UNIVERSITY OF DHAKA

REPORT ON:
Corporate Social Responsibility in
Pharmaceuticals
Industry of Bangladesh

Department: Finance
Course: F-505/506
Course Name: Management and
Organizational Behavior

Page 1 of 35

Prepared For
Sheikh Tanjila Dipti
Assistant Professor, Department of
Finance
Faculty of Business Studies, University of
Dhaka.

Prepared By
Name

ID

1) Kamrul Hasan Khan Shatil

2) Saiful Islam Saif
3) Motiur Rahman Utsha

28018
28026
27026

EMBA
Department of Finance
Spring 2015

Date of Submission: January 6,

2016

Page 2 of 35Letter

of Transmittal

6 January, 2016
Ms.Sheikh Tanjila Dipti
Assistant Professor, Department of Finance
Faculty of Business Studies, University of Dhaka.
Subject: Submission of Assignment
Dear Madam,
This is our pleasure to present the assignment entitled Corporate
Social Responsibility in Pharmaceuticals Industry of Bangladesh
The main purpose of this report was to get a brief understanding about the CSR
activity. We have tried our level best to cover the topic effectively, and we hope
that this report meets your expected standard.
Please accept this report and oblige. We are eager to respond to any questions
that you may have concerning this report.
Yours Sincerely,
Kamrul Hasan Khan Shatil
Saiful Islam
Motiur Rahman Utsha

#28018
#28026
# 27026

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Acknowledgement
This assignment was carried out under the guidance of Ms. Sheikh TanjilaDipti,
Assistant Professor, Faculty of Business Studies, University of Dhaka. We want
to thank her for her encouragement and assistance. Her valuable suggestions
and contribution has been very helpful for us.
On a personal note, we want to thank our family and friends.

Executive Summary
The aim of this research was to assess the effectiveness of Corporate Social
Responsibility (CSR) practices of some local companies operating in
Bangladesh. The research specifically focused on the extent to which companies
practicing CSR complied with their policy and regulation involving their
employees. The research involved identification of companies providing CSR,
obtaining information about the details of the CSR practices adopted at these
companies (though looking at their website and interviews). The research found
that most CSR practicing companies practiced CSR in their own specific way,
and that few companies have separate units for providing CSR or get advice
from CSR experts. It was often unclear how much money companies spend on
CSR and it also found that many of these companies, whilst providing CSR, did
not comply with the law.

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Table of Contents
Number

Page

Title page.. i
Letter of Transmittal.ii
Acknowledgementiii
Executive Summary.iii
Content..iv

1.

INTRODUCTION
1.1.
1.2.
1.3.
1.4.
1.5.
1.6.

2.

Introduction......7
Rationale of the study.....7
Objective of the study.........8
Methodology of the study......8
Limitations of the study..9
List of Abbreviations.10

INDUSTRY ANALYSIS
2.1. Current State..11
2.2. Current Drug Market.13
2.2.1. The therapeutic groups.13
2.2.2. API manufacturing ....14
2.3. Key Players....14
2.4. Intra industry Business Practices...14
2.5. CSR.15
2.6. Regulatory Framework.19
2.6.1. Drug Formulation or Generation Testing..19
2.6.2. Administration of the Regulatory System..20
2.6.3. Infrastructural Support20
2.6.4. Scientific Testing.20
2.6.5. Regulatory Manpower.21
2.6.6. Quality Controlling...21
2.6.7. Regional Activities...21

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3.

COMPANY PROFILE
3.1.
3.2.
3.3.
3.4.
3.5.

4.

ACI..22
Square Pharmacuticles Limited Bangladesh..23
BeximcoPharma...24
Glaxosmithkline(GSK) ....25
Renata Limited..26

CSR INDEX CONSTRUCTION AND ANALYSIS

4.1. CSR Index Table..28
4.2. Analysis of CSR Index Table..29
4.2.1. Shareholder Relation..30
4.2.2. Consumer Relation.30
4.2.3. Employee Relation..31
4.2.4. Community Relation31
4.2.5. Low Cost Strategy...32
4.2.6. Differentiation Strategy..32
4.2.7. Value Gain Performance...32
4.2.8. Monetary Gain Performance....33

5.

FINDINGS

AND

POLICY

IMPLICATION.

..34

6.

CONCLUSION.
..35

7.

REFFERENCES.....
..36

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1. INTRODUCTION

1.1 INTRODUCTION
Corporate
social
responsibility (CSR,
also
called corporate
conscience, corporate
citizenship or sustainable
responsible business/
Responsible
Business)is a form of corporate self-regulation integrated into
a business model. CSR policy functions as a self-regulatory mechanism
whereby a business monitors and ensures its active compliance with the spirit
of the law, ethical standards and international norms. With some models, a
firm's implementation of CSR goes beyond compliance and engages in
"actions that appear to further some social good, beyond the interests of the
firm and that which is required by law." CSR aims to embrace responsibility for
corporate actions and to encourage a positive impact on the environment and
stakeholders including consumers, employees, investors, communities, and
others.

Mohammad Sanaullah, Director, Corporate Affairs & Company Secretary of

Singer Bangladesh said, 'Corporate Social Responsibility is one of the new
dimensions in corporate management once if the focus was on financial
Management. Most of that time people were saying that maximization of profit
is the main objective of the company but in modern times we do not speak like
that. We feel that the company's corporate management's main objective is to
achieve the corporate goal and incentives as well. Whenever you have to
achieve the corporate goal you think about the stakeholder's interest and at
the same time the corporate social responsibility. Corporate Social
Responsibility is for progressive companies and definitely they will look after
the under privileged people, the distressed people and those who don't have
the capacity to survive in this society'.

