Introduction

The pharmaceutical sector is a high-technology and knowledge-intensive industry. The industry

has a two-tier structure. The largest firms account for the majority of the R&D investment in the
industry and hold the majority of patents. There is a large number of smaller firms producing
mostly for local markets. The pharmaceutical industry is heavily regulated. In this assignment we
have selected a farm from this pharmaceutical sector and we will try to find out how the farm is
using strategic management in its operations.
Company Profile
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 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%. SQUARE Pharmaceuticals Limited has extended her range
of services towards the highway of global market. She pioneered exports of medicines from
Bangladesh in 1987 and has been exporting antibiotics and other pharmaceutical products. This
extension in business and services has manifested the credibility of Square Pharmaceuticals
Limited.
GENERAL INFORMATION
CORPORATE HISTORY:
Year of Establishment (Initially as a Partnership) : 1958
Incorporated as a Private Limited Company : 1964
Technical Collaboration Agreement with Janssen Pharmaceuticals of Belgium ( a subsidiary of
Johnson & Johnson International Ltd. ) : 1975 Technical Collaboration Agreement with F.
Hoffman-La Roche & Co. Ltd. : 1984
Converted into Public Limited Company : 1991
Initially Public Offering (IPO) : 1994
Stock Exchange Listings : 1995
Agreement with M/s. Bovis Tanvec Ltd. of UK for implementation of Dhaka Plant : 1996

Awarded ISO-9001 Certificate : 1998

Business Lines : Manufacturing and Marketing of Pharmaceutical Finished Products,Basic
Chemicals, AgroVet Productsand Pesticide Products Authorized Capital : Tk. 1,000 million
Paid-up Capital : Tk. 496.8 million
Number of Employees : 2,703
Companys strives, vision, mission and objective in its own language
STRIVE FOR
We in SQUARE strive, above all, for top quality health care products at the least cost reaching
the lowest rungs of the economic class of people in the country. We value our social obligations.
We owe to our shareholders and strive for protection of their capital as well as ensure highest
return and growth of their assets. We strive for best compensation to all the employees who
constitute the back-bone of the management and operational strength of the Company through a
pay-package composing salary/wages, allowances, bonus, profit participation, leave salary and
superannuation & retirement benefits. We strive for best co-operation of the creditors & debtors
the banks & financial institutions who provide financial support when we need them, the
suppliers of raw materials & suppliers who offer them at the best prices, the providers of utilitiespower, gas & water etc. and the customers who buy our products & services by redeeming their
claim in time by making prompt payment and by distributing proper product on due dates. We
strive for fulfillment of our responsibility to the Government through payment of entire range of
due taxes, duties, and claim to various public agencies. We strive, as responsibilities citizen, for a
social order devoid of malpractices, anti-environmental behaviors, unethical and corruptive
dealings. We strive for practicing good governance in every sphere of activities covering inter
alia not being limited to, disclosure & reporting to shareholders holding AGM in time,
distribution of dividends and other benefits to shareholders, reporting/dissemination of price
sensitive information, acquisition of share by insiders, recruitment & promotion of staff,
procurement & supplies, sale of assets etc. all that directly and indirectly affect the interest of
concerned groups the shareholders, the creditors, suppliers, employees, government and the
public in general.
VISION
We see business as a means to the wellbeing of the investors, employees and the society at large,
leading to accretion of wealth through financial and moral gains as a part of the process of the
human civilization.
Priority assessment scales for Business scope
MISSION

Our mission is to provide quality & innovative healthcare relief for people, maintain stringently
ethical standard in business operation also ensuring benefit to the shareholders and other
stakeholders.
Scope

Priority

Existing

The product, customer, channel or Graphical Location

Is being divested or exited form.

Will be assigned a low level of Importance.

Will continue to receive the current level of resources

Will be assigned high level of importance and additional resources

to achieve a better completive position

++
Is assigned highest level of importance and the resources need to
achieve as outstanding a completive position as possible

OBJECTIVE
Our objectives are to conduct transparent business operations within the legal & social frame
work with aims to attain the mission reflected by our vision.
Corporate Focus
Our vision, our mission and our objectives are to emphasise on the quality of product, process
and services leading to growth of the company imbibed with good governance practices.
Chapter 2
1. Research method

