Analysis of the Communicative Image of

Square Pharmaceuticals Ltd.

Executive summary :

Square Pharmaceuticals Ltd. was established as a partnership firm in 1958. In 1991 it was
converted into a public limited company. 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. Since 1987 Square has taken
aggressive measures to explore new countries as potential export market. More & more
countries are getting confidence in Squares product every year. But its true that in the
competitive global environment Square is still struggling to ensure firm footings in global
market. Square is the flagship Pharma Company in Bangladesh, wants to be a global player.
As recognition to its export contribution to national economy, Square received the National
Export Trophy in 1997. To strengthen its global operation further, Square is planning to enter
in Russian Pharma market considering market potentiality. Our project is focused on to
decide entry mode of Square for Russia. Russia is having a huge potential pharma market for
a foreign company that is having competitive advantage. Domestic pharmaceutical producers
of Russia supply only 35 percent of the total market and foreign companies control remaining
65% market. Imported pharmaceuticals have increased their presence in the Russian market
in the last several years and continuously having positive growth in each year. In 2001 the
imported pharma market growth was 36%. Due to high-unsatisfied demand for
pharmaceuticals, decreased production capacity of Russian pharmaceuticals, increased prices
of the domestic producers, drastically making them less competitive in comparison to
imported ones. However considering the potential and opportunity, definitely Square can
think to keep step in Russian Pharma market. The question is what will be the right entry
mode & how to implement the business structure. I also analyzed all these issues in this
project report. I made a thorough analysis of country profile, Russian market, target market,
marketing mix and competitors profile. At last i have suggested the entry mode of
Exporting through distributor & office setup for marketing integration.

1
Introduction:

Square Pharmaceuticals Ltd. (SPL), the pharmaceutical giant in the country, is a trusted name
in the industry of manufacturing quality medicines for more than four decade. Since 1987
Square has taken aggressive measures to explore new countries as potential export market.
More & more countries are getting confidence in Squares product every year. The
pharmaceutical market in Bangladesh remains tiny compared to the population size because
of the lack of spending power of the population. Pharmaceutical spending is also amongst the
lowest in the world in per capita terms. Healthcare expenditures consist of only 3.4% of GDP.
However, the increased awareness of healthcare and the governments increased expenditure
in this sector is causing the demand to increase in this sector. In addition to the demand of
therapeutic drugs, the demand for wellness drugs such as vitamins and minerals are
increasing gradually and the future growth of the sector lies in it. Bangladeshs
pharmaceutical industry contributes almost 1% of GDP. It is the third largest tax paying
industry in the country. Bangladeshi pharmaceutical firms focus primarily on branded generic
final formulations using imported APIs (Active Pharmaceutical Ingredients). To sustain the
changing environment SPL made convert itself into Public Limited Company in 1991. With a
brilliant track record SPL became the first company in Bangladesh to cross the Billion Taka
mark turnover in 1992. In 1994 SPL got its share listed in the Dhaka and Chittagong Stock
Exchanges. Authorized Capital towered to billion taka and paid up capital by now is taka 250
million. Presently Square is family of 1321 members. In 1996 an agreement was signed with
M/s Tanvec, UK for the establishment of the second formulation unit (Pharma II) at
Kaliakoir, Gazipur. This factory, which built with a view to get the approval of
USFDA/MCA, is completed in the year 2000, and without doubt, help SPL continue to
command its leadership through the next millennium as well.

The organization Background

SQUARE today symbolizes a name a state of mind. 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.

FIRST to export antibiotics and other ethical drugs overseas.

FIRST to manufacture and market Metronidazole, Ampicillin and Cotrimoxazole after
the expiry of patents.
FIRST to develop sustained release technology locally.
FIRST to achieve an all time industry high record sales turnover of US$ 25 million.
FIRST to locally produce high tech Metered dose Inhalation (MDI) formulations.
FIRST to locally produce diclofenac sodium in the chemical division.
In addition to these FIRSTs, SQUARE Pharmaceuticals Limited (SPL) was always
ahead in introducing new products in the market.

2
Profile of Square Pharmaceuticals Ltd.

Corporate Headquarters : SQUARE CENTRE

48, Mohakhali Commercial Area, Dhaka 1212, Bangladesh

Factory : Shalgaria, PabnaTown, Pabna

Established : 1958

Constitution : Public Limited Company

Chairman : Mr. Samson H. Chowdhury

Managing Director : Mr. Tapan Chowdhury

Details of Business : Pharmaceutical Products/

Bulk Chemicals/ AgroVet Products

Authorized Capital : Tk. 1000 million

Paid-up Capital : Tk. 496.8 million

No. of Employees : 2703

ProductRange : Pharma 91 products in 185 dosage forms

Chemical Division 7 products

AgroVet Division 7 products

Name of the Banker : Janata Bank, 1, Dilkusha, Dhaka

CitiBank N.A., 122-124, Motijheel, Dhaka

Standard Chartered Bank, 18-20, Motijheel, Dhaka

Credit Agricole Indosuez, 47, Motijheel, Dhaka

Bank Asia Ltd., 113-116,Tejgaon, Dhaka

Manufacturing Units :

Pharmaceutical Division

2. AgroVet Division

3. Chemical Division

3
 Square Pharmaceuticals Ltd. (SPL), the pharmaceutical giant in the country, is a trusted name
in the industry of manufacturing quality medicines for more than four decade.

With a capital of Tk. 55,000, a floor space of 3000 sft, and a team of 12 persons, SPL made
its humble debut as a partnership firm in 1958.

Within a span of only six years, under the farsighted vision of the management, and the
dedicated efforts of the company, its turnover reached the mark of Taka one million. With the
growth of turnover came the increase in number of employees, which in 1964stood to 50. At
this point of time the partnership firm was transformed into Private Limited Company. In
1964, PLs Authorized Capital was Tk. 5,00,000 and the Paid up Capital was 4,00,000.

