge, but most importantly it is growing at a very fast pace. Today, Bangladesh is exporting a wide range of pharmaceutical products covering all major therapeutic classes and dosage forms. Beside regular brands, Bangladesh is also exporting high-tech specialized products like Inhalers, Suppositories, Nasal Sprays, Injectables and Infusions. The product quality, packaging and presentation of the products have been highly appreciated in all of the countries of export destination.
3. POST WTO OPPORTUNITIES
From January 01, 2005 onwards, huge export opportunities have already been opened for Bangladesh pharmaceutical sector. As a signatory of WTO/ TRIPs, countries like China and India have already implemented ‘Patent Laws’ in their countries and hence, these countries are no longer allowed to export patented drugs from their countries. On the contrary, the situation is just reverse for Bangladesh. As a member of LDCs, Bangladesh has already got the exemption from abiding by the patent laws until January 01, 2016, which is going to open the door to ‘Enormous Export Opportunities’ for the Pharmaceutical Sector of the country. Although, all the 49 LDCs have got this exemption, except Bangladesh all 48 LDCs are basically import based in pharmaceuticals and will not be able to exploit this export opportunity. Bangladesh with its strong manufacturing base in pharmaceuticals is the only country that would really be able to capitalize this opportunity by exporting pharmaceuticals to other LDCs.
Needless to mention that, Bangladesh can also ensure huge value addition by pharmaceutical export since the export price is much higher than the local price. For example, in Bangladesh the price of one fluconazole capsule is Tk. 8 whereas fluconazole is exported to Pakistan at a price of Tk. 38. Similarly, the price of paracetamol syrup in Bangladesh is Tk. 13 but it is exported to Russia at a price of Tk. 100.
2) Compulsory Licensing and Contract Manufacturing
For countries where pharmaceutical patent has come into-effect from January 01, 2005, compulsory licensing is neither a practical nor a feasible option to meet national emergencies. In case of ‘National Emergencies’, it may take 2 to 3 years to get the products through ‘Compulsory Licensing’ because the generic manufacturing company, after getting the permission to manufacture patented products from Drug Authority, have to go through all the processes (e.g. RM sourcing, development-RM procurement, product development, stability studies, commercial RM procurement, production etc.) to introduce the products.
In such situation, Bangladesh could be an ideal candidate having all the manufacturing facilities and well developed formulation R&D that could be utilized for immediate manufacturing of the patented life saving molecule using compulsory licensing.
Bangladesh has all the infrastructure & facilities to be an ideal place for contract manufacturing. It has state-of-the-art manufacturing facilities, highly educated & skilled human resources, sophisticated & cutting edge quality control laboratories. It can manufacture highest quality products conforming to all international standards like British Pharmacopoeia (BP), United States Pharmacopoeia (USP), European Pharmacopoeia (EP) and any other recognized standards.
Equipped with the most advanced technologies & following cGMP standards, Bangladesh Pharmaceutical Industry can cater to any healthcare need of all concerned. Some of the Pharmaceutical manufacturers of Bangladesh have made multimillion dollar investments on new plant and facilities conforming to USFDA standards. They have sufficient production capacity for contract manufacturing. Since Bangladesh has abundant and cheap labor force, the cost of contract manufacturing would be highly favourable compared to any other countries of the world.
3) Joint-Venture Investment Opportunities
Bangladesh has a very big market for Active Pharmaceutical Ingredients (APIs), excipients and intermediates. Although it is self sufficient in formulation drugs meeting 95% of country’s demand it still depends largely on imported bulk drugs. Around 80% of Bangladesh’s total need of API is being met through import. Under TRIPS agreement Bangladesh will enjoy manufacturing patented drugs until 2016. Since most of the countries of the world will not be able to manufacture patented drugs after 2005, there exists an excellent opportunity for foreign investors in bulk drug manufacturing in Bangladesh. They will be able to cater to growing bulk drug need of Bangladesh as well as 49 such other patent exempted countries of the world. Bangladesh would be an excellent place for investors and relocating R&D set-ups for reverse engineering, specially for those countries who will be restricted to manufacture patented drugs after 2005.
Since India and China have very good expertise in API and formulation R&D, they may like to manufacture the APIs outside their countries as they cannot manufacture these ‘patented’ APIs in their countries after 2004.
Because of cost advantage, large pharmaceutical companies of highly regulated markets are now going for joint venture projects. They have already signed several contracts with companies of India and China. Bangladesh also has enormous opportunities to go for joint ventures with these large global companies for manufacturing pharmaceutical finished products.
