Introduction:

Square pharmaceutical is the leading pharmaceuticals company with a powerful combination of

skills and resources to provide a platform for delivering strong growth in today’s rapidly
changing health care environment.

The pharmaceuticals company in Bangladesh is accountable for the health of the people; since
the products are the fundamental right of all human being. The pharmaceutical industry is
different from other industries related to consumer centered businesses.

The industry has a fundamental social responsibility towards the society and their users. The
pharmaceutical industry depends on their target market- the society of Doctors who decide which
medicine to prescribe.

1|Page
Objective of the study:

This study titled as “Square Pharmaceutical company leading market by follow cost leadership
strategy” is aimed to know the business level and functional level strategy.

Specific objectives:

The specific objective of the report is mainly focused on business level strategy of Square
Pharma. There are mainly some functional level strategies of business level strategy. To findings
the business level strategy, following are required:

 Finding out the marketing and market expansion strategy.

 Finding selling strategy.
 Finding HRM policy.
 Finding strength, weakness, opportunity and threats.

What is Business level strategy?

An organization's core competencies should be focused on satisfying customer needs or

preferences in order to achieve above average returns. This is done through Business-level
strategies. Business level strategies detail actions taken to provide value to customers and gain a
competitive advantage by exploiting core competencies in specific, individual product or service
markets. Business-level strategy is concerned with a firm's position in an industry, relative to
competitors and to the five forces of competition.

Customers are the foundation or essence of a organization's business-level strategies. Who will
be served, what needs have to be met, and how those needs will be satisfied are determined by
the senior management.

 Who are the customers?

Demographic, geographic, lifestyle choices (tastes and values), personality traits, consumption
patterns (usage rate and brand loyalty), industry characteristics, and organizational size.

 What are the goods and/or services that potential customers need?

Knowing ones customers is very import in obtaining and sustaining a competitive advantage.
Being able to successfully predict and satisfy future customer needs is important. (Perhaps one of
Compaq's mistakes was not understanding who their real customer was and what that customer --
end user -- wanted.)

2|Page
  How to satisfy customer needs?

Organizations must determine how to bundle resources and capabilities to form core
competencies and then use these core competencies to satisfy customer needs by implementing
value-crating strategies. Descriptions of the purpose of business level strategies and of the five
business level strategies follow the discussion of customers. The five Generic strategies are as
follows,

1. Cost leadership.
2. Differentiation.
3. Focus cost leadership.
4. Focus differentiation.
5. Integrated cost leadership/differentiation.
6. Spin price

Square pharmaceuticals follow cost leadership strategies:

We found that square pharmaceuticals follow cost leadership strategies for a specific set of
product category. Because cost leadership strategy is an integrated set of actions taken to
produce goods or services with features that are acceptable to customer at the lowest cost,
relative to that of competitors. Square using the cost leadership strategy to sell no-frills,
standardized products to the industry’s most typical customers. Square’s products have
competitive levels of differentiation in term of features that they create value for customers.
Indeed, emphasizing cost reductions while ignoring competitive levels of differentiation is
ineffective. Square pharmaceutical also carefully examines all support activities to find
additional sources of potential cost reductions. Developing new systems for finding the optimal
combination of low cost and acceptable quality in the raw materials required to produce the
drugs.

Differentiation: Square pharmaceutical limited also focuses on market niche, concentrating

competitively on a specific market segment. These types of products are usually charged with
premium price and only a few numbers of companies produce or imports those drugs. In this
regard square pharmaceuticals achieved a good reputation in medicine sector. Corporate Culture
SPL, with its progressive business outlook, believes and practices corporate work culture with a
classic blend of efficiency and equity. SPL believes in company growth by increasing efficiency
level of employees and for that offering excellent environment and support for skill and
knowledge upgradation. SPL’s Business Motivation is ‘Being Good by Doing Well’ and to
conduct transparent business operations based on market mechanism within the legal, ethical &
social framework with aims to attain the mission reflected by the company’s vision. It values
productivity as the spontaneous contribution of Human Resources. Strategic Human Resource
Development Programs are the energy sources for SQUARE HR for running towards the zenith
of success. Flow of clear and specific information and justification of queries play the vital role
to ensure the market reputation of SQUARE as the most trusted and transparent company and it
enriches the motivation level of HR who are the real contributors and owners of his / her own
jobs. At SPL, HRD symbolizes the unique blending of professionalism as well as sharing the
stress and success equally like a family where every member has deep concern, feelings and