During the mid-seventies (1975) SPL entered into a technical collaboration agreement with
Janssen Pharmaceuticals, Belgium, which is a subsidiary of Johnson and Johnson
International, USA. Since its inception SPL practices Good Manufacturing Practices (GMP),
as recommended by the World Health Organization (WHO).

With its finished goods already dominating markets at home and abroad, SPL started
production of pharmaceutical raw materials groom its new unit, christened as Square
Chemical Division, in 1995. The items in production under this unit are Diclofennac Sodium,
Amoxycillin, Cloxacillin and Paracetamol.

To sustain the changing environment SPL made convert itself into Public Limited Company
in 1991. With a brilliant track record SPL became the first company in Bangladesh to cross
the Billion Taka mark turnover in 1992. In 1994 SPL got its share listed in the Dhaka and
Chittagong Stock Exchanges. Authorized Capital towered to billion taka and paid up capital
by now is taka 250 million. Presently Square is family of 1321 members.

In 1996 an agreement was signed with M/s Tanvec, UK for the establishment of the second
formulation unit (Pharma II) at Kaliakoir, Gazipur. This factory, which built with a view to
get the approval of USFDA/MCA, is completed in the year 2000, and without doubt, help
SPL continue to command its leadership through the next millennium as well.

Chronology since inception:

Year Events

1958 : Debut of Square Pharma as a Partnership Firm.

1964 : Converted into a Private Limited Company.
1974 : Technical Collaboration with Janssen Pharmaceutica, Belgium, a subsidiary of
Johnson and Johnson International, USA.
1982 : Licensing Agreement signed with F. Hoffmann-La Roche Ltd., Switzerland.
1985 : Achieved first position in the Pharmaceutical Market of Bangladesh among all
national and multinational companies.
1987 : Pioneer in pharmaceutical export from Bangladesh.
1991 : Converted in to a Public Limited Company
1994 : Initial Public Offering of Square Pharmaceutical Shares.

4
1995 : Chemical Division of Square Pharmaceuticals Ltd. starts production of
pharmaceutical bulk products (API).
1997 : Won the National Export trophy for exporting pharmaceuticals.
1998 : Agro-chemicals & Veterinary Products Division of Square Pharma starts its
operation.
2001 : US FDA/UK MCA standard new Pharmaceutical factory goes into operation built
under the supervision of Bovis Lend Lease, UK.
2004 : Signing of agreement with ROVIPHARM, Vietnam to manufacture and market
SQUARE products under license in Vietnam.
Secured the top position for the best published accounts and report for 2003 in the
manufacturing category for transparency and excellence in corporate reporting.
2005 New State-of- the-Art Square Cephlosporins Ltd. goes into operation; built under the
supervision of TELSTAR S.A. of Spain as per US FDA/ UK MHRA requirements.

Global Operations of SPL:

SQUARE has extended its range of services towards the highway of global market. It
pioneered exports of medicines from Bangladesh in 1987. Through its extended marketing
operations, SQUARE is now selling its finished goods in many countries of Asia and Europe
including:

Cambodia
Myanmar
Nepal
Pakistan
o Russia
o Sri Lanka
o Ukraine
o Yemen

In addition, registration of many of SQUAREs finished goods in other countries of Asia,

Europe, and Africa is now under process.

Partnership and agreement with different world players

1974 : Technical Collaboration with Janssen Pharmaceutical, Belgium, a subsidiary of

Johnson & Johnson International, USA

1982 : Agreement signed with F. Hoffmann-La Roche Ltd., Switzerland

1999 : Agreement with Bayer AG, Germany

1999 : Agreement with Eisai Co. Ltd., Japan

1999 : Technical know-how transfer to foreign pharmaceutical company

2000 : Establishment of Square Spinnings Limited.

2001 : Operation of new factory with a view to get USFDA/MCA approval and
production support for expanding export operations.
5
2002 : Establishment of Square Fashions Limited and Square Knit fabrics Limited.

2003 : Turnover crosses Four Billion Taka mark.

Overview and Communicative Image of Square Pharmaceuticals Ltd.

Manufacturing Facilities

SQUARE is committed to ensure strict compliance with CGMP norms and regulatory
requirements in every phase of manufacturing, quality assurance, and distribution of
medicines. To comply with CGMP SQUARE has state-of-the-art technology in production
and quality control. In addition, USFDA/MCA standard new plant is now at the completion
stage.

Documented Quality Management System (QMS) is integral part of all of SPL operations.
People at all levels are committed to adopt advanced technology for continuous development.
Being confident with the sophisticated manufacturing and quality assurance technology of
SQUARE, multinationals from industrialized countries now have agreements with Square for
having their products manufactured in Bangladesh.

Product Mix:

SQUARE has latest technologies for production of a wide varieties of dosage forms including
Tablet, Sustained Release formulation, Capsule, Metered Dose Inhaler (MDI), Injectable,
Syrup (liquid and dry), Suspension (liquid and dry), Pediatric Drops, Nasal & Ophthalmic
formulations, Topical Gel/Ointment/Cream, and oral care formulations.