4. AREAS FOR TAKING IMMEDIATE ACTION
1) Investment in Facility and R&D
As India, China and all present sources of raw materials are signatory of WTO, it is naturally expected that they will not produce raw materials of patented products from 2005 onwards. Even if they do, they will not be allowed to export. Although as an LDC, Bangladesh is allowed to produce patented products, it is unknown where it will get the Raw Materials/APIs to produce these drugs after 2004. Accordingly, Bangladesh need to immediately invest in bulk drug facilities and sophisticated R&D centers. But the market is too small to make this investment a feasible one. In order to make this venture feasible, tax-free import of all machineries and equipments as well as concessional interest rates in taking loan from banks for investment in bulk drug facilities and in R&D Projects are needed.
2) API Industrial Park
In Bangladesh, treatment of both solid and liquid wastes is presently being done by individual manufacturers, which elevates the product cost significantly.
On the other hand, in India and China, there are public /govt. Incinerators and Effluent Treatment Plants (ETP) to dispose off solid and liquid wastes respectively. So, these countries have very successfully reduced their cost of production in pharmaceuticals.
Although Pakistan does not have these export opportunities as revealed by WTO/TRIPs, they are also establishing an Industrial Estate at Lahore, named ‘Sundar Industrial Estate’ comprising 1500 acres of barren land and with combined effluent treatment plant, solid waste disposal system etc.
The cost of Raw Materials /APIs as well as Finished Formulations would have become more competitive in the overseas markets, if Bangladesh also had Incinerators and Effluent Treatment Plants (ETP) in the public sector.
3) Registration Requirement for Imported Products
Most of the countries like India, China and Singapore have already upgraded their registration requirement of imported products for all new-comers which is believed to be almost as stringent as the highly regulated markets. These countries are thereby creating barriers to entry for all substandard drugs. Like these countries, Uganda and Tanzania also have upgraded their registration requirements of imported products though their market is mostly depended on imported products.
On the other hand registration requirement in Bangladesh for imported products is extremely relaxed. If immediate proper attention is not given, there is a possibility that Bangladesh Pharmaceutical Market will be flooded with substandard and spurious products from the neighboring countries. The manufacturing facilities and documentation of small pharmaceutical companies also needed to be upgraded immediately.
4) Independent Drug Testing Laboratory (DTL)
There are two DTL in Bangladesh, one in Dhaka and the other in Chittagong. These two DTLs are always engaged in testing numerous drugs that are being introduced by about 200 pharmaceutical companies operating in the domestic sector. More than that, these facilities are not modern and sophisticated enough to carry out different types of tests as required for export which are becoming more & more stringent day by day.
Considering aforementioned scenario, the pharmaceutical manufactures of Bangladesh have been requesting the Government to provide a land for an independent, modem and sophisticated DTL with the facility of Bio-equivalency testing.
5) Incentives for Export
Since 1990, the Govt. of India has been offering various supports and incentives for export of pharmaceutical finished formulations and APIs. In China, there is huge incentive for pharmaceutical export. On the contrary, in Bangladesh there is no such incentive for pharmaceutical export. As a result, Bangladesh is gradually becoming less competitive in most of the overseas markets where India is operating. Though the Govt. of India was supposed to stop these incentives but in practice they are still continuing with such supports and incentives.
The Bangladesh Association of Pharmaceutical Industries (BAPI) feels that to become competitive in the overseas markets, Bangladesh Government should immediately introduce ‘20% Cash Incentives’ for export of pharmaceutical finished formulations and ‘30% Cash Incentives’ for export of Raw Materials/APIs.
Despite all these tasks in hand, there are huge export opportunities for Bangladesh in the years to come. Till now, Indian and Chinese export of branded generics is significant that may abruptly be ceased immediately from 2005. If the abovementioned issues can be addressed immediately, there is no reason why Bangladesh would not be able to export pharmaceuticals worth Tk. 20000-25000 crore in next few years. The future is enormous, provided that Bangladesh prepares itself to avail the opportunity.
5. GLOBAL PRESENNCE
In early 90’s, few companies took initiatives to export pharmaceuticals from Bangladesh. Because of that pioneering role of these few companies, Bangladesh could fulfill the national aspiration of turning its pharmaceuticals industry into an exporter of quality medicines.
