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Pharma winning global markets

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Pharma winning global markets

Exports cross $100m mark

Jagaran Chakma

Pharmaceuticals export has crossed $100-million mark for the first time in the country’s history, according to the Export Promotion Bureau.

Export earnings from the sector hit $103.46 million in 2017-18, up 16.03 percent from a year ago thanks to improved compliance by the local manufacturers.

Shipment of pharmaceutical products registered an average 14.6 percent growth between 2011 and 2016.

“Pharmaceutical companies have the potential to earn $1 billion a year through exports in the next five years, but the sector needs fiscal benefits and policy support to do so,” Abdul Muktadir, managing director of Incepta Pharmaceuticals, told The Daily Star recently.

“Domestic demand is also growing,” he said.

Local players dominate Bangladesh’s pharmaceutical industry. Square Pharmaceuticals is the major player with 18.8 percent share. Incepta holds 10.2 percent share, Beximco 8.5 percent, Opsonin 5.6 percent, Renata 5.1 percent and Eskayef 4.5 percent, according to the Bangladesh Association of Pharmaceuticals Industries.

Multinational companies Radiant, Sanofi and Novo Nordisk also have significant presence and are focused on some specialised products.

Bangladesh exports pharma products to 144 countries and caters 97 percent of the domestic need. Per capita consumption of medicine in Bangladesh was about $15.36 in 2017.

In 2012, the local market size stood at Tk 9,390.4 crore and rose to Tk 18,755.6 crore in 2017, according to IMS Health Care Report 2017.

Currently, Bangladesh has the ability to produce advanced medicines such as bio-similar drugs, vaccines and oncology products as well as medical devices.

The country has a surplus of pharmaceutical industry-focused human resources, Muktadir said, adding that the formulation industry is well-developed and investing heavily for future growth.

Mizanur Rahman Sinha, managing director of ACME Laboratories Ltd, said the export figure is insignificant but the sector has a good future in the foreign market.

“A number of foreign buyers come and visit our factories and examine the quality of products. They place order when they find that the products are of good quality,” he said.

He said the export volume will go up gradually as the quality of products is improving day by day.

Sinha said the exports will also increase if Indian and Chinese companies invest in Bangladesh in joint ventures with local companies and bring technology.

Local consumption of medicine is increasing in line with the rise of people’s purchasing capacity, he said.

Mohammad Ebadul Karim, managing director of Beacon Pharmaceuticals, emphasised on upgrading technology to boost exports and enter regulated markets.

Since the beginning of the decade, the pharmaceutical industry has experienced double-digit growth driven by a large consumer base, improved health consciousness and a supportive regulatory framework.

Two effective policies have accelerated the growth of the sector. One was the Drug Control Ordinance 1982, which banned foreign companies from selling imported pharmaceutical products in the country last year, according to a research of LR Global, an asset management firm. The other was the relaxation of the World Trade Organisation’s agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which permitted Bangladesh to reverse engineer patented generic drugs. 

The relaxation of TRIPS for least developed countries has been extended to 2032.

Bangladesh can significantly boost its pharmaceuticals exports on the back of the patent waiver as it is the only LDC that produces pharmaceuticals, according to the National API and Laboratory Reagents Manufacturing and Exports Policy.

In 2015, the US Food and Drug Administration gave approval to Square Pharmaceuticals and Beximco Pharmaceu-ticals after inspecting the oral solid dosage facilities of the two companies.

At present, oncology drugs are imported but some of the local players like Renata, Beacon and Acme have heavily invested in the segment.

Although the sector has grown fast, the country largely relies on imports for raw materials in the absence of local active pharmaceuticals ingredients (API): about 95 percent of the Tk 5,000 crore worth of raw materials needed by the pharmaceutical sector are brought in from abroad.

This had led the government to come up with the policy, which offers a host of incentives to encourage local manufacturing of raw materials for the pharmaceutical sector.

Nestle, Starbucks wrap up $7.15b licensing deal

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Nestle, Starbucks wrap up $7.15b licensing deal

Reuters, Zurich

Nestle and Starbucks said on Tuesday they had concluded their licensing deal for the Swiss food giant to market the US coffee maker’s packaged coffees and teas around the world.