Current product mix of Square Pharmaceuticals Ltd. comprised of products from the
following types of Drug Delivery Systems:

Tablets
o Non-coated (Vaginal, Dispersible, Chewable, Plain)
o Coated (Sugar coated, Film coated, Enteric coated)
o Sustained released (coated/non-coated)
o Capsules
o Injectables
Vials containing dry powder for injections
Small volume parenterals
Liquids
Oral (suspension, syrup, drops, and stomatologicals)
Topical solutions
Nasal drops
Dry powders
Oral (for reconstitution to make suspension, syrup and drops)
Topical
Semisolids (creams, ointments and gels)
Solid suppository formulations
Metered Dose Inhalers (MDIs)
Dry Powder Inhalers (DPIs)
Sterile Ophthalmic Formulations (drops)

6
Therapeutic Range (Formulation)

Analgesics/AntipyreticsAnthelmintics AntiviralsBone resorption preparations

Antiallergics Dermatologicals
Antidepressants Enzymes
Antidiabetics Expectorants/Antitussives
Antidiarrheals Hematinics
Antiemetics/Gastroprokinetics Lipid modifiers/Antiobesity
Antifungal Systemic Nootropics
Antigout NSAIDs
Antihistaminics Ophthalmic preparations
Antihypertensive / Antianginal Sedatives/Tranquilizers/Muscle Relaxants
Antiinfectives/Antibacterial Bronchodilators/Antiasthmatic
Antimalarial Vitamin and mineral preparations
Antiprotozoals Androgen suppressants
Antiseptics/Disinfectants Anti-migraine
Antispasmodics Laxatives
Antiulcerants Neurological

Quality:
SQUARE is committed to ensure better life through quality medicine. SPL has defined its
Quality Policy to fulfill this commitment. To achieve and maintain a steady quality, a range of
sophisticated state-of-the-art technology is engaged in operation. SQUARE has adopted the
latest quality philosophy by organizing a well-equipped Quality Assurance Department in the
plant in addition to Quality Control Department. Above all highly qualified, well-trained,
experienced and dedicated professionals are most valuable assets of Square Pharmaceuticals
Ltd.

Research and Development:

SPLs Research and Development is devoted to improve the health care facility of people.
Square Pharmaceuticals Ltd. has brought in advanced technology for its Research and
Development works. Research & Development includes the bibliographic search aided by a
resourceful library, design and selection of process that maximizes efficiency and minimizes
the environmental impact, accelerated and long term stability testing, product quality
optimization and translation of new scientific insights into the products. R&D Department is
also devoted to extensive research and development work in synthesizing bulk chemicals for
Chemicals Division. Having started as an importer of technology, R&D Dept. from 1999 has
started to export technology to SQUAREs global customers. To support Research and
Development work latest Information Technology (IT) is available with us and SQUARE is
now fully prepared to meet the challenge of twenty-first century.

Chemicals Division for Bulk Drug Manufacturing :

In 1995, SQUARE has established a separate division for the manufacturing of bulk drugs.
Currently this division is producing the following bulk chemicals for the domestic
pharmaceutical companies:

7
Paracetamol BP/USP

Diclofenac sodium BP

Diclofenac free acid INN

Diclofenac diethylamine

Diclofenac potassium INN

Flucloxacillin sodium BP

Amoxicillin trihydrate BP/USP (compacted and micronized)

Cloxacillin sodium BP/USP (compacted and micronized)

Ampicillin trihydrate BP/USP (compacted and micronized)

Cephalexin monohydrate BP/USP (compacted and micronized)

Distribution Network:

SQUARE is committed to ensure better life through quality medicine. The ultimate motto is
to ensure customer satisfaction by exceeding their level of expectations. SPL has 14 Sales and
Distribution offices in the following places in Bangladesh:

Depot Address Phone

355-356, Tejgaon Industrial Area, Dhaka-
Dhaka (880-2) 8828775
1208.
Pabna Hospital Road, Salgaria, Pabna. (880-731) 66580
877/A, MS Road, Bakshi Bazar, Malati
Bogra (880-051) 64747
Nagar, Bogra
House # 36, Road # 2, R K Road, Islambag ,
Rangpur (880-0521) 63588
Rangpur.
Alhamdulillah, 25 Usufe Road, Mirzapur,(880-041) 732330,
Khulna
Khulna-9100 724654
502/532 South Alekanda, 1 No. C & B Pool,(880-0531) 53661,
Barisal
C & B Road, Barisal. 56778
400/363, Shishu Mangol Road, Kandirper
Comilla (880-081) 72320
Comilla.
5/A/04 & 5/A/05, Shaheb Quarter, Kachijuli,
Mymensingh (880-091) 55143
Mymensingh
House No-1/C, Baijid Bostami Road, East
Chittagong (880-031) 654423
Nasirabad, Chittagong-4000.
234/B, Hospital Road, Maizdee Court,
Maizdee (880-0321) 61683
Noakhali.
Sabina Mohal, 44, Payra, Darshandewry, (880-0821)
Sylhet
Dorga Mohalla, Sylhet. 725298
Tangail Biswas Betka, Dhaka Road, Tangail (880-0921) 53488
(880-0721)
Rajshahi 106, Ambagan, Senanibas Sarak, Rajshahi
760877
8
 Mission Road, Christian Mission, Police
Faridpur (880- 0631) 63561
Line, Faridpur

The extensive marketing network comprising of latest technical and logistic support along
with 887 skilled and qualified field staffs is a key to succeed in achieving customer
satisfaction level beyond their expectation. The modern warehousing and completely
computerized invoicing facilities of SQUARE ensures just-in-time delivery and high
customers satisfaction.

Resources

Total Distribution personnel : 887

Permanent : 420
Casual : 467

Central Depot : 01

Depot : 14

Vehicles : 212

Export market:

In an effort to expand the market for the pharmaceutical products beyond the border, the
company has been successful in exporting to several countries at an increasing ratio of its
turnover as indicated below:

(Taka in 000)

Year Turnover Exports % age of GT

(Gross)
2001-2002 2,422,785 44,361 1.83%
2000-2001 2,055,418 15,082 0.73%
1999-2000 1,827,983 11,503 0.63%
1998-1999 1,595,590 163 0.01%

The company has so far been able to enter into the markets of Russia, Pakistan, Sri Lanka,
Myanmar, Nepal, and Cambodia. It is expected that after the Dhaka Unit goes into production
the company will succeed in entering the markets of developed countries with expanded
share of exports.