Objective of the study

Analysis technique

Data collection

Objective of the study

Strategic management is one of the important of study. For starting a new business or to survive
in the market or to make improvement in the business selection of strategy is very important
critical also. In the competitive age without strategy organization can not survive and run the
organization successfully that is why strategy is important for all type of organization. The
objective of this study is to understand, how the organization follow strategic management. The
process of formulating, implementing and evaluating strategy. That means the over all practice of
strategic management. Which will help us bust our knowledge on the practical practice of
strategic management.
Analysis technique
In the assignment we tried to give a clear view of strategic management process. To implement
this topic we have first selected a company and analyzed details about the companys profile,
mission, objective, function and then gave details of that industry. After that we took a short
interview of management of that company to know details about strategic management practice
of that company.
Data collection
To complete the assignment we have dependent different sources for collecting data from
primary source to secondary source.
PRIMARY SOURCE:
A SHORT INTERVIEW OF SQUAREPHARMA LTD. MANAGEMENT
SECONDARY SOURCES:
www.squarepharma.com.bd
Other Sources:
Drug policy of Bangladesh. Ministry of Health population council, Health Division, Dhaka.
1982.
Zafrullah Chowdhury, Bangladesh: A Tough Battle for a National Drug Policy. Development
Dialogue. 1995:1 pp. 97-146.
Directorate of Drug Administration, Ministry of Health and Family Planning, Government of the
Peoples Republic of Bangladesh.
WHO, Technical Report Series-685.
WHO, Essential Drug Monitor, November, 1993.

Chapter 3
1. Findings and analysis Industry profile

Strategic Management Process in The Organization

Competitive Analysis

Some Competitors of Squarepharma ltd.

2. Conclusions & Recommendation

Finding and analysis
Industry profile
The country has at present 194 operating pharmaceutical units of different sizes. In addition, by
1997 there were 244 Unani, 161 Ayurvedic, 74 Homeopathic and Biochemic system medicine
manufacturers in the country. The industry employs 50,000 skilled and 15,000 unskilled people.
Once a product is brought to market, pharmaceutical companies spend heavily on marketing and
promotion. The larger drug companies maintain a large sales force, which makes direct regular
contact with individual prescribing physicians and other pharmaceutical decision makers. The
sums spent on marketing are large. Pharmaceutical marketing efforts are not only directed at
physicians and consumers; drug companies have also sought to directly influence pharmacists, in
some cases paying pharmacists to induce customers to change their drug consumption habits.
The nature of competition in this industry differs between the two sets of firms. The second tier
of firms holds fewer patents and relies primarily on manufacturing off-patent generic medicines
or patent medicines under license. Competition between these firms takes the conventional form
of competition on price, cost-efficiency and quality. In contrast, a few large research-based
pharmaceutical companies invest heavily in R&D and hold the bulk of the patents, and can often
enjoy substantial market power while these patents are in force. For these companies,
competition is not primarily on the basis of price, but rather on the basis of marketing and
innovation. These companies compete to develop entirely new drugs which either treat new
medical conditions, improve upon existing drugs, or serve as substitute for existing patented
drugs. Some large pharmaceutical companies in this tier export and compete in international
markets.
Prior to independence, the pharmaceutical sector was dominated by multi-national companies
(MNCs) which resulted in high prices and scarcity of those drugs that were less commercially
lucrative. Lack of technological know-how, skilled human resources and huge capital
investments cost served as barriers to entry for local producers.
The Drug Control Ordinance (1982) was enacted to address the situation through the
introduction of controls of the manufacture, import, distribution, and sales of drugs. The

Ordinance introduced cost-based pricing to guarantee a minimum profit to producers to attract

more local firms. As a result of the regulations, the market saw a massive redistribution. In
1982 the top ten companies included seven MNCs and three local companies. Of these the top
five were all MNCs, the major ones being Fisons, Pfizer, Rhone Poulenc Rorer (RPR), Glaxo,
SK&F, and ICI. These companies controlled more than 50% of the market share, and a major
share of their earnings was drained out of the country through equity share, compensation and
benefits provided to expatriates, and raw material purchases from their parent company. By
1994, three of the major players Pfizer, SK&F and ICI sold out their operations to local
entrepreneurs. Table 6 shows the market share of Top Ten companies in the pharmaceutical
sector over a five-year period. The top five companies control around 50% of market share.
Strategic Management Process in The Organization Companys strategy is an important and
secret subject. All the time the company doesnt want to disclose the information. So it is very
difficult to know about the strategy of the company.
But when we talked to the management of the company they said us usually there is not any
fixed strategy, the market condition and the competition rapidly change so the strategies are also
changes, though there does not happen any massive change in the corporate level strategy.
Management also said that at the corporate strategy there had used formal strategic management
process. Such as defining the organizations guiding philosophy, purpose, mission; establishing
long range objectives to achieve the mission; selecting the strategy to achieve the long range
objectives; development of organizational structure, selecting leadership and providing
motivational system; establishing short range objectives, developing budgets and developing
functional strategy and establishing standards to evaluating the performance, monitoring
progress in the execution; initiating corrective actions etc.
When we wanted to know about the strategy process model, the management said any strategy is
not formulated based on model but when any strategy is goon to formulate the model is
automatically followed.
Management also said when they go to formulate any strategy for business unit and function
unit, first they identify the reason which indicates the guiding philosophy, purpose and the
mission. Then they analysis all the factors relevance to the strategy which may be inside of the
organization and outside of the organization. After that they find out the best way to do the job
and then they set factors to implement or to get done the job. This over all process actually
indicates the model.
One thing more, In case of formulating business unit and functional unit strategy the company
give priorities on competitors. The management also said us the pharmaceutical companies
spend heavily on marketing and promotion. The larger drug companies maintain a large sales
force, which makes direct regular contact with individual prescribing physicians and other
pharmaceutical decision makers. The sums spent on marketing are large. Pharmaceutical
marketing efforts are not only directed at physicians and consumers; drug companies have also
sought to directly influence pharmacists, in some cases paying pharmacists to induce customers
to change their drug consumption habits. So the strategy process for marketing an dother