1.2 Rationale of the study

The main purpose of this study is to know about corporate social
responsibility and activities of the pharmaceuticals industry of Bangladesh by
studying companys CSR index. Such as-ACI Pharmaceuticals Ltd., Square
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Pharmaceuticals Ltd., Beximco Pharmaceuticals Ltd., GSK Pharmaceuticals

Ltd., Renata Pharmaceuticals Ltd.

1.3 Objective of the study

The purpose of this qualitative exercise is to find out the extent and the
kind of CSR practice by companies in Bangladesh and make
recommendations for establishing a national framework to advance CSR in
the country.
There is an increase in the quest for social responsibility from the business
sector because of its importance to the development of any country.
Therefore, corporate social responsibility is not a threat to achievement of
economic goals of a corporation; rather CSR is an opportunity and can be the
basis of economic development of firms in terms of competitive advantage in
global market. It is consequently needful for companies to be socially
responsible so as to build their reputation, which may in turn affect their
consumers' patronage. This research can find the condition of CSR projects in
the companies and give recommendation to the government to make a rule
which will be mandatory by all profitable companies.

1.4 Methodology of the study

The research on Corporate Social Responsibility was conducted over
annual reports of the respective companies of the specific year. The
methodology used to conduct the study was a combination of qualitative and
quantitative analysis based on annual reports, websites, journals and
magazines on the basis of broad range of sustainability aspects such as
charitable giving, CSR and human resource Management, drivers for CSR.
The participating companies were chosen from the group of larger national
and multinational companies. Five companies from pharmaceutical sectors
listed and were chosen as the sample for this study, to find out the extent of
the use of corporate social responsibility activities by companies in
Bangladesh. We randomly selected the companies.

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1.5 Limitations of the study

The difficulty that we faced while preparing the report areBudgeted times for the studyThe first obstruct is time itself. Due to the time
limitation, the scope and dimension of the project has been curtailed. As the
time limit was assigned for submitting the project was very short, it was not
possible to spend sufficient time for the study.
Data InsufficiencyAnnual reports always do not project the actual
performance of the company. It was very difficult to collect data, which is very
essential for interpretation. Lacks of records, insufficient books, publication,
facts and figure narrowed the scope of accurate analysis and interrupted the
ways to make the report more useful and attractive.

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1.6 List of Abbreviations

MNC - Multi National Corporation
API - Active Pharmaceutical Ingredient
GDP-Gross Domestic Product
IMS - Intercontinental Marketing Services, a market research company providing data
on markets, especially on healthcare industry
FDA-Food and Drug Administration
GMP -Good Manufacturing Practice ISOInternational Organization for Standardization
EMS-Environmental Management System
NDP- Net Domestic Product
UNCTAD- United Nations Conference on Trade and Development

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2. Industry Analysis

2.1

Current State

Pharmaceutical is the core of Bangladeshs Healthcare sector, and prevails

as one of the most significant manufacturing industry. With a history started in
1950s, the industry has come out as one of the most successful pharmaceuticals
manufacturing industry among the developing countries.
After liberation in 1971, the industry was largely dominated by Multinational
Companies, and the country was very much dependent on importing. In 1982,
through the formulation of national drug policy, and drug control ordinance, a
defined guideline for the development of the industry was created. By then, 75%
of the market was dominated by the MNCs, whereas the rest were shared by
some 133 local firms. Since then, the local firms have established a stronger
foothold, and the country has become from an import dependent to an active
exporter of pharmaceuticals products. At Present, the industry meets 97% of
local demand and exports to more than 80 countries.
Surprisingly, the pharmaceutical sector, which is widely regarded as a hitech industry, is the most developed among the manufacturing industries in
Bangladesh. Roughly 250 companies are operating in the market. According to
IMS, a US-based market research firm, the retail market size is estimated to be
around BDT 55 billion, which grew by 16.8% in 2009. The market size in 2008
was BDT 47 billion with a growth of 6.9%. The actual size of the market may vary
slightly since IMS does not include the rural market in their survey. However, the
deviation is estimated to be not more than 5-10% in either direction.
Unfortunately, there is no solid information source in Bangladesh other than IMS.
The retail market is about 90% of the total market. In that respect, the total
market size is more than BDT 60 billion.
One of the fastest growing sectors with an annual average growth rate
consistently in the double digits, Bangladeshs pharmaceutical industry
contributes almost 1% of GDP. It is the third largest tax paying industry in the
country. Bangladeshi pharmaceutical firms focus primarily on branded generic
final formulations using imported APIs. Branded generics are a category of drugs
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including prescription products that are either novel dosage forms of off-patent
products produced by a manufacturer that is not the originator of the molecule, or
a molecule copy of an off-patent product with a trade name. This definition is
used by both the FDA and the United Kingdom's National Health Service (NHS).
About 80% of the drugs sold in Bangladesh are generics and 20% are patented
drugs. The country manufactures about 450 generic drugs for 5,300 registered
brands which have 8,300 different forms of dosages and strengths. These
include a wide range of products from anti-ulcerants, flouroquinolones, antirheumatic non-steroid drugs, non-narcotic analgesics, antihistamines, and oral
anti-diabetic drugs. Some larger firms are also starting to produce anti-cancer
and anti-retroviral drugs.
The industry has been expanding locally as well as internationally. Local
market grew at 23% in 2010, while the import reached USD 50 Million landmark.
A number of firms got accreditations from USA, UK, Australia etc. developed
markets, and are underway toward expansion into the developed markets.
Locally, firms are preparing themselves for post 2016 scenario, when TRIPS will
be implemented. Almost all the firms are upgrading their facilities and taking up
precautions for post 2016 scenario, while aggressively expanding in both local
and export markets.