The $7.15 billion deal grants Nestle perpetual rights to sell Starbucks products such as Starbucks, Seattle’s Best Coffee and TeavanaTM/MC outside of the US company’s coffee shops, and will result in about 500 Starbucks employees shifting to Nestle.

Export to cross $60b by 2021: Tofail

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Export to cross $60b by 2021: Tofail

Star Business Report

angladesh’s export figure will cross the $60 billion mark by 2021 thanks to the presence of high quality diversified products in the export basket, Commerce Minister Tofail Ahmed said yesterday.

Bangladesh shipped only 25 kinds of products worth Tk 787 crore in 1972, just after the independence of the country, he said.

The country exported 700 different kinds of products to 199 countries worth $41.5 billion last fiscal year, of which $37 billion came from the export of commodities and the remaining from the services sectors, Ahmed said.

Being the second largest garment exporter in the world, Bangladeshi manufacturers shipped $30.66 billion worth of apparel items last fiscal year, Ahmed said.

The minister spoke at a function on “Bangladesh’s political economy (1952-2041) and the relevance of National Mourning Day” organised by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) at its office in Dhaka.

Shafiul Islam Mohiuddin, FBCCI president, chaired the function, moderated by Sheikh Fazle Fahim, vice president, where businessmen, researchers, economists and lawmakers were also present.

The minister also praised the quality of the products of the country’s emerging pharmaceuticals sector. He said the local producers meet 98 percent of the local demand for medicine and also export the items to 100 countries.

If the sustainable development goal is implemented properly, the rate of extreme poverty in Bangladesh would come down to less than 3 percent by 2030, Ahmed expected.

The economy will be buoyant as the government has been implementing some mega projects like the Padma bridge, Payra sea port and power plants. After achieving independence in 1971, many renowned global economists said Bangladesh would be the model of the poorest countries of the world, but they now speak highly of the economic development the country has achieved, Ahmed said.

The size of the country’s gross domestic product was only $8 billion in 1972, which is $280 billion now, said Atiur Rahman, former governor of Bangladesh Bank.

The life expectancy of Bangladeshis was only 47 years, which has gone up to 72.5 years now thanks to the improved lifestyle of the masses, Rahman said.

The central bank has $32 billion in foreign currency reserve now, he said.

It took over 100 years to produce 5,000 megawatts of electricity, but now the country produces nearly 15,000 megawatts of electricity a day, he said.

However, the country needs to create 1.6 million new jobs, he said.

“I am happy that nine lakh mobile banking agents have been created across the country,” the former governor said, adding that if every agent appoints three persons, the total employment will be 27 lakh.

He suggested factory owners take loans from Bangladesh Bank’s $200 million green fund for making environment-friendly industrial units.

The country’s light engineering units at Dholaikhal, Jinzeera, Bogra and Jessore are so capable now that they can produce spare parts of aeroplanes, he said.

Abdul Mannan, chairman of University Grants Commission, said the amount of Bangladesh’s foreign debt is $28.5 billion while that of Pakistan is $92 billion.

Bangladesh needs innovation in different areas for higher economic growth, said Mozammel Haque Babu, managing director of private television channel Ekattor TV.

Md Abdul Hannan, a former diplomat and secretary; and Kazi Akram Uddin Ahmed and Mir Nasir Hossain, former FBCCI presidents, also spoke.

Police to get banking licence

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Police to get banking license

Star Business Report

Bangladesh Bank has decided to give approval for one more commercial bank to be set up despite opposition from different corners.

The central bank’s board yesterday settled on giving Bangladesh Police Welfare Trust the go-ahead to take required procedural measures to set up the company for the proposed Community Bank Bangladesh.

Bangladesh Police Welfare Trust, a concern of Bangladesh Police, had applied to Bangladesh Bank on May 23 for a licence to set up the new Community Bank Bangladesh, to be owned by Bangladesh Police.

BB Governor Fazle Kabir presided over yesterday’s meeting at the central bank headquarters in the capital.