functional units are different from other industries and they have to change and develop the
strategy for functional units frequently to survive in the competition.
Overall competition from the beginning in the industry
Different marketing evaluations, government rules and regulations are important for the
company to understand the present market condition and potential market condition. Because to
formulate strategy it is must to know all the information about inside and out side of the
company. Company keeps information about over all evaluation in the market to get help in
strategy formulation. A short market and competition scenery has given bellow.
Multinational companies enjoyed two different benefits purchasing raw materials from their
parent company at high price. Firstly, purchasing by foreign currency, they were able to dispatch
million and million foreign currency from Bangladesh, which has a destroying effect on our
economy. Secondly, they produced documents showing high raw materials price and low
income. By this way, Bangladesh government deprived from huge amount of taxes. For
instances, in 1979, Pfizer purchased tetracycline from Hong Kong Pfizer Laboratories at a price
of US$ 80.36 per Kg. Where as Pharmadesh (a local Pharmaceutical company) purchased the
same tetracycline from Yugoslavia at a price eof only US$ 42 per Kg. The standard of raw
materials of Yugoslavia was certified by Food and Drug Administration (FDA) of USA and it
could be used in America. In 1983 after the NDP, Gonoshasthaya Pharmaceuticals Ltd. (GPL)
purchased tetracycline from international competitive market of West Germany at a price of only
US$ 22.5 per Kg. In 2001, it dropped to only US$ 8.5. It was found a 86.72 % price fall from
1981 to 2001. In 1981 price of per Kg Glibenclamide was US$ 2350. And over the last twenty
years it decreased dramatically and stands at only US$ 72 in 2001 (Table 5). Strict control over
the price of raw material stops the transfer pricing as a result Bangladesh saves several crores of
taka.
Table: Price of some important drugs and changes (1981 2005).

Drug

Retail price in Tk.

1981

Mebendazole Tablet
Metronidazole Tablet
(200 mg)
Antacid Tablet
Cotrimoxazole tablet
Atenolol Tablet
Paracetamol Tablet
Ampicillin Capsule
(250 mg)

% Change
% Change (1995(19812006)
1991)

% Change
(19992006)