The factors behind this dramatic growth rate of the industry areHuge Demand in domestic market.
Favorable regulatory authority for domestic manufacturer
Increasing health expenditure due to health consciousness.
Promising market for contract manufacturing

The industry has been experiencing significant growth over the last few years.
A local industry supporting drug policy and effective regulatory framework, along
with TRADE RELATED INTELLECTUAL PROPERTY RIGHTS (TRIPS)
relaxations are the key reasons for success of the industry.
Despite of achieving self sufficiency, it yet procures 70% of raw materials from
abroad. However, developments are already taking place, with the beginning of
manufacturing raw materials locally by a number of firms. In addition, an API
project has already been undertaken to accelerate the vertical integration within
the industry.
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While TRIPS and import dependence on raw materials put challenges to the
growing sector, prospect of the sector depends largely on the interactions among
the players, regulatory bodies and the govt., whether they can meet up the
requisites to continue growth of the sector while facing the challenges

The pharmaceutical market in Bangladesh is not large enough compared to

the total population due to the lack of intention or ability of spending the
population. Pharmaceutical spending is also amongst the lowest in the world in
per capita terms. Healthcare expenditures consist of only 3.4% of GDP. However,
the increased awareness of healthcare and the governments increased
expenditure in this sector is changing the demand to increase in this sector. In
addition to the demand of therapeutic drugs, the demand for wellness drugs
such as vitamins and minerals are increasing gradually, which is vital for the
future growth of the sector.

2.2 Current drug market

2.2.1 The therapeutic groups
The most important therapeutic group in the Bangladeshi market is
Systemic Antibiotics. They account for almost 30% of the market. The second
therapeutic group is Anti-acids, are much less relevant in terms of market, as well
as from a public health perspective. Vitamins, Analgesics, Mineral supplements,
Cough and Cold preparations and muscle relaxants also figure prominently. It is
to be noted, that typical developed market therapeutic groups like those
addressing diabetes, cardiovascular diseases, allergies or psychological
disorders also are among the most important in Bangladesh, whereas HIV/AIDS
and Anti-malarial drugs are not.

2.2.2 API manufacturing

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In most cases, APIs have to be imported from abroad, which, together with
the necessity to import machines, is one of the main disadvantages in terms of
cost when compared to India. The leading manufacturers are therefore going into
API manufacturing, focusing mainly on Antibiotics, but also other drugs, such as
anti-cancer drugs.
However, Antibiotics are particularly demanding in terms of manufacturing
conditions, as GMP procedures require special care to avoid crosscontamination. For example, each API manufacturing line has to be in a separate
building. For many APIs, the domestic market is too small to justify an API
manufacturing plant. This stresses the fact that whereas several Bangladeshi
manufacturers have the know-how to manufacture APIs, the initial investment
and the production scale required are high. This means that in order to establish
API manufacturing e.g. for Antiretroviral APIs in Bangladesh, the manufacturers
would need to be sure of their access to several export markets. This barrier is
unlikely to be taken without external support.

2.3 Key Players

Due to the branded generic nature of products, companies are usually able
to charge a premium price, while enjoy stable position. As a result, the top
performing companies in the industry are relatively consistent over the years,
often along with their respective market position. The market leader is Square
pharmaceuticals, which have enjoyed the top position since 1985. At present, it
has a 19.19% market share. The next player is Incepta, followed by Beximco,
Acme, Opsonin, and others. The top 10 firms are almost the same over the
years, often with little change in order.

2.4 Intra industry Business Practices

Pharmaceutical is an emergency product, and its demand is not akin to
other products. Not only consumers show inelastic demand, but also the demand
is more driven by doctors prescription and product availability compared to end
customers demand. Furthermore, brand loyalty is quite common. Thus, success
in this market requires competitor firms to strive for higher share in prescriptions
as well as higher product availability in pharmacies.
For this, firms engage in several product promotion strategy, including
aggressive pricing, credit policy and establishing relationships with doctors,
hospitals and pharmacies.
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The common business strategy is to employ medical representatives to

establish these relationships. Success is usually measured in terms of
prescription share (often termed as Rx share), which demonstrates how much of
pharmaceuticals product demand goes to a certain producer and is an indicator
of future market share.
And for increased product availability, firms often engage in aggressive
marketing, particularly for products in the low end. The strategy is reflected in
providing products at a lower price than competitors, and providing a more
relaxed credit policy. The industry on an average has a collection period of
approximately 30 days.
Alongside, Bangladesh pharmaceutical industry is more retail oriented and
thus, mass distribution is done by the companies themselves through their own
warehouses to retailers and wholesalers. Wholesalers usually have a limited role
in marketing of such products.