3|Page
pride for their own company SPL. HR ensures the strong supporting role to develop &
implement HR policy guidelines for ensuring uninterrupted operation and spontaneous
participation to achieve organizational objective as well as fulfillment of employee needs. HR is
maintaining an effective way to deal with labor union and still no unrest has been recorded as
dispute maintaining a progressive labor policy. SPL follows laws and encourage work
environment that welcomes diversity and also follow non- discrimination & fair treatment policy
both in the recruitment & selection process and performance management system Personnel
working here are taking care of SPL as if it is their own family. Employee-employer relation is
cordial and supporting always. SPL does not allow any female employees during night shift
operations & strictly prohibits any form of forced labor. It actively pursues the policy of No child
labor in SPL. Transparency & business ethics is the core value of SPL and it is strictly followed
at every step of the business processes. Every business in SPL is modeled in a way that enables
the management to ensure highest degree of both financial and behavioral accountabilities.
SQUARE pursues Zero Tolerance policy against all kinds of corruption. SPL's activity goes well
beyond the sphere of business. As socially conscious and responsible corporate body SQUARE
is committed to the improvement of the society as a whole.

Corporate History of Square Pharma

The company was founded in 1958 by Samson H. Chowdhury along with three of his friends as a
private firm. It went public in 1991 and is currently listed on the Dhaka Stock Exchange. Square
Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the
pharmaceutical industry of Bangladesh since 1985 and it has been continuously in the 1st
position among all national and multinational companies since 1985. Square Pharmaceuticals
Ltd. is now on its way to becoming a high performance global player.

Corporate Focus:

As per vision, mission and objectives; they are to emphasize on the quality of product, process
and services leading to growth of the company imbibed with good governance.

Chronology since Inception

 1958: Debut of Square Pharma as a Partnership Firm.

 1964: Converted into a Private Limited Company.

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

Johnson and Johnson International, USA.

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

4|Page
 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.

 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.

 2004: 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.

 2007: Square Pharmaceuticals Ltd., Dhaka Unit gets the UK MHRA approval.

 2008: New SVPO (Small Volume Parenteral and Ophthalmics) plant starts operation in
Dhaka Unit.

5|Page
Corporate Finance:

Corporate Governance involves decision making processes for any corporate body as a going
concern for The benefit of all concerned, present and future. These decisions may be categorized
as policy & strategic, operational and executing, performance & evaluation and sharing of
the accretion assets between present & future cohorts. The involvement of the entrepreneur in
all these areas invokes decision making governance on a continuous basis, the degree of
involvement being variable with the extent of delegation of authority top down and
reporting for accountability bottom up of the Management echelon. These aspects of
governance are shared by the Board of Directors, Executive Management, operational
participants and workers and others in fulfillment of the common goals that converge in
increasing the benefits of all stakeholders. To this end entire corporate governance efforts
are blended with “good governance practices” as ethically and morally acceptable
standards under a given socio politico environmental phenomenon of our society in which we
work, live and exist.

The organisms through which the corporate governance functions are carried out are:

BOARD OF DIRECTORS:

(a) Constitution:

The Board of Directors, the top Management echelon, consisting of the founding
entrepreneurs/ successors and an Independent Director, provides the policy and strategic
support and direction for the entire range of the corporate activities. The Board of Directors
consist of nine (9) members including the Independent Director with varied education and
experience which provides a balancing character in decision making process. The Board is
re-constituted every year at each Annual General Meeting when one-third of the members retires
and seeks re-election. A director is liable to be removed if the conditions of the Articles of
Association and the provisions of the Companies Act 1994 are not fulfilled.

