Valuation of Square Pharma
Company Background
Square Pharmaceuticals Limited has been a household name in Bangladesh since 1958 when it started its operations as a partnership, getting incorporated in 1964 and finally getting listed at the stock exchange in 1995. The company has been in the leading front of innovation, and continues to introduce new and better medicines in the market every year. Today the 97% of the demands for medicine in the domestic market is catered to by the local pharmaceuticals company and Square Pharmaceuticals limited has captured a significant portion of this market.
The company has been growing consistently for over the years, and their growth has exceeded the growth of the industry growth at times.
|Years |1999 |
|Square Pharmaceuticals Limited |20.06 |
|Incepta Pharmaceuticals Limited |7.53 |
|Beximco Pharmaceuticals Limited |7.09 |
|The Acme Laboratories Limited |5.25 |
|Eskayef Pharmaceuticals Limited |4.64 |
|ACI Limited |4.52 |
|Opsonin Chemical Industries Limited |4.30 |
|Renata Limited |4.22 |
|Aristopharma Limited |4.18 |
|Drug International Limited |3.39 |
[pic]
Source: IMS fourth quarter, 2008
The market is oligopolistic in nature and is thus dominated by high levels of entry and exit barriers, considering the first mover advantage already achieved by the dominating firms in the form of economies of scale. Besides this, entry into this market also requires heavy capital expenditure which is also translated into exit barriers, in the form of high sunk cost. Additionally, government rules pertaining to the industry to maintain standards also acts as a form of entry barriers. Even though the products of the firms are comparable in nature because of
Square Pharmaceuticals Limited has been a household name in Bangladesh since 1958 when it started its operations as a partnership, getting incorporated in 1964 and finally getting listed at the stock exchange in 1995. The company has been in the leading front of innovation, and continues to introduce new and better medicines in the market every year. Today the 97% of the demands for medicine in the domestic market is catered to by the local pharmaceuticals company and Square Pharmaceuticals limited has captured a significant portion of this market.
The company has been growing consistently for over the years, and their growth has exceeded the growth of the industry growth at times.
|Years |1999 |
|Square Pharmaceuticals Limited |20.06 |
|Incepta Pharmaceuticals Limited |7.53 |
|Beximco Pharmaceuticals Limited |7.09 |
|The Acme Laboratories Limited |5.25 |
|Eskayef Pharmaceuticals Limited |4.64 |
|ACI Limited |4.52 |
|Opsonin Chemical Industries Limited |4.30 |
|Renata Limited |4.22 |
|Aristopharma Limited |4.18 |
|Drug International Limited |3.39 |
[pic]
Source: IMS fourth quarter, 2008
The market is oligopolistic in nature and is thus dominated by high levels of entry and exit barriers, considering the first mover advantage already achieved by the dominating firms in the form of economies of scale. Besides this, entry into this market also requires heavy capital expenditure which is also translated into exit barriers, in the form of high sunk cost. Additionally, government rules pertaining to the industry to maintain standards also acts as a form of entry barriers. Even though the products of the firms are comparable in nature because of