Corporate Financial Highlights:

Authorized Capital Tk. 1000 Million
Issued, Subscribed and Paid-up Capital Tk. 496.8 Million
Reserve/Surplus (Retained Earnings) Tk. 872 Million
Share Premium Tk. 800 Million
9
Long Term Loan Tk. 210 Million

Marketing Performance:

Product

Squares product is viewed among the most quality products in the country. This quality
image has increased its credibility among the doctors. It is also pioneer in introducing many
new products sought by the doctors. Introducing new products is one of the important
objectives of the company. But there are some complaints regarding packaging of the
products. But the company has now concentrated in this area and working hard to bring
attractive and good packaging

Pricing

Government fixes Price of most of the essential drugs. The number is 118 products. The
company can fix price of other products but needs to take approval of government. In pricing
a product, Square Pharmaceuticals Ltd. usually follows target pricing. Premium prices cannot
be charged, as all the competitor products are similar and not much distinguishable from each
other. But prices of some products are still higher than the competitors. But since Square
Pharmaceuticals Ltd. does not compromise with the quality, sometimes they have to charge
higher to ensure the highest quality possible.

Promotion

Personal selling is the main weapon in pharmaceutical industry. Medical representatives of

the company go to the doctors to promote the products. The quality of medical reps is
assumed to be the best in Square Pharmaceuticals Ltd. They are selected after a careful
scrutiny and are sent to market after some extensive training. This helps Square
Pharmaceuticals Ltd. to maintain the quality of its medical reps. Advertising can be given
only in magazines related to health profession. Square also utilizes every opportunity to
explore this area

Distribution

square distributes its products all over the country using its own distribution channel. It has a
large number of vehicles and sales depots to ensure coverage of the whole country. Its
coverage is the best in the country.

10
Corporate Profile of SQUARE:

Although Square started its operation in pharmaceutical sector and leader in the field, it is
today a synonym of quality toiletries, health products, textile products and AgroVet products.
It has also expanded its business in real estate, engineering construction, hospitals, electronic
media and other trade & services. SQUARE is now one of the fastest growing and fastest
diversifying conglomerate in Bangladesh.

Square Family

Square family is currently comprised of following companies:

Square Pharmaceuticals Ltd.

Square Textiles Ltd.
Square Spinnings Ltd.
Square Toiletries Ltd.
Square Consumer Products Ltd.
Square Informatix Ltd.
Square Health Products Ltd.
Square Agro Ltd.
Mediacom Ltd.

Associated Companies
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As part of vast diversification, SQUARE has the following associated companies:

Sheltech
Pioneer Insurance Company Ltd.
Mutual Trust Bank Ltd.
National Housing Finance And Investment Ltd.
Aegis Services Ltd.
Maasranga Productions
Corporate Headquarters:
Corporate Headquarters of SQUARE is now located at the following address:
SQUARE CENTRE
48, Mohakhali Commercial Area, Dhaka-1212, Bangladesh
Tel. : (880)-2-8827729 (10 lines); Fax : (880)-2-8828608, 8828609
Email: square@bangla.net, Web: http://www.square-bd.com
Board of Directors
Mr. Samson H. Chowdhury Chairman
Mr. Tapan Chowdhury Managing Director
Dr. Kazi Harunar Rashid Director
Mr. Samuel S. Chowdhury Director
Mr. Anjan Chowdhury Director
Mr. Kazi Iqbal Harun Director
Mrs. Jahanara Chowdhury Director

Human resources:

In its efforts for human resources development in all spheres of its activities the company
offered various courses of training. The company conducted in-house courses of different
duration for upgrading skill of 395 employees during the financial year of 1998-1999. 22
employees were sent to various local institutes for training on different topics, 7 employees
were sent abroad for training/attending seminars/symposiums on various subjects including
general management, 3 expatriates were also invited for holding various discussion forums
for officers/staff of the company.

The Breakdown of HR:

Manager
Job Location Executive Non Executive Total
and above
Corporate Headquarters 46 123 123 292
Chemicals Division 2 12 64 78
Pabna Plant 19 59 459 537
Dhaka Unit 14 61 168 243
Distribution 3 17 174 194
Field Force(SPL) 942
Field Force(Agrovet) 70
Field Force(Pesticide) 25
Total HR 84 272 988 2381

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The Supervision Ratio :

Criteria Manager Executive Span of Supervision

84 272 1:3
Executive Non
Supervision
Executive
272 988 1:4

Activities of Key Functional Departments in SPL:

As per the latest organogram SPL had 20 (twenty) functional departments for its operation.
The names of the departments are as follows:

1. Information Technology (IT) Department

2. Medical Services Department (MSD)
3. Product Management Department (PMD)
4. Sales Department
5. Distribution Department
6. International Marketing Department
7. Market Research and Planning Cell
8. Quality Management and Audit Dept.
9. Production Planning and Inventory Cell
10. Engineering Department
11. Production Department
12. Commercial Department
13. Personnel and Administration Department
14. Technical Services Department
15. Human Resource Training and Development Department
16. Quality Control Department
17. Quality Assurance Department
18. AgroVet Department
19. Accounts and Finance Department
20. Accounts (New Venture) Department

Organizational Structure:

13
The following departments manage domestic marketing operation:

1. Product Management Department (PMD)

2. Sales Department
3. Medical Services Department (MSD)
4. Distribution Department
5. Market Research and Planning Cell

The following paragraphs describe the key functions of the above-mentioned Departments:

Information Technology (IT) Department:

The main functions of IT Department are as follows:

1. Provide computer and other related accessories supports to all the user
2. Maintenance of server and ensure smooth LAN operation
3. Provide up to date technical and software support to all the sectors of SQUARE

14
 4. Development and maintenance of centralized databases and provide routine and ad
hoc reports for management decision making.

