Home ›› Stocks

Beximco Pharma expands global footprint

The JV factory in Saudi Arabia is expected to start operation at the end of the year
Staff Correspondent
09 Jul 2024 21:05:53 | Update: 09 Jul 2024 23:58:48
Beximco Pharma expands global footprint

Beximco Pharmaceuticals, the country's leading drug maker, has expanded its global footprint by establishing a factory in Saudi Arabia in a joint venture (JV) where it will provide human capital and technical support.

The factory will be used to produce about 30 kinds of medicines and is expected to start operation at the end of this year, according to an equity note about the company issued by EBL Securities Ltd, a leading stockbroker firm.

Beximco Pharmaceuticals is the top pharmaceutical exporter in the country, with 68 export destinations, including highly regulated markets like the US and Europe, and contributed an average of 20.3 per cent of the total pharmaceutical exports from FY2018-19 to FY2022-23.

The publicly traded company received 33 new registrations for 19 generics in 17 countries, along with approval for seven drugs from the US FDA, TGA Australia and Health Canada in FY23.

Besides, the price of Active Pharmaceutical Ingredients (API) in the Chinese market has recently declined by 50 per cent due to overcapacity, the biggest drop since the Covid-19 pandemic.

Beximco Pharma is currently producing APIs for some anti-coagulants, anti-inflammatory drugs, dipeptidyl peptidase-4 inhibitors, anti-anginal medicines and anti-bacterial medicines and relies on imports primarily from China and India for the APIs of the rest of the drugs.

The company’s gross profit margin, like other pharma companies, is anticipated to increase in Q4 of 2024 and Q1 of 2025 owing to the decline in API prices, according to the equity note.

EBL Securities said Beximco Pharma has immense potential to generate significant revenue from contract manufacturing, and currently, the company has a contract manufacturing agreement with GlaxoSmithKline (GSK) for producing the Metered Dose Inhaler product.

Since the beginning of FY2017-18, contract manufacturing revenue has grown at a CAGR of 136.6 per cent from Tk 23 lakh to Tk 6.93 crore by FY23.

Despite being the leading medicine exporter among the listed pharmaceutical companies, Beximco’s export revenue was significantly impacted by the global political and economic crisis. From FY2016-17 to FY2020-21, its export revenue grew at a CAGR of 30.5 per cent.

However, the company experienced a negative 0.5 per cent CAGR decline in export revenue from FY21 to FY23 as it had to defer part of its export orders in response to these challenges, as per the equity note.

Its subsidiary Beximco Pharma API Limited was established on December 12, 2017, to set up an API manufacturing facility on two allotted plots in the API Industrial Park in Munshiganj’s Gajaria.

However, the company is yet to construct the manufacturing facility, which is not allowing it to decrease its reliance on import for APIs and protect its profitability during the period of exchange rate volatility, said the stockbroker firm.

Beximco Pharma has contingent liability for a disputed Tk 15.08 crore income tax claim, Tk 14.41 crore VAT claim and Tk 35 crore third-party guarantee claim. If any liability arises on the disposal of the cases, the company will have to meet the claims when it will arise, said the equity note.

To achieve external growth, the company acquired an 85.2 per cent stake in Nuvista Pharma Limited (formerly Organon Bangladesh) in FY18. Nuvista contributed to approximately 6.1 per cent of the revenue growth of Beximco to register 16.7 per cent of CAGR in revenue over the period from FY17 to FY23.

Beximco Pharma acquired a 54.6 per cent stake in Synovia Pharma PLC (formerly Sanofi Bangladesh) in FY2021-22 to increase its external growth, which is expected to increase the revenue growth of the company based on the anticipated revenue synergy.

The company produces over 300 generic medicines, which are available in more than 500 different presentations, covering key therapeutic classes such as antibiotics, analgesics, anti-diabetic, respiratory, cardiovascular, central nervous system, gastrointestinal, etc.

Beximco Pharma’s profits in the January-March period of FY24 grew by 51 per cent to Tk 136 crore from Tk 90 crore recorded in the same period of the previous fiscal year.

The company's Earnings Per Share (EPS) stood at Tk 3.06 at the end of March. It was Tk 2.13 at the end of the same month of the previous year. Its sales rose 15 per cent year-on-year to Tk 1,098 crore in the third quarter of FY24.

The company has a team of over 4,700 people who are the driving force behind its progress, according to its website.

Beximco Pharmaceuticals’ EPS stood at Tk 3.21 in the second quarter (October-December) of FY24, a rise compared to Tk 2.77 year-on-year.

Listed on the Dhaka Stock Exchange in 1986, the company’s shares closed at Tk 122.70 per share on the bourse’s trading floor on Tuesday.