Square Pharmaceuticals Case Study

History of Square Pharmaceuticals

Square Pharmaceutical Limited (SPL), the flagship company of the Square group of industries, has started its journey in 1958, since then square never had to look behind. SPL is the largest pharmaceutical company in Bangladesh, headquartered in Dhaka, with the largest domestic market share of 19.3%, in what is a highly competitive pharmaceuticals market. It is now the number one pharmaceutical product exporting company of Bangladesh and on its way to become a very profitable global player. It converted itself to a public limited company in 1991, the sale turnover of Square was close to 163.71 million, that is 16.43% of market share and the annual growth rate is 16.72%. Square exports its product to around 38

Imports of nearly 80% of required API - The Active Pharmaceutical Ingredients (API) are mostly imported from abroad, as 20% of this API is not manufactured in the local market except for a very few of the top companies. Earlier in 2000 almost all of the API were bought from Europe. However, recently 2/3 of the imports of API have been shifted to India and China, which brought about a significant cost saving.

Bangladesh have been exporting API and medicines abroad since the late 1980 's. Although the quantity of export is relatively small, but it seems to be increasing recently. There are mainly three types of foreign markets for pharmaceuticals. Of the tree segments, two of the export markets are wide open for the products of Bangladesh. These are unregulated and lightly / moderately regulated market which includes countries like Myanmar, Nepal, Kenya, Libya, Somalia, Sri Lanka, Vietnam, Bhutan, Cambodia, Afghanistan, North Korea, Ghana, Malaysia, Sudan, Gambia, Rwanda, Uzbekistan, Thailand etc.

The highly regulated market such as US or EU countries require even higher standards for permission for entry in their business territory. This high pressure from the outside is though good for the development and improvement in he pharmaceutical

Government regulations are another factor that requires to much bureaucratic procedures.

Moreover, creating a brand image among the consumers, and influencing the hospitals and doctors is a drastic challenge for new comers.

Rivalry (Medium):

The rivalry in the market is very intense, as there are neck to neck competition among the rivals. There are several major players in the market where all of them are continuously growing with the market. although there are still scope for further growth, as the market is still at growing stage, and it is still very small if local firms are considered to be operating in the vast international market.

Bargaining power of buyers (High):

Institutional buyers of pharmaceutical products such as the hospitals and diagnostic centers or health care organizations buy in bulk and exert pressure on pharmaceutical companies to keep prices in check. However, regular patients have lost bargaining power due to price increases in generic drugs.

Moreover, if foreign market is considered, not every company from Bangladesh can enter a new market abroad where there are high