Bangladesh has just started its overseas business operation. As it first move towards internationalization Bangladesh entered few overseas markets with the export of basics chemicals. So far Bangladesh exported its basic chemicals to many countries namely, Iran, Hong Kong, South Korea, Malaysia, Taiwan, Vietnam, Thailand & Nepal.
After being successful in exporting basic chemicals, few leading companies also started registering & exporting their finished formulations in Sixty Two countries namely:
o New Zealand
o South Africa
o Hong Kong
It is worth that the world renowned hospitals & institutions like KK Women, ChildrenHospital and Raffles Hospital of Singapore, MEDS of Kenya and Zihnnah Hospital of Pakistan are regularly using the pharmaceuticals products of Bangladesh. Today, a large number of Pharmaceuticals manufacturers of Bangladesh like Beximco, Square, Novarties, Opsonin, Acme, Aristopharma, Eskayef, ACI, Renata, Orion, Jayson, Hudosn, etc are involved in export operations.
RECENTY EXPORT OF SOME POTENTIAL PHARMACEUTICALS EXPORTERS OF BANGLADESH
(Value in US$)
Name of the Company
Year of Export
|Novarties (Bangladesh) Limited|
|Beximco Pharmaceuticals Ltd|
|Square Pharmaceuticals Ltd|
|Jams Pharmaceuticals Ltd|
|Jayson Pharmaceuticals Ltd|
|The Acme Laboratories Ltd|
|Eskayef Bangladesh Ltd|
July 2004 ~ June 2005
|Navana Pharmaceuticals Limited|
Sept. 2003 ~ June 2005
|Advanced Chemical Industries (ACI) Limited|
|Essential Drugs Company Limited|
|Globe Pharmaceuticals Limited|
|Opsonin Pharma Ltd.|
|Source: Bangladesh Association of Pharmaceutical Industries|
6. EXPORT TREND OF PHARMACEUTICALS FROM BANGLADESH
The growth of Pharmaceuticals export from Bangladesh during the period 2003/04 ~ 2000/01 is tremendous. The country witnessed a growth of 83.94% in the Pharmaceuticals export in the Fiscal year 2003/04 compare to the export of fiscal 2000/01. Observer believes that the sector will witness a high steady growth in the coming years because of opportunities provided with the LDC from WTO.
Bangladesh Export of Pharmaceuticals by Destination
|2003/04||2002/03||% Change |
in FY 2003/04
|2001/02||% Change |
in FY 2002/03
|2000/01||% Change |
in FY 2001/02
7. EXAMPLES OF A FEW LEADING PHARMACEUTICAL INDUSTRIES IN BANGLADESH
1) Beximco Pharmaceuticals Ltd.
19 Dhanmondi R/A, Road – 7
Tel: 861-9151, 861-9091
Beximco Pharmaceuticals Ltd. (BPL) is a member of the Beximco Group – the largest private sector business conglomerate of Bangladesh, comprising 8 divisions and over 22000 employees. BPL, one of the largest pharmaceutical as well as bulk drug manufacturers of Bangladesh started its journey back in 1980 with manufacturing and marketing of licensee products of Bayer AG, Germany and Upjohn Inc. of USA.
Beximco Pharma is now manufacturing and marketing various types of pharmaceutical finished formulations covering almost all major therapeutic classes, dosage forms and strengths. Currently, BPL is producing and marketing 106 products with 172 strengths. It is into various therapeutic classes, with major emphasis on i) Antibiotics, ii) Antiulcerants and Antacids iii) Cardiovascular Drugs, iv) NSAIDs, v) Analgesics and Antipyretics, vi) Vitamins and Iron Supplements, vii) Antidiabetics, viii) Antifungals, ix) Asthma Prophylactics and Bronchodilators and x) Nasal Decongestant and Anti-inflammatory Drugs.
Apart from producing tablets, capsules, syrups, suspensions, solutions, drops, creams, ointments, gel etc., currently the company is also into specialized products like i) Inhalers, ii) Nasal Sprays and iii) Suppositories.
In addition to local market, BPL’s export activities are there in nineteen countries of three continents- Asia, Europe and Africa. For its outstanding export performance, BPL received Bangladesh’s highest award for export, the National Export Trophy, Gold in 1994-’95. BPL is the first pharmaceutical company in Bangladesh to receive such an award. BPL was also awarded National Export Trophy Gold for two consecutive years 1998-1999 & 1999-2000. BPL is the record three times winner of this national highest recognition for export.
