Instead of increasing the production capacity of its existing factory, it will form a new company to increase medicine production
Square Pharmaceuticals Ltd has decided to set up a subsidiary company by investing Tk350 crore to extend its foothold in the medicine market and to meet the growing demand for its products.
The company sales have been growing by double digits over the last few years.
Initially, Square Pharma had intended to invest Tk200 crore to expand its existing factory, but now it has decided to set up a new subsidiary company – Square Lifesciences Ltd – which will be completely run by Square Pharma.
Square Pharma's Secretary Khandaker Habibuzzaman confirmed to The Business Standard that the company has decided to expand medicine production by forming a separate subsidiary company.
He explained this by saying, "It is a strategic policy of the board. However, Square Pharma will have absolute control over the new company."
He added that the new company will produce only oral dosage products – tablets and capsules. They expect to implement the project by the end of June 2023.
Md Kabir Reza, head of accounts and finance at Square Pharma, said the project is at an initial stage. The paid-up capital of the new subsidiary will be Tk10 crore. The necessary investment for the company will come from Square Pharma's own funds and from other entrepreneurs.
Square's dominance in drug market
Late Samson H Chowdhury started his the drug business by setting up Square Pharmaceuticals Ltd in 1958 when the country's medicine market was dominated by multinational companies.
Later, the drug business by local companies started to grow after Bangladesh secured patent privilege in medicine as a least developed country. Now, Square Pharmaceuticals leads the country's drug market.
The demand for medicine in the country was Tk22,352 crore at the end of 2019, and this demand has been growing by 15 percent every year. Square Pharma controls 17 percent of the total market.
At present, the company produces 858 types of medicines, with Seclo, a drug for gastric ailments, leading the sales. The company earned Tk4,500 revenue in the 2018-19 financial year. Its business has been growing by 15 percent every year.
Square also lead exports
Square Pharma become the country's first company to start exporting medicines in 1987. Now it exports drugs to 42 countries and earned Tk149 crore from drug export in the last financial year.
Square Pharma is now in the process of setting up a medicine factory in an export processing zone in Kenya for an investment of $21 million. Company officials said the construction of the factory is in the final stage, and it will go into commercial production in September this year.
The medicines produced in the factory will be sold in East African countries, they added.
The paid-up capital of Square Pharma, which was listed in the share market in 1995, is Tk844 crore. Sponsor directors hold 34.43 percent of company shares, institutional investors 10.39 percent, foreign investors 19.38 percent and general investors hold the remaining 35.8 percent of shares.
The company gave 42 percent cash and 7 percent stock dividends to its shareholders in the last financial year. It provided handsome dividends to its investors in previous years too.
Square Pharma is known as a blue chip company to stock investors. The company has been giving handsome returns to its investors since it was listed in the stock market.
The company's share prices have fallen by 32 percent following a sharp drop in stocks prices at the Dhaka Stock Exchange since December last year. The share price of the company went down to its lowest level of Tk162 in January this year.
In this backdrop, four directors of the company recently bought 12 crore shares worth around Tk22 crore to protect general investors. As a result, the company bounced back from its declining phase.
The closing price of its shares at the DSE was Tk206.70 on Tuesday.