1991
2001
2.11 0.70 1.37

-66.8

+95.71

-35.1

0.70

0.63

0.65

-10.0

+3.17

-7.1

0.30
2.00
6.00
0.25

0.50
0.65
3.30
0.62

0.50
1.47
0.76
0.60

+66.7
-67.5
-45.0
+148.0

0.00
+126.15
-76.97
-3.23

+66.7
-26.5
-87.3
+140.0

1.70

2.50

2.60

+47.1

+4.00

+52.9

Data source: Directorate of Drug Administration

An unbelievable change in drug retail price was brought by the NDP. The price of an antacid
tablet was Tk. 0.30 in 1981 and Tk. 0.50 in 1991. It increased Tk. 0.20 in local currency but
according to international currency like Dollar, the price of antacid tablet decreased 23 %. In
1981, the price of 100-mg Atenolol tablet, a drug used in hypertension, was Tk. 6. It fell 45 % in
1991 and 87.3 % in 2001 Parallel to this we can compare the statistics of drug price change in
Britain during the same period. In Britain in 1980, price of a box containing 100 capsules of 250
mg Amoxycillin each was 12.87 and it rose by 40.10 % to stand at 18.48. Similarly, price of
100 tablets of 500 mg Chloroquine each was 3.75 in 1980 and it rose 366.7 % to stand at
17.50 in 1991. By comparing the statistics of Bangladesh and Britain, it is clear that the drug
price fell considerably and remains consistent over the last twenty years. The epoch-making
NDP played a key role behind this.
Drug administration fixes up the maximum retail price (MRP) of drugs used in primary health
care. The MRP of other drugs were approved by Drug Administration. From 1981 to 1991, retail
price of drug increased only 20 % in local currency, which was a very little compared to
international inflation. During these ten years, price of rice and fish increased 122 % and 197 %,
respectively. Furthermore, price index rose 173 %, while price of drug increased only 20 %,
which indicates the success of price control and the NDP of 1982 as well.
Now a day, total number of pharmaceutical industry in Bangladesh is 212. According to
Bangladesh Health Bulletin, 1997, MOHFW, GOB, out of 212, 155 pharmaceutical companies
are manufacturing drugs while other 48 are suspended, and production license of the remaining 9
companies have been cancelled. The role of the NDP would be crystal-clear if we see the annual
sales of drugs of some leading pharmaceutical industries in Bangladesh.
Table: Annual sale of drug of some leading pharmaceutical companies in Bangladesh (Tk. in
mill.).
Company

1981

Square
Pharmaceuticals
70
Ltd.
Opsonin Chemical
<50
Industries Ltd.
Beximco
Pharmaceuticals
<50
Ltd.
Fisons (BD) Ltd./
140
RPR-Fisons
Pfizer/Renata
20 350
Limited
Glaxo/Glaxo110 340
Wellcome

1995 2002

Growth
2004
%

Growth
%

2006

Growth %

850

1,872

+0.6

1,817 -2.9

2,454

+35.1

540

1,082

+9.4

968

-9.9

1,019

+5

502

1,540

+0.8

1,488 -3.3

1,896

+27.3

500

1,501

1,249 -16.8

1,570

+25.6

+2.6

540 +11.8

468

-13.3

496

+5.9

942 +2.8

857

-9.1

1,037

+21

Table 7Acme
<50
Laboratories Ltd.
Rhone-PoulencRorer/ RPR120
Fisons
Hoechst
115
Bangladesh Ltd.
Ciba-Geigy (BD)

Ltd./Novartis
ICI/ACI Limited 50
Squib
64
Eskayef

Bangladesh Ltd.
Drug

International Ltd.

300

694

+8.5

839

+20.9

989

+17.8

260

1,501

+2.6

1,249 -16.8

1,570

+25.6

220

200

378

167
105

563
+0.9
Stop operation

465

-17.5

609

+30.9

535

+12

590

+10.2

766

+30

459

+13

485

+5.6

687

+38

Data source: Directorate of Drug Administration and IMS.

In 1981, total annual sale of Square Pharmaceuticals Ltd. was only 70 million taka and it has
increased to 850 million taka in 1991 and to 2,454 million taka in 2000. The drug
productions/sales an upward trend between 1981 and 2000 for almost all companies except some
multinational companies who stooped their operation (Table 7). Beximco Pharmaceuticals Ltd.
sold drugs worth 50 and 502 million taka in 1981 and 1991, respectively. Now, sale increases
tremendously and sale volume reaches to 1,896 million taka. Sale volume of Glaxo (Bangladesh)
Ltd. increased from 110 million to 1,037 taka over last 20 years. It is really interesting that after
the implementation of NDP multinational companies like Glaxo (presently Glaxo-Wellcome),
Giba Geigy (presently Novartis) etc. increased their investment and doing their business
successfully with increased growth of drug production and sale. This example implies that
multinational companies no longer do loss in their business as well as the NDP does not interrupt
production and sale.
shows the sale of drug by major therapeutic groups annually in Bangladesh from 1998 to 2006.
Table : Annual sale of drugs by therapeutic groups in Bangladesh (1998-2000).
Type of drugs
Systemic Antibiotics
Antiulcerants
+Antacids
Vitamins
NSAID

1998
% of
Growth
(Tk.
total
%
mill)
sale
4,920 +9
34.2

2003
% of
Growth
(Tk.
total
%
mill)
sale
4,523 -8
31.8

2006
(Tk.
mill)
5,649

Growth % of
%
total
sale
+25
31.5

1,828 +1

12.7

1,884 +3

13.2

2,561

+35

14.3

1,080 +3
796 +2

7.5
5.5

1,109 +3
778 -2

7.8
5.5

1,423
896

+28
+16

8.0
5.0

Cardiovascular

516

-7

3.6

564

+9

4.0

780

+38

4.4

Data source: Pharmaceutical Industries and IMS.