BPL’s commitment is to always offer the best, both in product quality and services to its customers. Quality is the measure of excellence in the field of pharmaceutical products. BPL feels that it has an incalculable social liability of providing safe, efficacious and highest quality drugs. Equipped with the latest & the most advanced state-of-the-art technologies BPL team is committed to serve its customers. Through the highest quality drugs BPL has succeeded in gaining the confidence & trust of doctors & patients all over the country.
BPL has transformed its activities, culture, style and philosophy to meet the demands of the new millennium. Business diversifications that are strategically important for a sustained growth are results of its vision of the future. Several new bulk drug facilities are being developed to backward integrate their high volume products. A USFDA standard multi-million dollar pharmaceutical formulation plant is nearing completion. This would be one of the most modern plants in this region.
2) Square Pharmaceuticals Ltd.
48, Mohakhali C/A Dhaka-1212
Tel: 882-7733, 882-7729-38 Fax: 880-2-885-9704 E-mail: firstname.lastname@example.org
SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player.
Square Pharmaceuticals Limited (SPL) 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 5 Billion (US$ 90 million) with about 15% market share (April 2003 – March 2004) having a growth rate of about 16%.
The formulation plants of Square are producing wide range of dosage forms like –
|:||(Total Dosage Form = 110 Nos.)|
|Non-Coated (plain, chewable, dispersible, vaginal)|
|Coated (sugar coated, film coated, enteric coated)|
|Sustained/Extended Released (coated, non – coated)|
|:||(Total Dosage Form = 35 Nos.)|
|Granulated Material filled|
|:||(Total Dosage Form = 06 Nos.)|
|:||(Total Dosage Form = 32 Nos.)|
|Vials containing Dry Powder for Injections|
|Small Volume Liquid Parenterals|
|:||(Total Dosage Form = 25 Nos.)|
|Oral Syrups (Sugar based, Non-Sugar based)|
Spray, Drops, Ointment, Cream and Powder
|:||(Total Dosage Form = 42 Nos.)|
|Small Volume Sterile Eye & Ear Drops|
|Small Volume Nasal Drops & Sprays|
|Topical Ointments & Creams|
|Topical Antibiotic Powder|
Oral Dry Powders
|:||(Total Dosage Form = 30 Nos.)|
|Dry Suspensions (Antibiotic & Anti Infectives)|
|Dry Syrups (Antibiotics)|
Dry Powder Inhalers
|:||(Total Dosage Form = 08 Nos.)|
|Partial Filled (Premix) Capsules for Respiratory Tract Application with a Device|
Metered Dose Inhalers
|:||(Total Dosage Form = 05 Nos.)|
|Pressurized Canisters for Oral use with an Actuator|
The Chemical Division of Square started commercial production in 1995. From the year 1997 it started it’s full-fledged production and marketing to all top pharmaceuticals within the country including Aventis Pharma, Novartis Bangladesh Ltd., Glaxo Smith Kline, ACI Ltd., Reckitt & Colman, Beximco Pharmaceuticals Ltd., The Acme Laboratories Ltd, Eskayef Bangladesh Ltd., Opsonin Chemicals, Renata Ltd., Essential Drugs Co. Ltd. etc. with good reputation and loyalty.
Square started exporting finished pharmaceutical formulations since 1987. And it is the pioneer in pharmaceutical export from Bangladesh.
Square offers more than 200 molecules in over 350 formulations, from its 2 WHO GMP-compliant manufacturing plants.
3) The ACME Laboratories Ltd.
46, Satmasjid Road, Dhanmondi
The ACME Laboratories Ltd. is the second largest manufacturer and exporter of Human, Herbal and Animal Health Pharmaceutical Products in Bangladesh. Her Certifications include:
Table of Content 1. Letter of transmittal…………………………………03 2. Introduction …………………………………04 3. Ratio Analysis……………………………….. 06 4. Liquidity…………………………………07 i. Current ratio…………………………………08 ii. Quick Ratio……………………………….. 09 5. Asset management……………………………….. 10 iii. Inventory turnover…………………………………11 iv. Days sales outstanding (DSO)…………………………………12 v. Fixed asset turnover…………………………………13 vi. Total assets turnover…………………………………14 6. Debt management……………………………….. 15 vii. Total debt to total assets…………………………………16 viii.