2.5 CSR
It would be motivating to derive a meaning of the concept with the
dissection of each of the words. CSR is not a difficult concept and can be
explained as:
Corporate - means organized business.
Social - means everything dealing with people, the society at large.
Responsibility - means accountability between the two.
Some people define CSR as meaning open and transparent business
practices that are based on ethical values and respect for employees,
communities and the environment. It is designed to deliver sustainable value to
the society at large as well as to the shareholders. Now, there is no single,
commonly accepted definition of CSR, even across global corporate bodies. It
refers to business decision making linked to ethical values, compliance with legal
requirements, and respect for people, communities and their environments. CSR
is seen as more than a collection of discrete practices and occasional gestures or
initiatives motivated by marketing, public relations or other business benefits.
Rather, it is viewed as a comprehensive set of policies, practices and programs
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that are integrated throughout business operations and decision-making

processes.
Corporate Social Responsibility (CSR) is a reality of recent decades. CSR
is the continuing commitment of business to behave ethically and contribute to
economic development while improving the quality of life of the workforce and
their family as well as of the local community and society at large. Business owes
its responsibilities towards society; first as a result of the impact of its own
operations and secondly, as the unit of the society in which it operates. The
former is related to what the organization does to the society by way of its
specific operations, whereas the latter deals with what the society demands from
it.
Accordingly, CSR needs to be:
(i)
More inwards than outwards
(ii)
More related to the character and culture of the corporate rather than its
size or profitability
(iii)
More related to making and distributing profits and sustainability
(iv)
More business process oriented than philanthropic
(v)
Focused on day to day activities by every employee of the organization
rather than limited to the typical presence of key individuals in the
company along with the various social partners of the corporate. CSR
appears in many forms some are directly related to employees and their
families whereas some others point towards outside workplace without
any connection to its employees. It takes various forms such as:

Corporate Philanthropy
Corporate Support Sponsorships
Corporate Partnerships
Responding in Emergency

CSR also refers to business decision making linked to ethical values,

compliance with legal requirements and respect for people, communities and the
environment. It is a comprehensive set of policies, practices and programs that
are integrated throughout business operations and decision-making processes
that are supported and rewarded by the top management.

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The World Business Council for Sustainable Development in its publication

Making Good Business Sense by Lord Holme and Richard Watts, used the
following definition for CSR. 'Corporate Social Responsibility is the continuing
commitment by business to behave ethically and contribute to economic
development while improving the quality of life of the workforce and their families
as well as of the local community and society. For instance, CSR is a voluntary
decision taken by corporations, it is integrated into the strategic model of
business in the form a self regulating mechanism that lets them monitor and
ensure their adherence to ethical standards, law and international norms.
Fundamentally, CSR is governed by the Triple Bottom Line (TBL) i.e.
People, Planet, and Profit. By incorporating CSR policies, businesses embrace
their responsibility towards the environment, consumers, employees,
stakeholders, suppliers, communities and the other members of the community,
and contribute to their social obligations by promoting and encouraging
community development and eliminating the practices that harm it.
However, the scope of CSR in corporate board rooms to be management
ranks have pervaded and continue to gain momentum (Hill, 2006 cited Belal
2008). It is also recognized as Corporate Responsibility, Corporate Citizenship,
Responsible Business, or Social Action Program, Sustainable Responsible
Business (SRB), Corporate Social Performance or Corporate Sustainability and
Responsibility. It is gratifying more and more vital initiative of businesses both
nationally and internationally. Proponents argue that corporations make more
long term profits by operating with a perspective.
Though various definitions have been attached to the term, it can be stated
that CSR, in its broadest sense, delineates the relationship between business
and society and the role of business in sustainable development. The
fundamental idea behind CSR is that a corporation or company incurs
responsibilities to society beyond maximization of profit and beyond meeting the
minimal requirement of the law. CSR also has numerous facets. Corporations are
overwhelmed by many issues in the name of CSR: stakeholder demands,
environmental issues, issues of sustainability, diversity, labor conditions, ethical
investment, and philanthropy among others. Clearly, there is no one agreed
concept. An important distinction should be made, however, between internal and
external CSR practices.
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Internal CSR refers to programs that focus on the core business and on
the workforce, such as:
Human Resources (HR) practices
Health, Safety and Environmental ( HSE) practices
Codes of Conduct
Fulfilling and Motivating Work Environment
Employee Development Programs
Local Content Policies
Assessing and Increasing the Social and Environmental Impact
of a Company
Environmental Management Systems ( EMS)
Product Responsibility

External CSR refers to social and environmental programmes directed

towards the external environment, including:

Community development programmes

Sponsorships corporate SOCIAL responsibility
Donations
Contributions to Civil Society Organizations ( CCSO)
Educational programmes at various levels
Supply -chain management
Cluster development
Involvement in the development debate

External CSR should be also distinguished from philanthropy and Public

Relations (pr)/Marketing. Unlike philanthropy, CSR is "an investment from which
companies should expect tangible returns and positive impact on their net
profits". In contrast, philanthropy relates to donations or charitable giving from
which companies do not necessarily expect any direct positive impacts on their
business activities.

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On the other hand, CSR differs from pr/Marketing, since it focuses on

those areas where there is an overlapping of social and economic benefits, while
marketing does not focus on any specific social benefits, but only on those
activities that can provide a monetary return for the company.

2.6 Regulatory Framework

However, regulation of CSR is very limited in Bangladesh and even more
limited in the pharmaceuticals industry because of the lack of scientific and
professional specialist. Anyway, The Directorate General of Drug Administration
(DGDA) under the Ministry of Health & Family Welfare is the drug regulatory
authority of the country.

2.6.1 Regional Activities

DGDA supervises and implements all prevailing drug regulations in the
country and regulates all activities related to import, procurement of raw and
packing materials, production and import of finished drugs, export, sale, and
pricing of all kinds of medicine. DGDA has 37 offices in 36 districts, including
the head office located in Dhaka. There are two drug testing laboratories
under DGDAone in Dhaka and the other in Chittagong.