With this new one, the number of scheduled banks in the country will stand at 59.

Prime Minister Sheikh Hasina had earlier agreed to allow Bangladesh Police to set up a new bank if they could arrange Tk 400 crore as paid-up capital.

A BB official told The Daily Star yesterday that the central bank would communicate with Bangladesh Police Welfare Trust in one or two days asking it to submit a business plan on how to operate the proposed bank.

The managing director of the proposed bank will have to present the business plan before the central bank’s board.

The central bank gave the approval or the “letter of intent” for the proposed bank at a time when the country’s banking sector is plagued with financial irregularities and bad loans.

At March’s end, the total amount of default loans in the banking sector stood at Tk 88,589 crore, up from Tk 74,303 crore at the end of December 2017. Approval for two more commercial banks — Bengal Bank and People’s Bank — is in the works, said the BB official. The two proposed banks may get the letters of intent within the shortest possible time as the central bank has almost completed verifying documents they submitted.

The BB had earlier turned down proposals from Bengal Bank and People’s Bank, but it had to go back on the decision following pressure from government higher-ups.

In its response to the finance ministry on December 18, the central bank said the current precarious condition of the nine fourth generation banks should be considered before allowing yet another bank.

The financial health of the nine banks, which got licences in 2013, is not good, with two of them being currently on “life support”, according to the BB letter.

The central bank is also under pressure from government high-ups to allow another new bank — Citizen Bank, the BB official added.

Profits jump before listing, fall afterwards

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Profits jump before listing, fall afterwards

Firms show inflated earnings figures during IPOs
Ahsan Habib

The earnings of 19 out of the 21 textile companies that got listed on the Dhaka bourse between 2010 and 2015 have fallen sharply from the level shown during the initial public offerings.

What is more, four of these companies have become junk because of their poor performance and failure to pay dividends to shareholders.

The scenario is more or less the same for companies that went public in the five years to 2015.

During the period, 67 companies were listed. Of them, the earnings of 48 went lower compared to the prelisting level, according to the latest data of the firms available on the DSE website.

Only 17 were able to make higher earnings per share (EPS) last year compared to the year of the listing. The earnings of one firm remained unchanged while data about one company were not available.

Ten companies were downgraded to the junk shares category while three closed operations.

The Daily Star did not include in the analysis the companies that raised capital after 2015, as a company needs nearly three years to make profit after getting listed on a stockmarket.

The sponsors of most of the companies bring the shares to the market when they think they have no potential to grow, said Abu Ahmed, a former chairman of the economics department of Dhaka University.

The promoters also go for IPOs when they feel the necessity of raising capital to save themselves from bank loans, he said.

“At the time of IPO, some companies exaggerate earnings information to allure investors. Some do not even bother about doing better business. Rather, they mainly focus on doing share trading and making quick bucks.” Industry insiders say issue managers help these low-performing companies get due diligence certificates with inflated data, as the certificates are a must to launch a share.

Among the textile companies, the EPS of Familytex, listed in 2013, has experienced the highest fall of 104 percent: from Tk 0.92 to Tk 0.04 in the negative.

The EPS of Zahintex, which raised capital in 2011, fell 88 percent to Tk 0.73.

Hamid Fabrics followed suit with an 84 percent slide. Generation Next gave up 72 percent while Matin Spinning has seen the lowest fall of 22 percent.

According to DSE data, sponsors hold only 4.16 percent stakes in United Airways while it is 9.99 percent for Shurwid Industries and 12.04 percent for Active Fine Chemicals.

Around 13.82 percent shares of Generation Next belong to its sponsors. It is 21.19 percent for Appollo Ispat, 22.14 percent for Salvo Chemical and 22.43 percent for Familytex.

Since the listing, Shurwid Industries has declared dividend only once and started counting losses the next year, said Jamal Uddin, an official of the company’s share department.

“The management of the company have already sold their ownership to a new management.”

He said the company started making losses because of the previous management’s poor performance following its listing.

The companies that got listed between 2011 and 2016 used 31 percent of their IPO proceedings for clearing bank loans, according to data of the Bangladesh Securities and Exchange Commission.