Medical Services Department (MSD):

The main functions of MSD are as follows:

Arranging clinical meeting with the physicians on different products

Provide answers to different queries of the physicians through mail or telephone

Arranging education programs for the rural medical practitioners

Publishing of medical journals

Arranging of special promotional campaign of different products

Product Management Department (PMD) :

PMD is the core and centralized department for managing the total marketing effort.
Basically PMD performs the all planning, implementation of plans as part of marketing
management functions. The two key functions of PMD are as follows:

1.Introduction of new product into the market

2.Manage the existing portfolio to achieve the marketing objectives.

To this end PMD undertakes all relevant activities including the following:

1. Preparation of Marketing Plan.

2. Designing and development of promotional materials
3. Training of field forces
4. Feasibility study of new products
5. Management of regulatory affairs with Drugs Administration
6. Preparation of printed promotional material (literature/pad/brochure/show card etc.).
7. All relevant coordination works with supplier/factory and procurement department
concerning machinery and raw materials that will be used to manufacture the
concerned brands.

Sales Department:

1. Pay regular visit to the doctors; show the benefits of new existing products with the
help of promotional tools.
2. Monitor the competitors activities.
3. Handles initial product queries from doctors and product complain from the market.
4. Receive sales order from the retailers /drug stores.
5. Coordination among different markets
6. Market rearrangement
7. Handling different problems of field forces

Distribution Department:

15
Ensure smooth distribution of products to all over the country

Collection of payments from the customers

Performs functions as the representative of SPL at the depot level.

Maintenance of vehicles and depots

International Marketing Department:

Exploration of new markets all over the world

Operating of export business in the different countries

Provide training to field forces in overseas countries

Provide all types of documents for registration of SPLs products in overseas countries.

Production Planning and Inventory Cell (PPIC) :

Prepare the monthly production schedule of different products

Maintain the inventory status of different raw materials and packaging materials

Technical Services Department (TSD) :

1. Provide technical support to QC, QA, Production and other departments with regards
to any kind of technical issues.
2. To procure new Raw Material and production and quality facilities in coordination
with Commercial Dept.
3. Development of formulation of new products
4. Selection of machinery and equipment including spare parts.
5. Coordination and follow-up of the designing and implementation of the Master Plan
of the factory. All matters related to development of factory facilities.
6. Handling various forms of product complaints from market, field forces, and different
departments.
7. Recipe development and necessary changes in formulations, product improvement.

Current performance of SPL.

Corporate financial highlights

As on March 31, 2006 the corporate financial position of SQUARE was as follows:

1. Authorized Capital Tk. 1000 Million

2. Issued, Subscribed and Paid up Capital Tk. 436.8Million
3. Reserve/Surplus (Retained Earnings) Tk. 872 Million
4. Share Premium Tk. 800 Million
5. Long Term Loans Tk. 210 Million
6. Number of Shareholders (2006) 13,206
16
Corporate operational results:
The following three years financial data proves that SPL is operating through maximizing the
shareholders benefits. (Figures in thousands)

2003-2004 2004-2005 2005-2006

(12 months) (12 months) (12 months)
1 Turnover (Gross) 3451523 4234244 4729743
2 Value Added Tax 450577 563433 663892
3 Turnover (Net) 3000946 3670811 4065851
4 Gross Profit 1081340 1435655 1466282
Net Profit before
5 691636 905736 929604
Tax
6 Net Profit after Tax 573677 759448 764885
7 Paid-up Capital 300,000 300,000 300,000
8 Earning per Share 229.47 253.15 254.96
9 Dividend per Share 70.00 75.00 70.00

Output/Capacity utilization:

The actual production of the various categories of products (except inhalers) including
chemicals increased substantially leading to higher capacity utilization as summarized below:

Production (000)
% ageCapital Utilization
Product
Units increase /
Categories 2005-2006 2004-2005 2005-2006 2004-2005
(Decrease)
1 Tablets Pcs 1829089 1736561 5% 105% 231%
2 Capsules Pcs 295234 286350 3% 96% 119%
3 Liquids Bottles 21210 16105 32% 118% 153%
4 Injectables Pcs 13325 23075 (42%) 74% 90%
5 ENT Preparations Phials 8651 10778 (20%) 192% 207%
Opthal
6 Phials 1083 966 12% 181% 116%
Preparations
7 Dry Syrup Bottles 4048 2634 54% 169% 88%
8 Inhalers Can 298 148 101% 50%
9 Basic Chemicals Kg 219 201 9% 64% 59%
10 Tablets-AgroVet Pcs 1262 1697 (26%) 67% 99%
11 Powder-AgroVet Gm 34911 15252 129% 189% 127%

The capacity utilization rate in some areas of production decreased due to strategic changes in
favor of increased production of higher value added products in each category resulting in
higher turnover in value.

Dhaka Expansion:

17
Despite numerous oddities and complex artifices usually associated with a state-of-art plant,
the management is in the final phase of implementation of the project with the planning,
supervisory and technical support form the consultants e.g. M/s Bovis Lendles and Tanvec of
UK and KUPPA collaboration of Thailand, though the target of commissioning had to be
revise / shifted a few times in the past. It may be appreciated that the project in hand is only
of its kind in the region with USFDA and EU pharmaceutical manufacturing standards
requiring highly rigid and unquestionable quality of materials, workmanship, and
performance. The process of implementation has often suffered from various hazards of
communication, transports, movements and planned accomplishments was not achieved fully
due to malfunctioning of ports, airports, airlines, shipping services, etc. Due to carious
reasons as are rampant in the country since the project was taken in hand. Considering all
these factors and the technical complexities of such a project as well as non-availability of
requir5ed man-machine-material in Bangladesh, the delay in implementation of the project
would not be termed unusual and abnormal. It may also be mentioned that the consultants
also had often failed to identify and consider every possible situation in Bangladesh. In spite
of these the unit is scheduled to start functioning by end 2001.