2.6.2 Quality Controlling

Despite extensive rules, the pharmaceutical market remains under
regulated due to lack of capacity of the regulatory authority. The primary
responsibility for drug quality control lies with the manufacturers, and the top
firms have their own quality control mechanisms. However, DGDA has to
ensure the quality, efficacy, and safety of pharmaceutical products though the
implementation of relevant legislation, via its monitoring and supervision
functions. Though the DGDA was upgraded from department to directorate
general status after the adoption of the revised NDP 2005, it continues to
suffer from funding, staffing, and technical competence constraints.

2.6.3Regulatory Manpower
The DGDA is severely understaffed, given the rapidly growing
pharmaceutical market, large number of registered products, and large
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population size (USAID and SIAPS 2013), and standards enforcement

suffers. In 2012, there were 370 personnel vacancies at different levels and
only 146 people working in the DGDA, 52 of which were at officer level
(DGDA 2012). The World Health Organization (WHO) promotes current good
manufacturing practice (cGMP) regulations for high-quality production of
medicines in developing countries and the NDP 2005 seeks to enforce it. The
responsibility of assessing cGMP compliance lies with DGDA. With limited
human resources, and staff not sufficiently trained in recent developments in
quality control, compliance is difficult to test and enforce. Local inspectors
have been found to be less stringent compared to international inspectors,
and DGDA has issued some questionable cGMP certifications. To overcome
this issue, some pharmaceuticals firms are adhering to different
manufacturing quality standards like the Therapeutic Goods Administration of
Australia, the United Kingdoms Medicines and Healthcare Products
Regulatory Agency; others firms are operating below cGMP standards. This is
preventing the use of a harmonized global standard in drug regulation.

2.6.3 Scientific Testing

The drug-testing laboratories have insufficient capacity. Testing of drugs is
required for evaluating preregistration and post marketed drugs and
medicines quality. The two laboratories under DGDA have extremely limited
capacity with inadequate staffing and equipment. According to the UNCTAD
(2011) study, there are three technical staff members in the Chittagong
Laboratory and eight in the Dhaka Laboratory. There is neither a central
reference laboratory nor any independent contract research organizations in
the country. Companies that export to international markets have their
products tested and certified in established laboratories in other countries.

2.6.4 Infrastructural Support

Infrastructure support for the regulatory body is insufficient. For example,
the DGDA does not have its own office building in Dhaka. District offices are
rented and logistical support for district-level staff is inadequate. Proper office
facilities like Internet connections and computers are also lacking (DGDA
2012). There is no electronic system to maintain an updated register. The
DGDA does not have a specialized lawyer to handle the legal aspects of
violations of standards and regulations. Such drawbacks have led to an
ineffective supervisory system, in which substandard or lack of medicines and
commodities have become a part of the health system.

Page 20 of

2.6.5 Administration of the Regulatory System

The DGDAs effectiveness is further constrained by complexities of multiple

administrative bodies and committees involved in the relevant regulatory
processes. The recommendation for registration of drugs by the DGDA comes
from the Drug Control Committee. The National Drug Advisory Council
advises on implementation of the NDP and the promotion of local
pharmaceutical industries. There is also a Pricing Committee (which approves
pricing decisions on medicaments) and a Standing Committee for
Procurement and Import of Raw Materials and Finished Drugs (GTZ 2007).
Adding to this structure, the National Research Ethics Committee is
responsible for reviewing all clinical trials of medicinal substances and advises
the DGDA to ensure that the drugs available in the country fulfill the
necessary requirements for safety, quality, and efficacy. There is a clear public
health need for this governance structure to be reconciled with the changes
introduced since 2005 (UNCTAD 2012).

2.6.6 Drug Formulation or Generation Testing

The industry does not have any bioequivalence testing facility which is
mandatory for product registration in developed markets. For a generic final
formulation to be approved for import into a regulated market and some
moderately regulated markets, the drug needs to be tested for bioequivalence
that is, comparability studies on healthy volunteers between the brand and
generic drugs. Bangladeshi firms who want to export have to send drug
samples to an internationally recognized bioequivalence laboratory abroad,
which costs around US$50,000US$60,000 per sample. This increases costs
and makes exports less competitive. In addition, stringent regulations on
sending foreign currency abroad further complicate the process.

Page 21 of 353.

Company Profile

3.1 Advanced Chemical Industries (ACI) Limited

In 1973, the UK based multinational pharmaceutical company, ICI plc,
established a subsidiary in Dhaka, known as ICI Bangladesh Manufacturers
Limited. In 1992, ICI plc divested its share to local management, and the
company was renamed Advanced Chemical Industries (ACI) Limited.

ACI formulates and markets a comprehensive range of more than 387

products covering all major therapeutic areas, which come in tablet, capsule,
powder, liquid, cream, ointment, gel ,ophthalmic and injection forms. ACI also
markets world-renowned branded pharmaceutical products like Arimidex,
Casodex, Zoladex, Atarax etc. from world-class multinational companies like
ASTRAZENECA, UK and UCB, BELGIUM in Bangladesh.
ACI is actively engaged in introducing newer molecules and Novel Drug
Delivery Systems (NDDS) to meet the needs of the future.
ACI introduced the concept of quality management system by being the
first company in Bangladesh to achieve ISO 9001 certification in 1995 and
follows the policy of continuous improvement in all its operations.
Aligned with the concept that a pharmaceuticals company must ensure
effective management of environment, ACI complies with standard environment
management policy, thus adorned with EMS 14001 in 2000.
ACI maintains a congenial and supportive relationship with the healthcare
community of Bangladesh, with the belief that business excellence can only be

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achieved through pursuit of quality by understanding, accepting, meeting and

exceeding customer expectations.