(b)Role & Responsibilities:

The main role of the Board of Directors, which is the highest level of authority, is to
provide general superintendence, oversee the operations and control the affairs of the

6|Page
company through appropriate delegation and accountability processes via the lines of
command. However the Board of Directors hold the ultimate responsibility & accountability
with due diligence for conducting the activities of the company as per provisions of law in
the interest of the shareholders, the stakeholders, the state and the society. The Board of
Directors, in fulfillment of its responsibility hold periodic meetings, at least once a quarter
and provide appropriate decisions/directions to the Executive Management. Such meetings
usually consider operational performance, financial results, review of budgets, capital
expenditure proposals for BMRE or new projects/divisions/product lines, procurement of
funds by issue of shares or borrowing, procurement of raw materials, plant & machinery,
pricing of products/discounts, recruitment, training and promotion of officers, approval of
audited accounts and distribution of dividends and other interest of the stakeholders including the
employees and workers. The Board of Directors take special care in designing and
articulating productivity and compensation plans of employees and workers and rewarding
them appropriately on the basis of quality and quantity of performance as an incentive. Board
also remains responsible for removal of operational hazards to life and health of
workers, friendly environmental work condition and social relationship as demanded of good
citizen in a country.

(c) Relationship with Shareholders & Public:

The shareholders as owners, are required to be provided with material information on the
company’s operation half-yearly and annually, the latter at the AGM. They are also provided
routine services by the Company Secretary in matters of transfer of shares, replacement in
case of loss or damage of shares, payment of dividends etc. The Board is however
responsible to the public for publication of any price

Sensitive information as per SEC regulation. A qualified Chartered Secretary is in charge for all
these responsibilities as Company Secretary.

(d) Relationship with Government:

In its role on accountability to the government, the Board of Directors ensure payment
of all dues to government in the form of import duty, custom duty and port charges,

7|Page
VAT, Corporate Taxes and other levies as and when they become due on the basis of actual
operations and make sure to avoid corruption.

This has enabled the company to enhance its contribution to the National Exchequer on a
progressive rate year after year.

(e) Relationship with Financers/Bankers:

The Board oversees

the financial transactions and ensures to meet company’s commitments to the lenders without
default. This has resulted in securing lower interest rates from them.

(f) Relationship with Suppliers:

As the company has to import plant and machinery and almost all the raw materials from abroad,
it maintains cordial and mutually beneficial interest with its international as well as local
suppliers. This has enabled the company to avoid any legal disputes in international/local courts
and enhanced the company’s image as a good customer. (g) Corporate Social Responsibilities
(CSR):

The Board of Directors is also awoken of the Corporate Social Responsibilities (CSR)
especially in the areas of gender equality, race-religion-regional equality, non-employment of
child labor, human rights, environmental pollution, social-marketing, social activities (promotion
of sports & culture, health care and population control Programs, elimination of corruption
programs, participation in charitable activities etc. In non-partisan manner) right to form and
participate in Union under ILO convention, employment of disabled etc.

HUMAN RESOURCES DEVELOPMENT:

In order to improve productivity of human input, the company continuously provide formal and
informal training to the employees at every echelon of operation and management. During
the year under review 2,358 persons received in-house/in operation/on the job training at
home and abroad which will ultimately make great contribution to the company’s
profitability as well their own remuneration in due course.

8|Page
Human Resources are following these activities:

– Looking after Corporate HR activities of SQUARE Group.

– Conducting Recruitment and selection Process.

– Looking after Management Development Training.

– Conduct Training Need Assessment in different area within the organization.

– Formulate, Edit and Implement HR Policies.

– Overall talent and resource Management

– Analyzing organizational need linking with employee development.

– Managing employee relations and Communication.

– Conducting Orientation Program for Newly joined Employees.

Market place

SPL has the strongest domestic distribution network for smoothing distribution of medicines to
all parts of the country. Currently it has 15 depots all over the country. Those are situated at
Dhaka, Pabna, Bogra, Rangpur, Khulna, Barisal, Comilla, Mymensingh, Chittagong, Noakhali,
Sylhet, Tangail, Rajshahi, Faridpur and Naryanganj. It uses own transport system to deliver its
product to the stockist and retailer.