Times-interest-earned (TIE)…………………………………17 ix. EBITDA coverage…………………………………18 7. Profitability……………………………….. 19 x. Profit margin on sales…………………………………20 xi. Basic earning power (BEP)…………………………………21 xii. Return on total assets (ROA)…………………………………22 xiii. Return on common equity (ROE)…………………………………23 8. Market value……………………………….. 24 xiv. Price/earning (P/E)…………………………………25 xv. Price/cash flow…………………………………26 xvi. Market/book (M/B)…………………………………27 9. Overall Financial Summary……………………………. 28 10. Balance sheet, cash follow and income statement of BEXIMCO LTD 11.
Balance sheet, cash follow and income statement of SQUARE LTD 12. Balance sheet, cash follow and income statement of Renata LTD Acknowledgements At first our thanks goes to Mr. S. M. Abdus Shakur, Lecturer, School of Business, Presidency University, for giving us the responsibility to prepare this report which we found to be a rather interesting topic to work on, and for the help to prepare the report as well. We got help from many people in the context of preparing this report and some of the persons have been very helpful and cooperative with information and suggestions.
And lastly, we would like to thank each other, means the group members for helping each other whenever we have to get help. Introduction: Financial Ratio Analysis is a tool used by individuals to conduct a quantitative analysis of information in a company’s financial statements. Ratios are calculated from current year numbers and are then compared to previous years, other companies, the industry, or even the economy to judge the performance of the company. Ratio analysis is predominately used by proponents of fundamental analysis.
Financial ratios are designed to help one evaluate financial statement and by comparing the results it must pay to the income it has available for payment such comparisons are made by ratio analysis. Here we take three companies from the same industry to analyze their financial statement and we also compare the findings with the total pharmaceuticals industry average. The companies name we took are- 1. BEXIMCO PHARMACEUTICALS LIMITED. 2. SQUARE PHARMACUTICALS LTD. 3. RENATA LIMITED. 4. AMBEE PHARMACEUTICALS LTD. Ratio Analysis Financial ratios are useful indicators of a firm’s performance and financial situation.
Financial ratios can be used to analyze trends and to compare the firm’s financials to those of other firms. Financial ratios can be classified according to the information they provide. The following types of ratios frequently are used: 1. Liquidity ratios 2. Asset management ratios 3. Debt management ratios 4. Profitability ratios 5. Market value ratios LIQUIDITY RATIOS Liquidity ratios are the first ones to come in the picture. These ratios actually show the relationship of a firm’s cash and other current assets to its current liabilities. Two ratios are discussed under Liquidity ratios. They are: 1.
Current ratio 2. Quick/ Acid Test ratio. 1. Current ratio: This ratio indicates the extent to which current liabilities are covered by those assets expected to be converted to cash in the near future. Current assets normally include cash, marketable securities, accounts receivables, and inventories. Current liabilities consist of accounts payable, short-term notes payable, current maturities of long-term debt, accrued taxes, and other accrued expenses (principally wages). Current Ratio = Current Assets/Current Liabilities BEXIMCO =28618916542602032267 1. 10 times Square=44118364363500845103 =1. 26 times Renata=988092820717068650 =1. 38 times Ambee=218724505222145758 =0. 985 times Industry average=1. 18 times 2. Quick/ Acid Test ratio: This ratio indicates the firm’s liquidity position as well. It actually refers to the extent to which current liabilities are covered by those assets except inventories. Quick Ratio = (Current Assets-Inventories)/Current Liabilities BEXIMCO =2861891654-15052880932602032267 =1. 04 times Square=4411836436-20267363223500845103 =1. 20 times
Renata=988092820-959414590717068650 =0. 04 times Ambee=218724505-135899190222145758 =0. 37 times Industry Average=0. 66 times ASSET MANAGEMENT RATIOS Asset management ratios are the financial statement ratios that measure how effectively a business uses and controls its assets. Below are discussed five types of asset management ratios: 1. Inventory turnover ratio 2. The day’s sales outstanding 3. Fixed asset turnover ratio 4. Total asset turnover ratio 1. Inventory turnover ratio: The ratio is regarded as a test of efficiency and indicates the rapidity with which the company is able to move its merchandise.
Inventory turnover ratio = Gross Turnover / Inventories BEXIMCO = 40101670591505288093 =2. 66 times Square= 82310975252026736322 =4. 06 times Renata=3089746417959414590 =3. 22 times Ambee=240726296135899190 =1. 77 times Industry Average=2. 93 times 2. The Days Sales Outstanding: The Days Sales Outstanding ratio shows both the average time it takes to turn the receivables into cash and the age, in terms of days, of a company’s accounts receivable. This ratio is of particular importance to credit and collection associates.