3.2 Square Pharmaceuticals Limited Bangladesh

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 has extended its range of services

towards the highway of global market. It pioneered exports of medicines from
Bangladesh in 1987 and has been exporting antibiotics and other pharmaceutical
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products. This extension in business and services has manifested the credibility
of Square Pharmaceuticals Limited.

3.3 Beximco Phar maceuticals Limited

Beximco Pharmace uticals Ltd. (BPL or the Company ), the leading
Bangladeshi pharmaceutic al manufacturer and exporter, is please d to announce
that it has received app roval (GMP Clearance) from Therapeutic Goods
Administration (TGA), Australia for its new Oral Solid Dosage (Ta blet, Capsule),
and the Metered Dose Inha ler and Spray manufacturing facilities. BPL is the first
Bangladeshi company to r eceive this regulatory approval from T GA, Australia
through a stringent facility a udit process.
With an overall pharmaceutical market of around US 10 billion dollars, Australia
is one of the richest pharm aceutical markets in the Asia-Pacific region and the
13th largest in the world. Its per capita spending on medicines is equivalent to
top ranking European cou ntries. Australia has a highly advanced healthcare
system and has a substantial demand for all types of pharmaceuticals.

Australia is also one of the most highly regulated pharmaceutical markets

in the world. The Therap eutic Goods Administration (TGA), a division of the
Australian Department of H ealth and Ageing, is the regulatory bo dy responsible
for conducting assessmen t and monitoring activities to ensure th at therapeutic
goods (including medicin es, medical devices, gene technology, and blood
products) available in Australia are of high standard. Under Mutual Recognition
Agreements (MRA), TGAs Certificates of GMP Compliance are recognized by
over 20 developed countries including Austria, Belgium, Canada, Denmark,

Page 24 of 35

France, Germany, Ireland, Italy, Netherlands, Norway, Spain, Sweden,

Switzerland and the UK.

Beximco Pharma CEO Mr. Nazmul Hassan said:In our long history of more
than 25 years, Beximco Pharma has always been the leader and the flagship of the
Bangladesh pharmaceutical industry by setting new trends and exploring new horizons of
export opportunities. In achieving GMP Clearance from a globally recognized regulatory
authority like TGA Australia, BPL has crossed a very important milestone in its journey
to become a global pharmaceutical company. This TGA approval puts Beximco Pharma
in an elite group of manufacturers world-wide who have passed the rigorous quality
standards of the Australian government, enabling the Company to manufacture and
export medicines to Australia and numerous other countries in the developed world
which recognize the standard.

3.4 GlaxoSmithKline(GSK)
GSK Bangladeshs portfolio includes both pharmaceutical products and
consumer products. The pharmaceutical side includes prescription medicines,
vaccines and non prescription medicines. Our prescription medicines range
across therapeutic areas such as anti-bacterial, respiratory, dermatology,
oncology, gastro- intestinal, cardiovascular and other diseases. The company is
the market leader in most of the therapeutic categories in which it operates. We
offer a range of vaccines, for the prevention of hepatitis A, hepatitis B, invasive
Page 25 of 35

disease caused by H, influenza, chickenpox, diphtheria, pertussis, tetanus and

others.

In Bangladesh, GSK's consumer brands are the major players in the health
food drink category. The powerful portfolio includes Horlicks, Boost, Maltova and
Viva which owns an enviable market share of 85%. Among them, Horlicks, a
trusted & heritage brand, enjoys 76% market share. Horlicks which has been relaunched in 2008, following intense market research and product development
activities, with an improved formulation is clinically tested to make children
Taller, Sharper & Stronger".

3.5 Renata Limited

The company started its operations as a subsidiary of Pfizer Limited in
1972. For the next two decades it continued as a highly successful subsidiary of
Pfizer Corporation. However, by the late 1990s the focus of Pfizer had shifted
from formulations to research. In accordance with this transformation, Pfizer
divested its interests in many countries, including Bangladesh. In 1993 Pfizer
transferred the ownership of its Bangladesh operations to local shareholders, and
the name of the company was changed to Renata Limited.

Page 26 of 35

Renata Limited is a Public Limited Company that manufactures and

markets human pharmaceuticals as well as animal therapeutics. It is listed in top
ten pharmaceutical companies in Bangladesh. Renata Limited has International
Presence in: UK, Hong Kong, Philippines, Sri Lanka, Vietnam, Belize, Myanmar,
Nepal, Cambodia, Kenya, Jordan, Guyana, Thailand, Afghanistan and Malaysia.
At present, Renata manufactures about 300 generic pharmaceutical products
including hormones, contraceptives, anti-cancer drugs, oral preparations,
cephalosporins, parenteral preparations as well as other conventional drugs. In
addition, they also offer about 95 animal therapeutics and nutrition products.

The Company has eight manufacturing facilities spread over three

manufacturing sites. In addition Renata Oncology Limited has two manufacturing
facilities. Distribution of products is carried out by 19 depots across the country.

