Pharmas rake in higher profits

Listed drug makers booked an 18 per cent growth in profit in the first nine months of the current fiscal year thanks to a decrease in marketing costs amidst the coronavirus pandemic.

The figures and associated data were compiled by Prime Finance Asset Management Company, analysing 13 pharmaceuticals companies. ACI and Orion Pharmaceuticals were excluded as they are yet to disclose their earnings.

The total profit of the listed medicine-makers rose to Tk 2,168 crore. Among them, the profits of eight rose. One of them was Beacon Pharmaceuticals, whose profit surged five times to Tk 75 crore.

"Operational excellence in productivity is the main reason for the higher growth in profits of drug makers," said Muhammad Zahangir Alam, chief financial officer of Square Pharmaceuticals. The company's profits rose around 11 per cent to Tk 1,163 crore.

Elaborating, he said administrative costs fell during the period. "Due to the pandemic, our communication cost declined along with promotional expenditure," he added.

Md Jubayer Alam, company secretary of Renata, echoed the same, saying higher profits mainly came from lower marketing costs.

Renata's profits rose to Tk 363 crore this year, whereas it was Tk 305 crore last year.

This year company representatives went on fewer visits to meet doctors, so the marketing costs were also lower, he said.

However, sales growth of the drug maker was relatively lower compared to previous years, Jubayer Alam said, adding that most of companies' sales growth was 5 to 6 per cent this year which was much higher a year earlier.

"This is because many doctors refrained from private practices due to the contagion, and people were reluctant to go to clinics and hospitals for treatment."

The export slowed a little bit this year, but it will surge in the coming months as the second wave of the pandemic is easing out, he hoped.

Responding to a question, Alam said Renata did not raise the price of the medicines during the pandemic.

"From a stock market viewpoint, pharmaceuticals were a preferable sector for institutional investors," said Mir Ariful Islam, head of research and portfolio management of Prime Finance Asset Management Company.

"Medicines are a necessary product, so it was expected that they would fare better in any situation."

Though sales were low for most for many reasons, the sector generated the highest hopes. Institutional investors believe that the sector would be able to sustain its performance even if the market took a plunge, he added.

Among the listed drug makers and chemical companies, Renata closed 0.01 per cent higher on the Dhaka Stock Exchange yesterday. 

Square Pharmaceuticals declined 0.23 per cent, Beximco Pharmaceuticals dropped 2.63 per cent, Ibn Sina Pharmaceutical was down 1.27 per cent, Acme Laboratories shed 0.98 per cent, Beacon slipped 0.71 per cent, and Reckitt Benckiser went down 0.15 per cent.