It is true that some companies may have entered the market only to make quick gains, said Mohammed Ahsan Ullah, acting president of the Bangladesh Merchant Bankers Association.

“But there are some companies that began incurring losses not for their own fault. They might have been the victim of bad business environment. The stockmarket regulator should investigate and find out the actual reasons.”

The companies that became junk stocks following their public listing between 2010 and 2015 are: United Airways, Padma Life Insurance, Sun Life Insurance, Familytex, Fareast Finance, Emerald Oil, Khulna Printing, Tung Hai Knitting, Shurwid Industries and C&A Textile.

Despite several attempts, this correspondent failed to reach the officials of Tung Hai Knitting and C&A Textile through the phone numbers and email addresses available on the DSE website.

“Our issue managers and auditors should be more careful so that no company can manipulate earnings data when it comes to listing,” said KAM Majedur Rahman, managing director of the DSE.

He said the EPS of a company can fall in the first two years of the listing, but it should go up in the first four years.

Merchant bankers only issue due diligence certificates and can’t be held responsible for the companies’ poor performance after they are listed, Ahsan Ullah said.

“Moreover, panel auditors remain there to examine the documents companies submit during the IPOs. So, merchant bankers alone can’t be blamed for any fake or inflated data.”

China’s Foton to assemble vehicles in Bangladesh

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China’s Foton to assemble vehicles in Bangladesh

Star Business Report
Foton Motor, a Chinese vehicle manufacturer, will set up a plant in Bangladesh by next year to assemble commercial vehicles, a top official of the company said yesterday.

“The market for commercial vehicles in Bangladesh is very potential as the demand is increasing in line with the country’s consistent economic growth,” said Chang Rui, president of Foton International.

He was talking to The Daily Star after the signing of an exclusive dealership deal with local ACI Motors at the ACI Centre in the capital for marketing Foton vehicles.

Rui did not disclose the amount Foton will be investing in the assembly plant.

At present, the country’s market size for commercial vehicles is about Tk 4,200 crore a year and the segment is dominated by Indian vehicles. Japanese vehicles used to control the segment a decade ago.

ACI Motors believes that this partnership will enable it to grab 10 percent of the market of commercial vehicles within the next three years, according to Subrata Ranjan Das, executive director of the company.

He said they would launch the commercial sales of Foton vehicles in November this year. By signing the agreement, ACI Motors has become the sole distributor of a wide range of commercial Foton vehicles like pick-up van, double cabin pick-up, school van, dump truck, transit mixer, bulk cement carrier, fire service vehicle, cleaning vehicle, and heavy crane.

Kazi M Aminul Islam, executive chairman of the Bangladesh Investment Development Authority, said the investment would help develop the private sector.

“I hope Foton’s entry into the country will help Bangladesh adopt new technologies and business knowledge,” he said.

FH Ansarey, managing director of ACI Motors Ltd, said the motors business was significantly associated with the movement, speed and growth of Bangladesh.

“ACI Motors inspired people to jump from bull carts to power tillers, power tillers to tractors and now tractors to high-speed four wheelers. It was our long cherished dream to initiate this business,” he added.

Ansarey and David Lee, executive vice president of Foton Motor for South Asia, signed the agreement.

Dhaka urges Colombo to sign FTA quickly

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Dhaka urges Colombo to sign FTA quickly

Star Business Report

Bangladesh has urged Sri Lanka to sign the free trade agreement and the bilateral coastal shipping deal quickly to enhance trade between the two countries.

Planning Minister AHM Mustafa Kamal made the call yesterday during a meeting with Sri Lankan Prime Minister Ranil Wickremesinghe in Hanoi, Vietnam, on the sidelines of the Indian Ocean Conference, according to a statement of the planning ministry.

Kamal requested the prime minister to take steps to speed up the preparatory work for finalising the FTA.

The bilateral trade between the two nations amounts to only $150 million and it will receive a boost if the FTA becomes effective, the planning minister said.

Wickremesinghe assured that Sri Lanka will expedite the FTA and maritime agreements.