4. CSR INDEX CONSTRUCTION AND ANALYSIS

4.1 CSR Index
Page 27 of 35

Year 2013

No. Items to Construct CSR Index

Shareholder Relation:
Increase shareholder value (economic
1 return)
Corporate response on environmental
2 issues
Relationship with local authorities and
3 regulator
4 Good governance practices
Communication with Board of Directors
5 (AGM)
Consumer Relation:
6 Overall customer satisfaction
7 Provide product information & safety
8 Customer commitment & protection
9 Provide follow-up service
Employee Relation :
10 Provide equal opportunity
11 Provide work insurance
12 Provide job evaluation
13 Provide career plan system
14 Provide training and development
15 Provide fair remuneration system
16 Provide retirement plan
17 Relationship with union
18 Provide communication with employees
Provide compensation and reward
19 system
Community Relation:
Provide support for social life of local
20 community
Involve in improving environmental
21 condition
22 Efforts against environmental damage
23 Provide job opportunity for community
24 Philanthropic activities
Low-cost Strategy:
25 Provide low production cost
Provide lower price of product and/or
service
26 than competitors
27 Invest in cost saving technology
Differentiation Strategy:
Provide new service and/or product

Beximc Squa
o re

GSK

Rena

ACI

1
1

1
1

1
1

1
1

1
1
1
0

1
1
1
1

1
1
1
1

1
1
0
0

1
1
1
1
1
0
1
1
1

1
0
1
1
0
1
1
0
1

1
1
1
1
1
1
1
0
1

1
1
1
1
1
1
1
0
1

1
0
1
1

1
1
1
1

1
1
1
1

1
1
0
1

0
0

0
0

0
0

0
1

28 development
Offer product and/or service for special
29 need
Offer more quality product and/or
service than
30 competitors

31
32
33
34
35
36
37

Offer highly differentiated product

and/or
service
Value Gain Performance :
Productivity increase (Inventory)
Market share growth
Sale volume increase
Monetary Gain Performance :
Profit margin growth
Return on equity (ROE) growth
Return on asset (ROA) growth
Total Score

1
0
1

1
1
1

0
1
1

1
1
1

Page 28 of 35

1
1
1
1
1
0
1
1
1
1
1
0
78.3783 78.3783 86.4864 78.3783 70.27
8
8
9
8

4.2 Analysis of CSR Index Table

From the above table we find out the Total CSR index of
five companies. The companies are Beximco Pharmaceuticals
Ltd., Square Pharmaceuticals Ltd. GlaxoSmithKline Bangladesh
Limited, ACI Pharmaceuticals Ltd. and Renata Limited.
Beximco Pharmaceuticals Ltd. Total CSR Index score is 78.37838
Square Pharmaceuticals Ltd. total CSR Index score is78.37838
GlaxoSmithKline Bangladesh Limited total CSR Index score is86.48649
ACI Pharmaceuticals Ltd. total CSR Index score is78.37838
RenetaLimited total CSR Index score is70.27027
Average score of the five companies is 78.37838 indicating Industry
Average.

Page 29 of 35

Percentage
100

90
80
70
60
50
40
30
20
10

Percenta
ge

Fig:Graphical representation of five companies CSR Index total score and

average score in percentage.
The CSR index table is basically represented in eight differen t parts, which
are:
1.
2.
3.
4.
5.
6.
7.
8.

Shareholder Relation
Consumer Relation
Employee Relation
Community Relation
Low Cost Strategy
Differentiation Strate gy
Value Gain Performance
Monetary gain performance

4.2.1

Shareholder R elation

Among the five companies onlyRenata Limited fails tofulfillall the

requirement of maintaining the relationship with the shareholder. R enata Limited
fails to fulfill the requirement of corporate response on environmental issues
.Reneta Limited has not ta ken any initiative in the year 2013 on environmental
challenges which is a ver y important issue in todays world. T hough Renata
Limited did respond to o ther issues such as women empow erment, child
education and also got itself associated with other Non Governmental
Organizations.
Page 30 of 35

4.2.2 Consumer Relation

Beximco Pharmaceuticals Ltd, GlaksoSmith Kline Bangladesh Limited and
Square Pharmaceuticals maintains a good relation with the customers. Customer
satisfaction is the key thing in any business. In pharmaceuticals industry it is far
more important than any other industries in the world. Customers are satisfied
with these three companies. They provide adequate product information & safety.
They are committed for the protection of the customers and also provide follow
up services. But Renata Limited and ACI Pharmaceutical Ltd are not committed
in customer protection and they do not have a track record of providing follow up
services.

4.2.3 Employee Relation

One thing is common among the five companies the that they dont have
government registered labor union in their companies to represent them to the
owners. According to the labor law of Bangladesh Government which protects
the right of the labor there must be union of employees in the company so that
they can represent their requirements to the owner of the company. But
unfortunately none of the companies have union for the labor. Renata Limited
also do not have program for training and development. Square Pharmaceuticals
does not provide work insurance for its employees.

4.2.4 Community Relation

Community relation is one of the effective tool for good business practices.
Among the five companies only Renata Limited and ACI Pharmaceuticals Ltd did
not provide job opportunities for the community on the year 2013. Renata Limited
record in case of community relationship is poorer than ACI Pharmaceutical
Limited. Renata Pharmaceuticals Limited did not do anything regarding facing
environment damages and it did not any activities to improve the environmental
condition of the area where it has its factory situated.

Page 31 of 35

4.2.5 Low Cost Strategy

None of the companies follows the low cost strategy in their business
except though ACI also does not provide product in a low price. It is very
important for big pharmaceutical companies in Bangladesh to provide medicines
in low cost for the welfare of the people and also to fulfill the obligation of
corporate social responsibility.

4.2.6 Differentiation Strategy

Differentiation strategy is fully followed by GlaxoSmithKline Bangladesh
Limited and Square Pharmaceuticals Limited though it is not fully followed by ACI
Pharmaceutical Ltd and Renata Limited. Renata Limited provide better quality
product then the competitors in case of Animal Health though it fails to provide
Offer highly differentiated product and service and ACI Pharmaceutical neither
does provide better quality product then the competitors nor does it offer highly
differentiated product and services.