9|Page
SPL also exports its products to 31 countries.

Present export market covers:

 Myanmar
 Nepal
 Kosovo
 Kenya
 Libya
 Mauritius
 Malawi
 Yemen
 Tanzania
 Sri Lanka
 Somalia
 Vietnam
 Afghanistan
 Ukraine
 Uzbekistan
 Ghana
 Iraq
 Benin
 Botswana
 Bhutan
 Cambodia
 Comoros
 Island
 Tajikistan
 Mozambique
 Gambia
 Niger
 Rwanda
 Papua New
 Guinea
 Sierra Leone
 Macau countries

10 | P a g e
 Selling strategy and promotion:

Public advertisement for medicine, especially POM drug is strictly prohibited in Bangladesh. But
it may be done for OTC medicine to some extent. However, no pharma company in Bangladesh
is engaged in such advertisement.

SPL heavily depends on personal selling through rapport building and maintaining. A team of
sales representatives, called MPO have been employed to meet with physicians to explain the
merits, demerits, indication, contraindications, etc. of the medicine with the help of literature,
brochure, pad, booklet, leaflet, gift item etc. That is, the Medical Promotion Officers promote the
company’s product to doctors front with the help of different.

Marketing Objectives:

The company first has to decide what it wants to accomplish with its particular product offer. If
the company has selected its target market and positioning carefully, then its marketing-mix
strategy, including price, will be fairly straightforward.

The clearer a company’s objectives, the easier it is to set price. A company may seek additional
objectives. Common objectives include survival, maximum current profit, maximum current
revenue, maximum sales growth, maximum market skimming, and product-quality leadership.

 Survival:

Companies pursue survival as their major objective if they are plagued with overcapacity, intense
competition, or changing consumer wants. To keep the plant operating and the inventories
turning over, they will cut prices. Profits are less important than survival. As long as prices cover
variable costs and some fixed costs, the companies stay in business. However, survival is only a
short-run objective. In the long run, the firm must learn how to add value or face extinction.

 Maximum current profits:

Many companies try to set the prices that will maximum current profits. They estimate the
demand and costs associated with alternative prices and choose the price that produces
Maximum current profits, cash flow, or rate of return on investment.

11 | P a g e
There are problems associated with current profit maximization. This strategy assumes that the
firm has knowledge of its demand and cost functions; in reality, these are difficult to estimate.
Also, by emphasizing current financial performance the company may sacrifice long-run
performance, ignoring the effects of other marketing-mix variables, competitors’ reactions, and
legal restraints on price.

Value Proposition SPL has presently been offering its products to its market segment with the
value proposition: ‘Utmost quality, excellent efficacy’ Value creation activity includes:

Balanced Scorecard The balanced scorecard for Square Pharmaceuticals Limited is as follows.

• Protection of shareholder's capital

• Accretion of wealth through financial and moral gains
Financial • Ensure highest return on investment of shareholders.

• Redemption of customer claim in time

• Avoid any form of corruptive delaings, unethical and immoral practices.
Customer • Providing quality healthcare relief for people

• Practice of good-governace.
• Maintaining workplace equality.
• Providing best compensation to all the employees
Internal

• Strive for the achievement of millennium development goals for the

human civilization
• Ensure shareholder’s growth of assets
Growth

12 | P a g e
 Major Competetors

Major competitors of Square pharmaceutical are given below,

 ACI Pharmaceuticals
 Aristopharma Ltd
 Amico Laboratories
 The ACME Laboratories Ltd
 Beximco Pharmaceuticals Ltd
 Eskayef Bangladesh Limited
 Gaco Pharmaceuticals
 Ganashastha Pharmaceuticals
 IbnSina Pharmaceuticals
 Incepta Pharmaceuticals Limited
 Navana Pharmaceuticals
 Orion Pharmaceuticals
 Pharmadesh

SWOT Analysis of Square pharmaceuticals

Strength:

The strength of Square Pharmaceuticals Ltd. lies in its diversified products and dosage forms.
Square has been producing solid products like tablets and capsules and liquid products like
syrup, suspension and solution, as well as semisolid products like cream and ointment. It is the
pioneer company to manufacture and market nasal sprays, inhalation aerosols and suppositories
in Bangladesh. Its strengths can be analyzed as under.