During the year 2005-2006, an amount of Tk. 807,016,104 has been invested on various
heads as detailed below:

Particulars As on 31-03-05 As on 31-03-06 Increase

1 Land & Land Development 86,725,346 107,550,519 20,825,173
2 Building/Civil Work 318,783,360 812,111,406 493,328,043
3 Imported Plant & Machinery 348,897,963 576,923,068 228,025,105
4 Other Assets 6,315,634 19,954,395 13,638,761
5 Interest during Construction5,577,622 47,501,489 41,923,867
Period
6 Unallocated Expenditures 14,689,009 23,964,161 9,275,152
Total Tk. 780,988,934 1,588,005,038 807,016,104

The remaining implementation work is expected to be now completed by end of 2004 at an

estimated final cost of Tk. 1,830 million and commence production thereafter.

Square Dhaka Unit Project work was started from October 1996, which completed by end of
March 2000. After technical review and in the best interest of the project in order to achieve
quality work as State-of-the-art facility to meet the requirement of the USFDA/MCA Good
Manufacturing Practice the original project completion schedule had to be extended.

The Dhaka Unit New Pharmaceuticals Production Facility at Kaliakoir is going to be one of
its kind in the country to face the challenge of free world market in the beginning of new
millennium.

The State-of-Art Facility incorporated certain basic requirement in the area of Purified Water
System. Floor Construction, HVAC System Process Equipment and Validation/ Qualification
Documentation as stipulated by USA, EU and other developed countries.

Export market:
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The companys export drive is being continued with great stress. However, there are number
of problems in exports of medicines from Bangladesh. As a result, the value of exports in
Taka declined by 9.1%. To counter this in future, registration process of products for export
purposes has been initiated in few more countries. The company expects to make a break
through in exports when the Dhaka Unit is commissioned. (Taka in 000)

Year Turnover Exports % age of gross

(Gross) turnover
2005-2006 2,655,952 40,324 1.52%
2004-2005 2,422,785 44,361 1.83%
2003-2004 2,055,418 15,082 0.73%

The company has so far been able to enter into the markets of Russia, Pakistan, Sri Lanka,
Myanmar, Nepal, Combodia. It is expected that after the Dhaka Unit goes into production the
company will succeed in entering the markets of developed countries with expanded share of
exports.

Financial results:

The operating financial results of the company for the year under report as compared to the
previous year are as follows:

Figure in thousand : BDT

2005-06 2004-05 2003-04 2002-03 2001-02
Turnover (Gross) 7,085,553 6,199,135 5,482,088 5,482,088 4,234,244
Value Added Tax 995,648 867,088 760,536 663,892 563,433
Turnover (Net) 6,089,905 5,332,047 4,721,552 4,065,851 3,670,811
Gross Profit 2,564,503 2,172,593 1,906,592 1,466,282 1,435,655
Net Profit before Tax 1,533,043 1,513,019 1,151,636 929,604 905,736
Net Profit after Tax 1,165,865 1,255,848 970,044 764,885 759,448
Shareholders Equity 6,402,015 5,568,790 4,590,142 3,851,098 3,273,714
Total Assets 9,298,987 7,907,933 6,021,497 5,164,320 4,526,115
Total Bank Borrowings 2,334,925 1,902,331 988,611 1,070,163 1,098,874
Total Current Assets 4,031,685 3,242,502 2,016,056 1,441,552 1,452,494
Total Current Liabilities 2,260,755 1,949,949 1,250,676 1,247,967 1,181,473
Current Ratio 1.78 1.66 1.62 1.16 1.23

SWOT ANALYSIS:

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Strengths

Nationwide & worldwide recognition.

Big multinational clients.

Quality assurance.

Providing quality research.

Client satisfaction.

Continuous innovation and investment on core categories and new business initiatives.

Constant focus on effective and innovative ways of consumer communication.

Qualified employees.

Reliable & trusted employees.

ISO certified.

Learning economy.

Weakness:

Employee turnover (as it reveals the secrets of the company).

Unnecessary permanent employees almost in every department.
Excess workload on employees.
Too much importance attached to the role of top management.
High production cost.
High marketing expenses affect their margin significantly.

Opportunities:

Big unserved but potential international market.

Entering into new foreign pharma markets.

Threats:

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Too many competitors.

Frequent change in government rules & regulations.

Unstable political situation.

Regular devaluation of money increasing the cost of exports.

Part Two: The Project

Todays Pharmaceutical industry is very much competitive with more than 200 companies
operating nationwide. Though only few of them are operating in national scale, the market is
very competitive. The national players are fighting aggressively for grabbing some market
share. In addition of the local share, some of the major pharmaceuticals are also trying to find
market of their products in foreign markets.Furthermore, after implementation of WTO
agreement, as the local market will see many foreign players, there will be scope to export
medicines to other countries as well. To get a firm foothold then, Square and other companies
need to enter some foreign markets from now. Different countries have different environment
that includes social, cultural, legal, infra-structural, political environments. Depending on
these environments, entry strategy to each country must be customized. So, it is essential to
set specific entry strategy for each country a company wants to enter.

Objective of the Study:

Major objective of the study is to help SPL to draw an entry strategy for Russian
Pharmaceutical Market. Specific objectives include:
To get an overview of Squares global operation
To develop a country profile of Russia
To get an in-depth view of the Russian pharmaceutical market
To set an entry strategy based on the above information
To discuss some implementation issues

Scope of the Study:

The study will concentrate on Russian Pharmaceuticals Ltd. market only.

