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Square, Beximco, Renata, Ibn Sina and ACME are in the top five companies of FY2020-21 in terms of growth rate and net profit compared to FY2019-20
The country’s leading pharmaceutical companies have played a big role in the rise of the stock market at the end of the last fiscal year (FY), defying the challenges posed by the pandemic.
The five leading companies that are listed at the bourses contributed approximately one-third of the entire pharmaceutical industry revenue in Bangladesh during FY2020-21, said an equity research analyst of stock brokerage.
Square, Beximco, Renata, Ibn Sina and ACME are in the top five companies of FY2020-21 in terms of growth rate and net profit compared to FY2019-20.
Stock market analysts believe that the good business of the pharmaceutical companies during the Covid period has played a big role in the success of the pharmaceutical companies in the last financial year, which ended with the mixed effect of Covid.
According to the exchange websites, Square Pharma posted an earning of Tk1,595 crore during July 2020 to June 2021 period with 19% growth over the previous year.
Meanwhile, Beximco Pharma reported Tk513 crore with 46% growth, Renata Tk506 crore with 26% growth, ACME Laboratory Tk157 crore with 8% growth and Ibn Sina Tk49 crore with 25% growth.
When asked about the reasons behind such growth, Renata CEO and Managing Director Syed S Kaiser Kabir told Dhaka Tribune: “Firstly, the comparison is made with respect to 2020, when all companies underperformed due to the onset of Covid-19. In other words, the base year represented weak performance across the board.
“Secondly, the pharmaceutical market in Bangladesh is categorized as Branded Generic, which means that sales are generated essentially through doctors prescribing specific brands.
“In 2020, most doctor chambers were closed.
“However, as healthcare workers received vaccines on a priority basis from early 2021, doctors resumed their practice boosting the prescription market.”
In line with strong earnings, the stock prices of the pharmaceutical companies have also rallied during the past couple of months.
In comparison to last year, Renata’s growth rate is 26%, which is the second-highest on the market.
Kaiser Kabir said that the company performed poorly in 2020, so the growth in the first six months of 2021 largely represents recovery from a bad situation. However, there were other reasons as well.
“Our marketing strategies have been sharpened and the productivity of our sales representatives improved compared to many of our competitors,” he said.
When asked about plans to give investors special benefits, he also added that, according to a relatively new law, at least 30% of net profit must be paid out as dividends.
“Since our profits rose significantly, the 30% rule automatically increases the gain for shareholders,” he further said.
According to City Bank Capital Managing Director Ershad Hossain, it can be seen that the companies that have worked with Covid drugs and vaccines have made a big rise in the stock market.
While other companies did not do well in the Covid period, the pharmaceutical companies were at the forefront of the business. That is reflected in the stock market.
“Medicine is an essential product that is among the top necessities and thus, the revenue did not take a hit during the dire times of the pandemic,” said Research Analyst of EBL Securities Asrarul Haque.
“When people get sick, they also have to buy medicines. So the growth of pharmaceutical companies will always be there,” he said.
However, analyzing the data, it can be seen that in 2018, 2019 and 2020, their position was not so good in the stock market.
“They started to recover in the mid-2020,” he added.
At that time, if we think about the business of the companies again, it can be seen that Beximco has worked with the vaccine, the effect of which was normal.
“So, it can be said that Covid has played a positive role in the business of pharmaceutical companies. However, this upward trend we are witnessing right now, may not persist during the current year,” he said.
In the first six months of FY2020-21, the trading of the stock market was closed at different times. But during the next six months, the trading in the two stock markets of the country was at a normal level.
Bangladesh Securities and Exchange Commission spokesperson Mohammad Rezaul Karim said: “The stock market was closed at the beginning of the last fiscal year. But even then, the pharmaceutical companies did great business.”
“In both the stock markets, there has been a good interest among the general public to buy shares of these companies,” he added.
The pharmaceutical market in Bangladesh is expected to reach the $6 billion mark by 2025, according to a report published last year by a Dublin-based firm named Research and Markets.
(DT)