He said a good number of Sri Lankans are working in Bangladesh in a very friendly environment, mostly in technical and managerial positions, supporting the manufacturing and service sectors.

Kamal raised the issue of the coastal shipping agreement, which has been pending for three years.

The maritime shipping connectivity will help Bangladesh’s shipping cargoes to reach their final destinations in the west via Colombo Port.

In 2016, Bangladesh and Sri Lanka agreed to sign the FTA.

In March this year, Commerce Minister Tofail Ahmed said Bangladesh will sign the agreement in October.

Fresh congestion slows Ctg port

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Fresh congestion slows Ctg port

Chittagong Port has been facing container congestion for a week, the second this month, mainly because of slow delivery of import containers and transportation of containers to private inland container depots.

Import-laden containers lying in the port yards totalled 44,473 TEUs (twenty-foot equivalent units) till yesterday against the port’s storage facility of 37,620 TEUs.

A good portion of import containers are usually taken from the port to the ICDs from where importers receive the goods.

But the movement of the containers to the ICDs has been facing disruption for the last couple of days, after the Road, Transport and Highways Division banned trucks, covered vans and lorries from plying on the roads three days before Eid-ul-Azha.

As of yesterday, the number of ICD-bound containers lying at the port yards rose to 5,039 TEUs although the port doesn’t have designated space to store them.

The port experienced a similar congestion in the first week of August due to a transport crisis amid countrywide student protests demanding safe roads and an almost concurrently unannounced transport strike.

Although the Eid vacation ended, only a small number of vehicles plied as not all of the transport workers who had gone home to celebrate the vacation have returned, causing the poor delivery of imported goods.

Usually 3,000 TEUs to 4,000 TEUs of import-laden containers are delivered on a normal working day whereas only 3,000 TEUs were delivered in the five days to Saturday.

Abu Bakar Siddique, executive president of the Chittagong Prime Mover Owners Association, said a good number of containers were delivered from the port on Sunday as some vehicles have started plying.

Fazle Ekram Chowdhury, president of the Ship Handling and Terminal Operators Owners Association, said berth operators are working to ensure quick loading and unloading of containers but the handling has been disrupted because of the space shortage at the yards.

He called for a dedicated lane on the Dhaka-Chittagong highway for vehicles carrying goods to keep export-import activities unhurt.

Md Zafar Alam, member for administration and planning of the Chittagong Port Authority, said the situation has started improving as the delivery has been expedited since Sunday.

The situation would return to normalcy within a few days, he said.

Steelmakers flexing muscles

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Steelmakers flexing muscles

Large projects, housing sector boost demand

Sajjadur Rahman and Jagaran Chakma

Steelmakers are investing thousands of crores of taka either to expand existing capacity or set up new units as consumption is on the rise.

Per capital steel consumption in Bangladesh has grown more than 54 percent to 37kg in the last eight years thanks to the government’s large infrastructure projects and the thriving housing sector.

According to market players, per capita steel use was 24kg in 2010.

Market leader Bangladesh Steel Re-Rolling Mills (BSRM) and other top firms such as Anwar Ispat, AKS, GPH, KSRM and Bashundhara Steel have expanded their capacity in recent years.

PHP Family, a Chittagong-based business group, which has invested Tk 1,500 crore for a new unit in Feni, plans to invest about Tk 31,600 crore in the next five years to seven years to set up an integrated steel plant on 500 acres of land in the Mirsarai Economic Zone.

 

Chinese companies have also shown interest to invest in the steel sector.

Bangladesh’s steel sector has made great strides since the country’s independence.

In 1972, local millers used to produce a meagre 47,000 tonnes of steel. The figure rose to 55 lakh tonnes in 2017 and is expected to hit 70 lakh tonnes this year.

The sector turns over about Tk 30,000 crore a year in sales revenue.

The growing use may cheer up manufacturers and retailers, but Bangladesh lags far behind its peer countries and neighbour India when it comes to consumption. The country’s consumption is almost half of India’s 65kg and one-seventh of Asian average of 255kg, according to local companies and India-based information services provider SteelMint.