Methodology:

Source of Information:

The report is primarily based on secondary data on Russian market. Books and journals were
consulted for theoretical material. Previous studies made regarding this market have also
been used to get an insight.

Some documents of Square Pharmaceuticals International Marketing Department were used.

Managers related to international operation of Square were interviewed for information and
clarifications.

Limitations of the Study:

21
The primary limitation of the report is that it will be based on facts, accumulated from word
of mouth, while consulting secondary data. Some information presented in the report may be
biased, as the companies may be reluctant to provide all the information.

Strategic Objectives:
To achieve the target of 15 million Taka in year 2003.
To launch the generics in the fastest growing therapeutic classes & snatch a major
portion of share (%) positions.

Forecasted Target in the next three year:

2008(Million taka) 2009(Million taka) 2010(Million taka)
Square 15 20 25

Market Analysis & Target Market Identification:

Total Market: 4 billion US$

Growth: 15%

Market Segmentation:

Two types of market are there in Russia which are as follows.

Domestic: accounted to approx. 35% of the total pharma sale. Size is 1.4 billion US$. Growth
is (-) 18%.

Import: accounted for 65%. Size is 2.6 billion US$. Growth is (+) 36%.

Therapeutic Class Analysis (Basis of Competition)

Local production does not meet the demand for many types of drugs needed for treatment.
Pharmaceutical imports help solve the problem, but there is still large unsatisfied demand for
many types of medicines. According to local market surveys, the best sales prospects in the
Russian pharmaceutical market include

Market Size & growth (Million US$)

Therapeutic class wise market size, growth and market share is given in the following table:

Therapeutic Class Market Growth % Share of total

Size % demand
Cardiovascular 473 20 18.2
Analgetics &434.2 25 16.7
antinflammatory
Antibiotics 371.8 25 14.3
Vitamins 254.8 80 9.8

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CNS 195 10 7.5
Antiviral 151 10 5.8
Antihistaminic 109 60 4.2
Purgatives 86 5 3.3
Ferments 78 8 3.0
Others 442 N/A 17

Analgesic & anti-inflammatory

Square should launch one important product in analgesic & anti-inflammatory sector. The
reasons are:

Second largest sector in Russian Market

Market Size is 434 Million US$
Growth is 25%
Disease prevalence is increasing.
Square is having better generic in the product line.
Absence of quality products is there.
Market will increase more.

Antibiotics

Square should launch one important product antibiotic in Russia. Because

High Disease prevalence.

High market growth 25%
Market Size is 371 Million US$
Market is increasing

Gastrointestinal:

Square should launch one advanced gastrointestinal product in Russia. Because

Projected market growth is highest in this sector.

High disease prevalence.

Competition:

Total Pharma Company: 4,500.

Foreign: 1050 companies from 66 (Sixty Six) countries

Country wise share breakdown:

Country Share % of Import Sales

Germany 18
CzechRepublic 13.6
Italy 10.7
France 10
Latvia 9.4
Turkey 7.3
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Switzerland 7.0
US 3.3

Top Manufacturers:

Followings are the top 10 manufacturers

Aventis
Novo Nordisk
GlaxoSmithkline
Gedeon Richter
Sanofi-Synthelabo
Eli Lilly
KrKa
Novartis
Roche
Berlin Chemie

Sale of major players

Rank Company Import Sales VolumeGrowth %

(2001)
1 Aventis 102 +65
2 Novo Nordisk 82 +76
3 GlaxoSmithkline 60 +60
4 Gedeon Richter 57 +32
5 Sanofi- 49 +41
Synthelabo
6 Eli Lilly 44 +118
7 KrKa 40 +40
8 Novartis 39 +67
9 Roche 36 +10
10 Berlin Chemie 30 +35

Major portfolios of the competitors:

Company Portfolios
Aventis: AntibacterialGastrointestinal
Anticancer
Novo Nordisk: AntidiabeticsGrowth Hormone
GlaxoSmithKline AntiasthmaticsAIDs & HIV Products.
Anticancer

IMPLEMENTATION ISSUES:

Distributor Profile

M/S Zao Protos showed interest to market & distribute Squares product in Russia & this
company might be appointed as distributor for Square in Russia. As per the meeting with
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Square official M/S Zao Protos is very much enthusiastic to market & distribute Squares
product in Russia. M/S Zao Protos is an entrepreneurial private company and doing
Pharmaceutical business in Russia for last 5 years. It is a successful company, which is a
profit-driven organization. Its a vertically integrated structured with distribution and retail
network components. It is maintaining a wide pharmacy networks in Moscow & Saint
Petersburg. Main operational office of M/S Zao Protos is based in Moscow.

Structure:
Square will go for office setup in Moscow. Distributor of Square will take necessary
measures to setup the office in Russia. International marketing department of Square will take
necessary measures to supply documents from Bangladesh. Following documents are
required for office registration.

Letter of Authorization.

Application for Office registration. Memorandum and article of Association. Bank solvency
certificate Board resolution to open representative office. MCCI certificate regarding
company registration. All the documents should be translated into Russian Language and
authenticated by Notary public, foreign ministry and Russian embassy in Dhaka. After
receiving the documents Local Distributor will take necessary measures for the office
registration in Russia. Working personnel & Organogram:

Head of Operation/Country representative: Initially 01 personnel would be going to

Russia for overall operations in the country. He will be the head of country operation and will
be responsible for monitoring all the marketing activities in two states, Moscow & Saint
Petersburg.

Medical Promotion Officer: Would be recruited from Russia.