Days Sales Outstanding (DSO) = Trade Debtors/ (Annual gross turnover/365) BEXIMCO =5039164014010167059/365 =19. 23 Days Square=3602456469565715902/365 =13. 75 Days Renata=3442269333089746417/365 =40. 66 Days Ambee= 38179778240726296/365 =57. 89 days Industry Average=32. 88 days 3. Fixed asset turnover ratio: The Fixed Asset Turnover ratio measures the effectiveness in generating Net Sales revenue from investments in Net Property, Plant, and Equipment back into the company evaluates only the investments. Fixed assets turnover ratio (FATO) = Gross Turnover / Net fixed assets
Beximco=401016705911957773787 =0. 34 times Square=82310975258291290984 =0. 99 times Renata=30897464771656161962 =1. 87 times Ambee=24072629660695282 =3. 97 times Industry Average=1. 79 times 4. Total asset turnover ratio: The Total Asset Turnover is similar to fixed asset turnover since both measures a company’s effectiveness in generating sales revenue from investments back into the company. Total Asset Turnover evaluates the efficiency of managing all of the company’s assets. Total assets turnover ratio (TATO) = Gross Turnover/Total Assets Beximco=401016705914819665441 0. 27 times Square=825784373912703127420 =0. 65 times Renata=30897464173162232934 =0. 98 times Ambee=24072629657247033 =4. 21 times Industry Average=1. 53 times DEBT MANAGEMENT RATIOS Debt management ratios reveal 1) the extent to which the firm is financed with debt and 2) its likelihood of defaulting on its debt obligations. These ratios include: 1. Debt ratio, 2. Times-Interest-Earned (TIE) ratio, 3. EBITDA Coverage. 1. Debt ratio: The ratio of total debt to total assets, generally called the debt ratio, measures the percentage of funds provided by the creditors.
Debt ratio = Total Debt / Total Assets Beximco=436946329614819665441 =29 % Square=428608671512703127420 =34 % Renata=15001595773162232934 =47 % Ambee= 4800990157247033 =83% Industry Average=48. 25% 2. Times-Interest-Earned (TIE) ratio: This ratio measures the extent to which operating income can decline before the firm is unable to meet its annual interest cost. EBIT = Earnings before Interest and Tax TIE ratio = EBIT / Interest Charges Beximco=963775308249654298 =3. 86 times Square=2908395181397135963 =7. 32 times Renata=69719063387270665 =7. 99 times Ambee =78642302395026 3. 28 times Industry Average=5. 61 times 3. The EBITDA coverage ratio: The EBITDA coverage ratio shows if earnings are able to satisfy all financial obligations including leases and principal payments. (EBITDA is short for earnings before interest, taxes, depreciation, and amortization. ) EBITDA Ratio = EBITDA + Lease Payment/ Interest + Principal Payment + Lease Payment Beximco=963775308+5887353+30993608+10302868249654298+3556423568 =0. 29 times Square=2908395181+454290404+57334928+140936267397135963+2279693991 =0. 56 times Renata=697190633+1628151487270665 =1. 17 times
Ambee=7864230+9614002395026+0+7864230 =0. 86 times Industry Average=0. 72 times PROFITIBILITY RATIO: Profitability is the net result of a number of policies and decisions. Profitability ratios show the combined effects of liquidity, asset management and debt on operating results. There are four important profitability ratios that we are going to analyze: 1. Profit Margin on sales 2. Basic Earning power (BEP) 3. Return on Asset 4. Return on Equity 1. Profit Margin on Sales: Profit Margin on Sales gives us the net profit that the business is earning per dollar of sales.
The equation is as follows: Profit margin on Sales = Net income available to the stockholders / Sales Beximco=5453412734010167059 =13. 6 % Square=13818630938257843739 =16. 7 % Renata=4331458043089746417 =14 % Ambee=6347155240726296 =2. 64% Industry Average=11. 735% 2. Basic Earning Power (BEP): The ratio indicates the ability of the firm’s assets to generate operating income. The equation is as follows: Basic Earning Power = EBIT / Total Assets Beximco=96377530814819665441 =6. 5 % Square=290839518112703127420 =22. 9 % Renata=6971906333162232934 =22 % Ambee=786423057274033 =13. 3% Industry Average=16. 28% 3. Return on Total Assets (ROA): Return of total asset measures the amount of Net Income earned by utilizing each dollar of Total Assets. The equation is: Return on Total Assets (ROA) = Net income available to total common shareholders / Total assets Beximco=54534127314819665441 =3. 7 % Square=138186309312703127420 =10. 9 % Renata=4331458043162232934 =13. 7 % Ambee=634715557274033 =11. 08% Industry Average=9. 85% 4. Return on Equity (ROE): Return on Equity measures the amount of Net Income earned by utilizing each dollar of Total common equity.