• SPL has skilled scientists/technicians/management personnel at affordable cost leading to low

cost of innovation/ manufacturing/expenditure to run cGMP(current Good Manufacturing
Practice) compliance facilities and high quality documentation and process understanding.

• SPL has well developed chemistry, R and D and manufacturing infrastructure with proven track
record in advanced chemistry capabilities, design of high tech manufacturing facilities and
regulatory compliance.

• The healthy domestic market with rising per capita expenditure is another significant strength
enabling achievement of economies of scale. Square also has a strong marketing and distribution
network. • It has Company Strength and product strength, Company strengths effects positively
on the product, and products strength also effects positively on the Company.

• Square has highly skilled sales forces and very efficient and wide distribution channels.

• Square ranked and held the First position in Pharmaceuticals Industry since 1985, which
meansitisinthetopforlast29years,

13 | P a g e
 • Being in the top for this long time resulted in a very positive impression for all the products in
the minds of the doctors and patients already, it occupies a good position it theirminds.

• The built in positive impression on our products which is in the minds of the doctors and
patients helps Square Pharmaceutical to get a very good response from the market for any
product they introduce in the market.

• Square has the number of sales force of the company, their capability, Training and selling
skills are in better condition and position than any other company in the industry.

• Square follows very transparent marketing activities; there is no misleading or fraud, that why
it enjoys a good reputation in the market.

• Square maintains high quality standards for its products

• In production of Square’s Omeprazole Injection and DMP quality issues are followed and
maintained properly.

Weakness:

The weakness of the Square is the analysis of the internal industry components that are not
providing significant added value or are in need of improvement. The internal components can
include physical resources, human capital or features the company can control. For example, the
SPL’s weaknesses could include high-risk business modeling, disengaged Board of Directors,
dated medical equipment, poor branding, low staff morale or diseconomies of scale. More
weakness given below:

• Square has introduced some Injections like Omerprezol late in the market

• Those Injection has introduced already by Incepta and popular before Square

• Square has lost the opportunity to be the first introducer of various products but they couldn’t
have capitalized the benefits of it

• Square needs to consider the loss of late introduction and work on market considering this
disadvantage.

• Low investments in innovative R&D continue to be a major weakness of Square

Pharmaceutical Ltd.

• Square lacks the ability to compete with MNCs for New Drug Discovery, research and
commercialization of molecules on a worldwide basis due to lack of resources.

• Strong linkages between industry and academia which are essential for growth of the
industryislackinginSquare

14 | P a g e
• Rapidly increasing costs of skilled manpower such as scientists/ regulatory compliance
personnel / pharmaceutical lawyers/ international business development personnel is pushing up
the cost of innovation.

• Sales and marketing knowledge is inadequate due to lack of understanding of international

Pharmaceutical marketing/pricing practices and market environment in various countries.

• Inadequate manufacturing practices

Opportunity:

The opportunity of the Square is the analysis of the external industry components that provide a
chance for the company to grow in some capacity or gain a competitive edge. The external
components should be environmental factors or aspects outside the company’s control, yet
reflective of the business marketplace. It can be analyzed as under.

• In the market, the number of Antiulcer patients is increasing, when the number of patients
increases the possibility of a good return from the required drug increases.

• Incredible export potential

• New innovative therapeutic products

• Drug delivery system management

• Income is increasing day by day

• Clinical trials and research

• Due to the cost advantage in contract manufacturing & Research multi-national companies find
it compelling to shift their production bases to countries offering such cost advantage

• Licensing deals with MNCs for NCEs (New Chemical Entities) and NDDS (New Drug
Delivery Systems) offer new opportunities for Square

• Marketing alliances for MNC products in domestic and international market is another
emerging opportunity

• There is a possibility of greater returns from other countries of the world by exporting

15 | P a g e
Threat:

The threat of the pharmaceutical industry is the analysis of the external industry components that
could create an opportunity for the SPL to decline, atrophy or lose some competitive edge. The
external components should be environmental factors or aspects outside the industry’s control,
yet reflective of the business marketplace. For example, the pharmaceutical industry’s threats
could include increased government regulation, a declining economy, increasing research and
development (R&D) costs or a decrease in the global population. The threats of Square
Pharmaceutical Ltd are discussed below.