4.2.7 Value Gain Performance

5 companies provide good value gain performance. Productivity, sales
volume and market share growth in the year 2013 has been good.

4.2.8 Monetary Gain Performance

In case of ACI Pharmaceuticals return on asset and in case of square
return on equity was not possible in the year 2013. Other companies did good
monetary gain performance.

Page 32 of 35

5. Findings and Policy Implications

From the corporate social responsibility point of view the findings of the
CSR Index analysis suggests that only one company is below the average of the
five companies that is Renata Limited. Total CSR Index score of Renata Limited
is 70.27027. Other four companies Beximco Pharmaceutical Ltd, Square
Pharmaceutical Ltd, ACI Pharmaceutical Ltd and GlaxoSmithKline Bangladesh
Limited scores 78.37838, 78.37838, 86.48649, 78.37838 respectively which are
in the CSR Index table are equal or higher to the average scores. Average score
is 78.37838. From the Corporate Social Responsibility point of view Renata
Limiteds performance is the worst among the five companies we considered
here. If we look from the business point of view and we see that Renata Limited
makes the lowest profit among the five companies. So we can conclude in this
case that business and corporate social responsibility is complementary. To make
profit in pharmaceutical industry the business organizations in this field need to
fulfill its corporate social responsibility and the more it does the more people will
be interested in buying its products.

We found that policies implied in 2013 among the five companies have
commonalities regarding shareholder relation and employee relation. From the
shareholder relation point of view the company plays a very committing role in
the betterment of the relationship with its shareholders. Five Companies focus on
increasing the shareholders wealth and that can only be ensured by making
profit. So the companys main goal is to focus on making the business profitable.
On the other hand we see that another common issue among the companies is
employee relation. Five companies do not have an union for the employees. This
shows that the companies are reluctant in the welfare of its employees but is
eagerly interested in the welfare of its shareholders. But the companies do have
an option to move on a direction where it can make profit for the shareholders
and at the same time can ensure employees welfare. Because employees are
the people who runs a company. So if the employees are happy and well treated
then the business will be more efficient and will make more profitand also in our
country labor law gives the right to the employees of an organization to have an

Page 33 of 35

union to represent their requirements. So the betterment in case of employee

relation is something these five companies should focus on.
It is important to realize that CSR, if managed in a good way, can definitely
lead to the welfare of the firm and social welfare at the same time. Although
corporate social responsibility has become very popular these days, there still is
a need for common approach to implement it into business strategy. There has to
be more than one isolated part on CSR in the annual report and it should be
integrated as a golden thread throughout the business strategy.

6. Conclusion
The conclusion of this study is that Corporate Social Responsibility (CSR)
is the continuing commitment by business to behave ethically and contribute to
economic development while improving the quality of life of the workforce and
their families as well as of the local community and society at large. On the Basis
of the study, it shows that the local pharmaceuticals companies conduct
transparent business operations based on market mechanism within the legal,
ethical & social framework with aims to attain the mission reflected by their
vision. In this chapter we discussed different view on CSR considered the
interests of their external & internal stakeholders like customers, employees,
vendors, shareholders, society, government etc. and ecological & ethical
considerations in all aspects of operations.Despite being one of the Worlds
poorest countries, CSR actions in Bangladesh have risen significantly in
importance. As countries like Bangladesh are increasingly exposed to global
standards, it is anticipated that the growth of CSR will continue though the process is
slow & only in its infancy. From a different view of standpoint, CSR is also becoming
attractive to Bangladeshi Pharmaceuticals companies for strategic reasons.

Pharmaceuticals industry uses their CSR records to create the image of socially
responsible firms and thereby influence consumer buying decisions in favor of
the goods and services marketed by them.The primary and most important
benefit from implementing CSR mechanism is likely to be felt at the national level
with an improved global perception of pharmaceuticals business procedures
including improved ethical business practices which could lead to a process of
revitalization of the Bangladeshi economy.

Page 34 of 35

Refferences:
1.

Annual Report 2013. ACI Pharmaceuticals Limited

2. Annual Report 2013. Beximco Pharmaceuticals Limited.

3. Annual Report 2013. GlaxoSmithKline Bangladesh Limited.
4. Annual Report 2013. Square Pharmaceuticals Limited.
5. Annual Report 2013. Renata Pharmaceuticals Limited.
6. Chowdhury, P. M. (2010). An Overview of the Pharmaceutical Sector in Bangladesh.
BRAC EPL Stock Brokerage Limited.
7. Habib, M. A., Alam, M. Z. (2011). Business Analysis of Pharmaceutical Firms in
Bangladesh: Problems and Prospects. Journal of Business and Technology (Dhaka), Vol.
06, No. 01.
8. Porag, R. S. (2014). Corporate Social Responsibility in Bangladesh. Safety and Rights
Society, Dhaka.
9. Management and Marketing Practices and Problems of Pharmaceuticals Industry in
Bangladesh, An Internship Report of BRAC Business School.
10. Shawon, S. A. (2011). Pharmaceutical Industry of Bangladesh. IDLC Finance Limited
Publication.
11. World Bank (2013). Bangladesh: Diagnostic Trade Integration Study, Vol. 3: Sector
Studies. World Bank, Washington D.C.
12. www.aci-bd.com, Accessed On: April 10, 2015
13. www.beximco-pharma.com, Accessed On: April 10, 2015
14. www.gsk.com.bd, Accessed On: April 10, 2015
15. squarepharma.com.bd, Accessed On: April 11, 2015
16. renata-ltd.com, Accessed On: April 12, 2015

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