Company overview

Renata Limited is a leading and fastest growing pharmaceutical and animal health product company in Bangladesh. Renata is fourth largest pharmaceutical company in Bangladesh and it is the market leader in animal health products. Its field of business is manufacturing, marketing & distribution of human pharmaceuticals, animal health medicines, nutritional, and vaccines. The company is listed in Dhaka Stock Exchange with a market capitalization of over USD 1 billion. The company has started its operations in 1972 as Pfizer Laboratories (Bangladesh) Limited, a subsidiary of Pfizer Corporation, USA.1

Pfizer has transferred the ownership of the company to Bangladeshi shareholders in 1993 and the company’s name was changed to Renata Limited. It has ten manufacturing facilities in three manufacturing sites. There are 19 depots across the country for distribution of its products. The company exports to Core values of the company are as follows –

  • Focus on long-term growth
  • Structural innovation for sharing growth
  • Going the extra mile for employees
  • Environmental activism
  • Health activism through promoting innovation and partnerships

The company is headquartered at Mirpur-7, Dhaka, Bangladesh. It has three subsidiaries – Renata Agro Industries Limited, Purnava Limited, and Renata Oncology Limited. There are three production sites of the company – Mirpur-7 site, Dhaka, Rajendrapur site, Gazipur, Bhaluka site, Mymensingh.

The company produces some general products for UNICEF (United Nations Children’s Fund) and SMC (Social Marketing Company). The company has issued received Certificate of GMP Compliance of a Manufacturer from Medicines and Healthcare products Regulatory Agency (MHRA), UK. The company holds 99.99% shares of both Renata Agro Industries Limited and Purnava Limited; and it holds 100% shares of Renata (UK) Limited and Renata Pharmaceuticals (Ireland) Limited. The company transacts with/through the following bankers –

  • Agrani Bank Limited
  • Bangladesh Commerce Bank Limited
  • Bank Asia Limited
  • Brac Bank Limited
  • Commercial Bank of Ceylon
  • Citibank, N.A.
  • Eastern Bank Limited
  • Standard Chartered Bank
  • Sonali Bank Limited
  • The City Bank Limited
  • United Commercial Bank Limited

Auditor of Renata Limited is ACNABIN, Chartered Accountants. Legal advisors of the company are Dr. M. Zahir and Associates, Vertex Chambers, Hoque & Associates.

Mission of Renata is to provide maximum value to the customers and communities where we live and work; and vision is the establish Renata permanently among the best of innovative branded generic companies. The company is rated AAA by credit rating agencies.

Renata has introduced total 18 new formulations in the year 2019-20. The company has made a capital expenditure of BDT 2.5 billion in the same financial year. The investments were made from internally generated cash from retained earnings, and bank loans. The strategy of the company is to retain enough earnings and cash for future development and sustaining the proper growth rate. However, during FY20, the company has declared BDT 13 cash dividend per share (10 par value each), and stock dividend in the ratio 1:10. The cash dividend will result into a disbursement of BDT 1.15 billion and stock dividend will result into a transfer of BDT 88.59 million to share capital account. The company has contributed BDT 5.5 billion to national exchequer in 2019-20.

Industry overview

The pharmaceuticals industry in Bangladesh was once dependent heavily on imports and multinational companies. But now the industry is growing very fast to meet 98% of the domestic demand. The remaining 2% are specialized imports like vaccines, hormone drugs, anti-cancer products and so on. The industry is also exporting to different parts of the world and posting a growth rate of 27% per year in export earnings. In 2018, the industry stood at BDT 205 billion in terms of market size with a compound annual growth rate of 15.6% for the last five years. The industry is expected to grow at a rate of 15% per year to reach $5.11 billion by 2023.

industry overview

The industry in Bangladesh has found its strengths in the 80s. Over the past 4 decades, the industry has grown to a billion-dollar industry by developing thousands generic drugs and producing other thousands patented drugs. The drugs produced in the country are divided into two parts – 80% are generic, 20% are patented drugs. Different lines of drugs are being produced in the country including Allopathic, Homeopathic, Unani, Ayurvedic, and Herbal.