• R&D efforts of Bangladeshi pharmaceutical companies are hampered by lack of enabling

regulatory requirement

• Export effort is hampered by procedural hurdles in Bangladesh as well as non-tariff barriers

imposed abroad

External Analysis PESTEL Analysis:

External Analysis PESTEL Analysis: The macro environment tends to have a long term impact
and requires extensive research. PESTEL analysis is one of the major analytical tools to find out
the impact of politics, society, economic system, technology, environment and legal issues. For
the study purpose we have conducted a PESTEL analysis on the pharmaceutical industry of
Bangladesh. The facts and findings are discussed below.

Political Factors:

• Political Instability and events like Hartal, Strikes etc hugely effects on the pharmaceutical
industry as these hampers the supply chain and sales

• Export-Import policy of government changes with the change of political power. This has a
huge impact on the pharmaceutical industry

• Tax and Tariff policy hugely affects the cost and pricing strategy. For Bangladesh the tax for
pharmaceutical product is about 27.5% which is quite high. So these high tax and tariff hugely
affects on pricing

• Growing political focus and pressure on healthcare and healthcare savings on annual budget
affects hugely on the pricing strategy of medicines

• Affiliation of giant market players with political party/entity also affect the market

Economic Factors:

• High GDP growth of about 6.2% has a huge impact on the pharmaceutical industry of
developing countries like Bangladesh

16 | P a g e
• In Bangladesh the unemployment Rate is quite low (about 4.5%) compared to our neighboring
countries like India and Pakistan (more than 7%). So these level of employment has a huge
impact on the industry

• Exchange rates of foreign currency also has a huge impact on the industry

Bangladesh has comparatively lower rate of inflation (6.2%) than our neighborhood countries.
This affects on the pricing strategy

• Labor cost in Bangladesh is very low. So it helps in cutting cost and increase production of
drug stuffs. Like the RMG sector, low labor cost hugely effects on the pharmaceutical industry

• Increase in per capita income (annual 1180$) as well as disposable income of the population
has a great impact on the industry

Social Factors:

• Alternate Methods used in rural areas (spiritual, Herbal, Homeopathy etc) which affects the
pharmaceutical industry. But the use of these alternatives are reducing exponentially in urban
and suburban area

• Religion has a huge impact in the pharmaceutical industry. Religious views play a major role in
consumption of different products in our country

• Demographics features of population also affects on the pharmaceutical industry

• Increasing age of population and growth in obesity also affects on the industry

• Health concerns and increase in self-awareness of the population also has a huge impact on the
pharmaceutical industry

Technological Factors:

• 80% of Active Pharmaceutical Ingredient (API)’s are imported not produced in our country
because of technical issues. These has a huge impact on the pricing

• Unreliable power supply force leads firms to depend on self-generation of power which
increases production cost of drugs.

• Technological innovation observed only in medicine production process but not in the
production of material/machine. These has a huge impact on the industry

• Innovation in information and communication technology has a major impact on

pharmaceutical industry

17 | P a g e
Environmental Factors:

• Growing environmental agenda and community awareness have a huge impact on the
pharmaceutical industry

• Climate change affects hugely on the whole operation and production

• “The National Drug Policy 2005” states that the pharmaceutical plants must comply with
disposal of waste streams which increases cost of production but helps keep our environment
safe. And this concern for the ecosystem is very high in the pharmaceutical industry.

Legal Factors:

• World Bank (2009) reports Bangladesh as ranked 119 out of 183 economies on ease of doing
business regarding legal issues. This indicates how lenient the legal issue in Bangladesh is
regarding business. • Monitoring and supervisory role of DDA (Director of Drug Administration)
also affects the production, distribution and marketing of medicines and drug stuffs WHO’s
current Good Manufacturing Practices (GMP) should be strictly followed by every
pharmaceutical companies. This legislation has a huge impact on the industry.