The highest amount of drugs sold is the life saving systemic antibiotics. The sale of systemic
antibiotics was 4,920 and 4,523 million taka in 1998 and 1999, respectively. Last year it was
5,649 million that is 31.5 % of total drug sale. Antiulcerant and antacid sale rose approximately 2
% over the last 3 years. The highest growth was found to be 38 % in cardiovascular drugs sale
that was followed by 35 % in antiulcerant and antacids.
According to the believer of open market economy, multinational companies are forced to stop
their operation by the implementation of the NDP. Is it true at all? Let us see the case of Squib.
Due to the depressed international market of Squib, it merged with Bristol-Mayer and appeared
as Bristol-Mayer-Squib. The management of this company started to suspend production in
different countries through out the world, which were loosing concern. Before leaving
Bangladesh, the sale of Squib was only 0.06 % of total world market of Bristol-Mayer-Squib.
That is why management did not find any profit to run Squib in Bangladesh. For the same
reason, ICI Ltd. and Pfizer stopped their operation in Bangladesh and local authority started to
run operation of these two companies as ACI Ltd. and Renata Ltd. As we find annual sale and
growth of these local companies in last three years, we can confirm that they are doing well in
drug market. So the NDP is not the principal cause of leaving of multinational companies.
Pharmaceutical companies showed positive reaction on price control of raw materials but they
showed a negative reaction on retail price control. According to them, quality of drugs may fall
by the control of retail price. Any fluctuation of quality of life saving drugs is not acceptable. All
drugs must be produced according to Pharmacopoeia or Pharmaceutical Codex. The quality of
locally produced drugs has improved significantly since the introduction of the NDP because of
greater vigilance and because of testing procedures are easier now as most drugs contain only
one active ingredient. In 1981, 327 drug samples were tested in Drug Testing Laboratory, formed
by the recommendation of the NDP, of which 36 % were found to be substandard, while in 1991
it was 9.4 %. In 1999, the substandard drugs were found the lowest that was only 1.7 % (Table
9). The downward trend of the percentage of substandard drugs infers the significant
improvement of drug quality produced in the country.
Table : Drug sample tested in Drug Testing Laboratory, IPH (1990-2005).
Year

Total drug samples tested No of substandard drugs

1990
1992
1994
1996
1998
2000
2001
2002

327
1187
2367
3555
2331
2617
3551
3989

118
169
238
298
219
174
224
251

Percentage of substandard
drugs
36.0
14.6
10.0
8.4
9.4
6.6
6.3
6.3

2003
2004
2006
2007

3847
4149
3612
3635

202
244
252
101

5.3
5.9
7.0
2.8

Data source: Directorate of Drug Administration and Drug Testing Lab., IPH.
These data company use to measure their competitive position in the market and then they
analysis all internal and external factors which have impact in competition and formulate their
different level strategy.
Market share of top ten companies during 1999-2005
Company

Share
1999(%)
Square
11.83
Fisons
10.13
Beximco
8.56
Glaxo
7.44
Opsonin
6.86
Pfizer
4.82
Acme
4.72
RPR
4.62
Hoechst
3.82
Ciba Geigy 3.07
Companys growth rate

Company
Square
Beximco
Fisons
Glaxo
Opsonin
Acme
Renata
RPR
ACI
Hoechst

Some competitors of the company:

1.

Fisons

2.

Beximco

3.

Glaxo

4.

Opsonin

5.

Pfizer

6.

Acme

7.

RPR

8.

Hoechst

Share
2003(%)
12.33
11.59
8.45
6.89
6.7
5.27
4.24
4.09
3.82
3.24

Company
Square
Beximco
Fisons
Opsonin
Glaxo
Acme
RPR
ACI
Renata
Eskayef

Share 2005
(%)
13.93
12.40
7.17
6.99
5.90
4.60
4.12
3.94
3.52
3.32

Source:
Anwar,
S.F.
(2005)

9.

Ciba Geigy

Conclusions & Recommendation

The over all attempts in the assignment were to find out and to give a clear idea about the
practical practice of strategic management in a company. In the assignment we tried out best to
do so. For doing this job we have given details of the company and speech of the management
about the strategic management. And presented a competitive scenery of the company.
By analysis the data we find that strategic management is not usually practiced formally in the
organization but it is true elements or steps of strategic management are followed automatically
and unconsciously in the company. We also find that only in the corporate level the strategic
management process remain fixed. It is not usually changed but in the business and functional
level strategy changed frequently. And it is so complex and important job for the company to
survive in the competition. Specially for the pharmaceutical company, marketing and
promotional strategies are so important and company has to conduct research and development
process to formulate strategy.