It is the most important of the “Bottom line” ratio. By this, we can find out how much the shareholders are going to get for their shares. The equation is: Return on Equity (ROE) = Net income available to common shareholders / Total common equity Beximco=54534127310450202145 =5. 2% Square=13818630938417040705 =16. 4% Renata=433145804155075461 =2. 79% Ambee=634715546527981 =13. 64% Industry Average=9. 51% MARKET VALUE RATIOS The final group of ratios, the market value ratios relates the firm’s stock price to its earnings, cash flow and book value per share.
These ratios give management an indication of what investors think of the company’s past performance and future prospects. In this section, we are going to have a discussion mainly on three types of ratios: 1. Price/Earnings Ratio 2. Price/ Cash flow Ratio 3. Market/ Book Ratio 1. Price/ Earnings ratio: The Price/ Earnings ratio (price-to-earnings ratio) of a stock is a measure of the price paid for a share relative to the income or profit earned by the firm per share. P/E ratio = Price per share / earnings per share Beximco=104. 33 =2. 309 times
Square=100114. 47 =0. 87 times Renata=100374. 44 =0. 267 times Ambee=103. 17 =3. 15 times Industry Average=1. 65 times 2. Price/ Cash Flow ratio: This ratio indicates the amount investors will pay for Tk. 1 of cash flow. The equation for this ratio is shown below: Price/ Cash flow ratio = Price per share/Cash flow per share Beximco=10(545341+147183829)/1045020214 =70. 73 times Square=100(1381863093+652561599)/18170407 =1. 11 times Renata=100(433145804+16281514)/1156787 =3. 88 times Ambee= 10(6347155+57274033)/46527981 =7. 31 times Industry Average=20. 6 times 3. Market/ Book ratio: The ratio of stock’s market price to its book value. The Equation is: Market/Book ratio (M/B) = Market price per share / Book value per share Beximco=167. 7104502021451045020214 =16. 77 times Square=3151. 258417040705/18170407 =6. 80 times Renata=7789. 75115678700/1156787 =77. 89 times Ambee=12910 =12. 9 times Industry Average=28. 59 times OVERALL FINANCIAL SUMMARY After analyzing all the ratios, we have found out the following information: 1. Liquidity Ratios: In the liquidity ratio we can see that both current atio and quick ratio is good in average for Square comparing with the industry average. Renata’s current ratio is quite well, but it seems that the company has too much inventories, so, the quick ratio got lower. 2. Asset Management Ratios: for the asset management ratios, we can see that for the first two, Square is in a good shape. But for the asset turnover ratios, Ambee plays a good role. Meaning that Square is good in turning its current assets to liquidity, and Ambee is good at moving its long term assets to liquidity. 3.
Debt Management Ratios: in Debt management ratio analysis, we can see that for debt ratio and TIE ratio, both Beximco is in a good shape on an average. Bot for the EBITDA Coverage ratio, Renata does the best. But, as a whole, we can say that Beximco is quite good in managing its debt. 4. Profitability Ratios: for the profitability ratios, we can see that square is very good at both Profit margin on sales, and BEP ratios. At ROA, Square is okay, but Renata and Ambee are very good. Again for ROE, Square is extra ordinarily good. So, we can say that Squrae is very good at managing and earning profit. 5.
Market Value Ratios: here we see that for the first two analyses, Beximco’s market value is higher, but for the last one, renata’s valu is higher, but Beximco’s was okay. So, we can say that in terms of market value, Beximco is good on average. From the total analysis, we can summarize that Square Pharmaceuticals Ltd and Beximco Pharmaceuticals Ltd have been doing pretty good throughout the years. It is true that for some cases both the companies are in an okay shape, but it is still pretty much satisfactory. Therefore, we can conclude that both Square Pharmaceuticals Ltd and Beximco Pharmaceuticals Ltd are good enough company to invest on.