Porter’s 5 Force Model:

Porter’s 5 Force Model: Porter’s 5 force model is a standard analysis process to identify the
external environment of a company. For Square pharmaceutical ltd we analyzed the external
environment of the pharmaceutical industry of Bangladesh. And the analysis revealed the
following result.

Bargain Power of Customer: Low

• Consumer has no choice but to buy what Doctor says. So consumers are left with zero options
for bargain

• Retail buyers of medicine and drug stuff are scattered not united as it is not a commodity or
regular product.

• NPPA (National Pharmaceutical Pricing Authority) tries to control the price but not much
effective due to the political and legal situation of Bangladesh So this observation clearly
indicates that the Bargaining Power of Customer is Low.

Bargain Power of Supplier: Low

• Pharmaceutical industry depends upon organic chemicals which are easy to produce and
comparatively cheaper in our country. So the producers of those chemicals have almost zero or
little bargaining power.

18 | P a g e
• Chemical industry is very competitive and fragmented so switching cost for the bigger
pharmaceutical industries like Square is less costly and easier. So the supplier can’t bargain
much.

• Only a few items of pharmaceutical industry require importing. And the big player of the
industry has their own supplier of those import goods. From the analysis we can conclude that
Bargaining Power of supplier is also Low.

Rivalry among Existing Firms: High

• The number of firms in the industry is very high. So does the competition.

• There are lots of similar sized firms in the industry. Only the market leader Square
pharmaceutical ltd is too large than the other companies and other companies are almost similar
in size regarding revenue, market share and distribution.

Product Differentiation is very high ranging from simple to sophisticated medicines and drug
stuffs. • Cost competitiveness is very high in the pharmaceutical industry. As a result the Rivalry
among Existing Firms is quite High.

Threat of Substitute Products: Very Low

• There is little or almost zero substitute for medicine and drug stuffs. So it can be said there
almost zero possibility of substitution of drugs. • Biotechnology is a threat for pharmaceutical
industry but for Bangladesh this threat will be quite mild for several decades as the development
of that sector is quite mild in our country. So the Threat of Substitute product is Very Low in
developing countries like Bangladesh.

Threat of New Entrants: Very High

• Capital requirement for introducing a pharmaceutical company is low for local firms or root
level. So anyone with minimum idea of the industry can easily enter the pharmaceutical industry.
• Creating a regional distribution network is easy as the communication channel became so
developed in the past decades. So any small local firm can easily grab their fair share from the
pharmaceutical industry. From the analysis we came to the conclusion that Threat of New
Entrants in the pharmaceutical industry is Very High.

19 | P a g e
Recommendation

At the end of our study we find that square pharmaceuticals is the leading pharmaceuticals in
Bangladesh.

Square has a huge brand image but due to some reasons it is threat for square to keep their
position.

So Square pharmaceutical should more effective to continue its leading position.Though due to
government regulation pharmaceutical products can not be advertised in mass media. So square
should do this on other means.

Conclusion

Conclusion Pharmaceutical is the second largest revenue generating industry in Bangladesh after
readymade garments (RMG) and the industry is doing really well. Pharmaceutical industry is
enjoying some patent advantages as the introduction and continuation of TRIPs agreement from
2005 up to 2016. These eleven years will be very crucial and important for the pharmaceutical
industry. The overall attempts of the assignment were to find out and to give a clear idea about
the practical practice of business strategy of Square Pharmaceutical Limited. In the assignment
we tried our best to do so and presented a competitive scenario of the company as well as the
pharmaceutical industry. Government support is very important for the growth and expansion of
the sector at this stage. Investment to introduce newer drugs and newer research products is
crucial, while at the same time maintaining a healthy competitiveness among pharmaceutical
companies is essential.

Reference:

 www.squarepharma.com.bd
 http://en.wikipedia.org/wiki/Pharmaceutical_industry
 http://en.wikipedia.org/wiki/Square_Pharmaceuticals

20 | P a g e