Still, local manufacturers are quite optimistic about a consistent and healthy growth of the industry in the years to come.

Tapan Sengupta, executive director of BSRM, said the sector is booming thanks to the high demand from large infrastructure projects and the housing sector.

The sector’s growth is mainly driven by the government’s spending on mega infrastructure projects, which account for more than 40 percent of the consumption, said Manwar Hossain, managing director of Anwar Group of Industries.

“The growth trend will continue for the next 20 years to 25 years and the steel demand will also increase in line with development activities of the government and the booming housing sector in both urban and rural areas.”

He said foreign investors have realized the potential of the market and are keen to invest in Bangladesh.

The demand has been growing at more than 15 percent annually for the last few years, said Md Ashrafuzzaman, director for marketing and sales of GPH Ispat.

“We predict the growth will reach 20 percent next year,” he said.

BSRM is the market leader with 25 percent share and produces about 15 lakh tonnes of steel every year.

There are some 400 big, medium- and small-sized steel mills in the country with a combined production capacity of 80 lakh tonnes. Of them, the top 10 companies hold more than 50 percent stakes.

Local millers manufacture mainly two types of products: flat steel (corrugated iron sheet and cold rolled coil) and long steel (mild steel rod and thermo-mechanically treated bar).

They primarily source raw materials from ship-breaking industry in Chittagong and also import 15 lakh tonnes of billets each year.

Nitol-Niloy to start assembling Tata pickups this month

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Nitol-Niloy to start assembling Tata pickups this month

Jagaran Chakma

 

A growing demand for commercial vehicles has encouraged Nitol-Niloy Group to start assembling Tata pickup trucks in Bangladesh from this month.

“Now we will assemble the pickup, but we have a target to manufacture at least 25 percent of the components locally by 2020,” said Abdul Matlub Ahmad, chairman of Nitol-Niloy Group.

The group initially plans to assemble 800 pickup trucks every month at a plant of Nita Company Ltd, a joint venture of Nitol and Tata, located in Jessore.

Currently, chassis of trucks, buses and minibuses are imported in completely knocked down (CKD) condition and assembled at this plant.

Bangladesh Road Transport Authority (BRTA) data showed that the demand for pickup trucks was over 1,000 units per month last year and the growth rate was over 18 percent.

BRTA gave registration to 13,512 units of pickup trucks of different manufacturers in 2017, up from 11,371 units in 2016; 10,257 in 2015 and 9,554 in 2014.

“We will start assembling pickups this month and it will be the beginning of automobile manufacturing in the country,” said Ahmad, also a former president of the Federation of Bangladesh Chambers of Commerce and Industry, the apex trade body.

He believes Nitol Motors would be able to introduce a “made-in-Bangladesh” pickup truck in January 2021.

Ahmad said as per international practice at least 25 percent of the components of a vehicle must be manufactured locally to call it a local product.

Nitol Motors would manufacture the chassis, body, pinion, wheel rim and brake components, which would be economically viable. Ahmad said Tata would directly supply the rest of the components to the manufacturing plant.

Nitol Motors started assembling Tata buses and trucks in 1991 and has been Tata Motors’ partner since 1988.

Now, it is the largest distributor of Tata Motors in South Asia, and the most dominant player in the country’s commercial vehicle market having over 40 percent of the market share. According to Nitol Motors, it accounts for over two-thirds of the pickup truck market in the country and it has been growing at a double digit rate for the past five years.

Ahmad said Nitol needs to invest around Tk 300 crore in the existing assembling plant to upgrade it for manufacturing pickup trucks and it would need Tk 800 crore to go for manufacturing trucks and buses in the future.

He said assembly of pickup trucks would reduce its present price in the domestic market by Tk 1 lakh per unit.

Nitol-Niloy Group has a diversified profile with exposure to assembling of vehicles, bus body making, after sales support, transport and aviation services, financial institutions, manufacturing industries, real state, properties development and sports promotion.

The group’s annual turnover was $128 million, equivalent to over Tk 1,000 crore, last year, according to its website. It has so far invested around $260 million and employs 3,170 people.