types of medicines being produced in Bangladesh

Key growth drivers of the industry

Bangladesh has posted stellar economic growths in the past years until the covid-19 pandemic has come and caused a slip in the GDP growth rate. The country has achieved a growth rate of 7.28% in FY17 and 7.86%, 8.15%, 3.51% in the following financial years. According to Bangladesh Bureau of Statistics (BBS), provisional estimate of GDP for the country in FY21 is 5.47%. The country is experiencing a population growth rate of 1% every year. Per capita income of the country stands at $2,227 in FY21, an increase of $203 from previous fiscal year. Consumption expenditure of the country in FY21 is 75.83% of GDP. Domestic savings increased in FY21 to 24.17% of GDP from 23.77% of GDP a year earlier. Public and private investment together combines to 7.95% of GDP.2 Higher economic growth, increase in disposable income, population growth rate, and changes in pattern of disease are the key drivers for pharmaceuticals industry in Bangladesh. People are also becoming more aware about the facilities they can receive through the pharmaceuticals industry in the country. Apart from that changed life style, improved life expectancy, health awareness, and modern healthcare facilities cause drive in the pharmaceuticals industry.

key growth drivers of pharma industry

Porter’s five forces analysis

Porter’s five forces is a model developed by Michael E. Porter of Harvard University in 1979. The model assesses the competitiveness of an industry and the profitability of the companies given the competition.

Threat of new entrant in this industry is lower because a new aspirant in the industry will need huge capital investment and many regulatory permissions in order to start producing drugs. The brand loyalty of the customers is another factor contributing to the barrier of entry.

Threat of substitute products at industry level is low because the companies produce all types of drugs such as allopathic, homeopathic, unani, ayurvedic, and harbal. So, to cure a disease when prescribed a medicine, the consumers will have to come to the industry. But at a company-level, the threat of substitute products is high.

Bargaining power of the buyers is very low in the industry. The patients need to depend on the prescribed products by the doctors and they cannot but buy the drugs at a price setup by the pharmaceutical companies. However, the government has regulations regarding prices of different lifesaving drugs. But those are often not up to the mark for compliance.

Bargaining power of the suppliers is very high. Bangladesh imports over 90% raw materials for pharmaceutical industry worth Tk 47 billion.3 This makes the bargaining power of the suppliers high and the companies also remain vulnerable to external shocks. Oftentimes, the price of the drugs in the industry fluctuates due to high import costs. However, Bangladesh has laid the foundation to manufacture at least half the raw materials inside the country. Active Pharmaceutical Ingredients (API) Industrial Park is being constructed in Gazaria, Munshiganj.

Rivalry among the top players in the industry is very high. About 68% of the market is controlled by top 10 companies. For a generic medicine class all the companies have a brand which competes against each other in the market.

Business Overview

Renata Limited is a pharmaceutical company in Bangladesh which mainly produces human pharmaceutical products and animal health products. The production of the company includes 419 total brands and 237 generics. It holds 5.27% of the total pharmaceuticals market in Bangladesh.

The business of the company has generated revenue of Tk 27.67 billion in the financial year 2019-20, which was Tk 2 billion lower in the previous year. Renata has earned EBITDA of Tk 7.13 billion in the same year which resulted into profit after taxation of Tk 4.10 billion. From that profit, the company has declared Tk 1.24 billion (payout ratio is 30.03%). The earning per share (EPS) of the company in FY20 is Tk 46.62 which was Tk 43.16 in the previous year. The P/E ratio of the company has come down owing to the increased earnings in the year. P/E ratio in FY20 is 22.01, which was 22.77 a year earlier. Company’s net asset value (NAV) per share is Tk 243.14 in FY20, which was 206.40 a year earlier. All the financial indicators of the company have been trending upward for the last five years. Turnover, gross profit, and net profit are trending upward for that period. The company’s asset base is strong with Tk 13.66 billion property, plant & equipment, and Tk 63 million investment in non-current assets.  The company employs 7,710 employees as of FY20.

  1. ^ Annual Report 2019-20, p.1, https://renata-ltd.com/wp-content/uploads/2020/11/Renata-Annual-Report-2019-2020.pdf
  2. ^ https://mof.portal.gov.bd/sites/default/files/files/mof.portal.gov.bd/page/f2d8fabb_29c1_423a_9d37_cdb500260002/10.%20Chapter-01%20Eng%20Eng-21.pdf
  3. ^ https://thefinancialexpress.com.bd/views/api-park-to-boost-export-of-medicines-1594485666
Tags: BD:RENATA
Created by MD. TOUHIDUL ISLAM on 2021/10/11 04:07
     

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