GlaxoSmithKline Bangladesh bounced back to profitability last year thanks to streamlining its business the previous year.
The British multinational shuttered its 60-year-old pharmaceuticals business in Bangladesh in 2018. The pharmaceuticals unit, based in Chattogram, was incurring losses in the previous five years, much to the concern of the GSK Bangladesh board.
With the view to preventing any more losses, the board decided to bring down the curtains on the business.
"The higher profit proves that the shuttering of the pharma business was the right decision," said Masud Khan, chairman of GSK Bangladesh.
In 2018, there were significant costs incurred for the factory closure in the form of severance payment to employees and so on, due to which the company recorded losses, he said.
In 2019, the impact of discontinued business was minimal. And there were some cost-saving activities too, according to the company's posting on the Dhaka Stock Exchange website.
"So this year we booked higher profits," Khan added.
GSK's earnings per share (EPS) went up to Tk 81.83, up from Tk 52.75 in the negative in 2018.
The news of high profits sent the company's stocks up 1.23 per cent to Tk 1,867 yesterday. GSK made its debut on the DSE in 1976.
"The pharma unit was a money guzzler," said a top official of the company preferring anonymity as he is not authorised to speak with the media.
Now, shareholders are reaping the benefits of the decision, he added.
On the basis of the last year's profit GSK Bangladesh recommended 530 per cent cash dividend for its general investors. Some 18 per cent of the company's shares are with the public.
The British company took another monumental decision in 2018: on December 3, 2018, Unilever announced purchase of 82 per cent stakes of GSK's health food and drinks business in Bangladesh for Tk 1,640 crore, as part of the Anglo-Dutch company's push to cash in on Asia's fast-growing economies.
It is also purchasing GSK's entire health food and drinks portfolio in India as well as in 20 other Asian countries for 3.3 billion euros (about $3.74 billion), after it fought off competition from rivals Nestle and Coca-Cola.
The transaction is yet to be completed, Khan said.