20 persons will be recruited for two states. 10 will be working in Moscow & 10 will be
working in St. Petersburg.

Regional Managers:

02 (Two) Regional Managers will be recruited for supervision of 20 (Twenty) Medical

promotion Officer of two states. Each will be monitoring 10 MPOs. Two regional managers
will be reporting to Head of Country Operations.

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Cost Breakdown:
S/N Expenses head USD/month USD/year
1. Office Expenses(staff wages,600 7200
Correspondence, office materials and
others)
2. 20 Representatives wages 3000 36000
3. Product Registration Cost US$15000 x 4 (Four60000
Product) =$ 60,000
4. Promotional expenses (Sample +500 6000
launching Ceremony + Clinical
Meeting + Gift + Advertisement etc.)
Total 1,09,200

Relationship with CHQ:

Reporting: Head of Country operation, Russia will be reporting to Manager Intl. Marketing,
who is currently reporting to General manager Marketing of CHQ from Bangladesh. All
marketing activities will be conducted from Moscow representative office.

Approval Authority: Approval authority will be the General Manager, Marketing of Square
Pharmaceuticals Ltd.

Product registration: Representative office of Square will take necessary measures to

register products in Russia through distributor Zao Protos. International marketing

26
department will work to supply necessary documents for the product registration, which are
as follows.

1. Drug manufacturing license (notarized copy).

2. Free sale certificate (notarized copy).
3. Certificate of GMP (notarized copy).
4. Pharmaceutical information.
4.1. Dosage form and strength
4.2. Description of product (shape, size, color) and manufacturing formula.
4.3. Manufacturing direction (equipment, manufacturing procedure and precautions).
4.4. Standard specifications and test-procedures.
5. Information concerning stability monitoring program, shelf-life and storage conditions.

Supply Chain Management

A supply Chain encompasses all the facilities, functions and activities involved in producing
and delivering a product or service from suppliers (and their suppliers) to customers (and
their customers). It includes planning and managing supply and demand, acquiring materials,
producing and scheduling the product or service, warehousing, inventory control, distribution
& delivery and customer service. Supply Chain management coordinates all these activities
so that, customers can be provided with prompt and reliable service of high quality products
at the least cost. Successful supply chain management in turn can provide the company with a
competitive advantage.

Key issues related to supply chain management:

The major issues related to supply chain management for export operations would be dealing
with the following sectors.

Sourcing

Product Design & Production:

Sales & Distribution.

Sourcing:

Sourcing will be done as per the companys current procedure.

It could be divided into both of the followings:

Local & Outsourcing: Square Pharmaceuticals Ltd. is dependent on both of the sourcing
procedure. Sourcing will be done as per the current procedure.

Product Design & Production

Product design & production will be done in the Bangladesh from the two manufacturing
units of Square. This will be produced like the other export products of Square. Customized
packaging is necessary for the specific product for Russia. This should be in English &

27
Russian language. International Marketing department will take necessary measures for the
developments of this customized packaging.

Sales & Distribution

Protos of Moscow office will control sales & distribution. International marketing department
of Square will ensure exporting the product as per demand & forecast of Moscow office.
After receiving the goods in Russia sales & distribution will be conducted by the Protos.
Head of operation in Russia will look after all the issues through the recruited members of the
Moscow office.

Transfer of Money

Square has the following options in this regard:

L/C at deferred payment:

The Distributor through bank transfer on the Squares account could make payment for the
supplied goods within a certain calendar days from the date of issuance Airway bill. There
would be a contract between Square & the Distributor where mode of payment will be clearly
mentioned.

L/C at site:

After the negotiation documents submission, within 07 working days, Bank will pay to
exporters if the terms of the L/C at site.

Advance payment:

Buyer will pay the money in advance & then shipment will be done after receipt of the
money.

Decision:

Considering the entry mode & strategic aspects we recommend following L/C at deferred
payment mode for transfer of Money. Payment for the supplied goods will be made by the
Distributor through bank transfer on the Squares account within 45 (forty five) calendar days
from the date of issuance Air way bill. There would be a contract between Square & the
Distributor where mode of payment will be clearly mentioned.

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Conclusion: :

Square Pharmaceuticals today symbolizes a name a state of mind. 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. In todays competitive environment, Pharmaceutical companies
are demanding much greater coordination from promotional activities to physician customers.
By conducting image analysis, it can help Pharmaceutical companies better target and
segment customers, select the proper combination of marketing channels, and precisely
measure the impact of promotional programs. There are about 300 companies operating in the
Bangladesh Pharmaceuticals industry. The market is highly competitive and it really hard to
get response from the market. Pharmaceutical Industry has grown in Bangladesh in the last
two decades at a considerable rate. Its healthy growth supports development of auxiliary
industries for producing glass bottles, plastic containers, aluminum collapsible tubes,
aluminum PP caps, infusion sets, disposable syringes, and corrugated cartons. Some of these
products are also being exported. Printing and packaging industries and even the advertising
agencies consider Pharmaceutical industry as their major clients and a key driving force for
their growth. The annual per capita drug consumption in Bangladesh is one of the lowest in
the world. However, the industry has been a key contributor to the Bangladesh economy
since independence. With the development of healthcare infrastructure and increase of health
awareness and the purchasing capacity of people, this industry is expected to grow at a higher
rate in future. Healthy growth is likely to encourage the Pharmaceutical companies to
introduce newer drugs and newer research products, while at the same time maintaining a
healthy competitiveness in respect of the most essential drugs.

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References:

1. www.squarepharma.com.bd

2. Annual Report of Square Pharmaceuticals Ltd.-2014, 2015

3. Journal Published by Square Pharmaceuticals Ltd.-2015, 2016

4. www.wikipedia.com

5. www.squarehospital.com

6. The Financial Express-04-10-2016

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