Falling sales fling pharma sector in the red

The country's pharmaceutical sector witnessed a dull third quarter business in 1999 with their cumulative sales showing a negative growth of 3.60 per cent.

According to the retail audit of IMS, a Switzerland-based pharmaceutical sector auditing company which conducts retail and prescription audit globally to prepare its quarterly reports, all the top five pharmaceutical companies recorded slide in their sales during the July to September quarter. These five firms account for 45.27 per cent of the pharmaceutical market.

The report showed that of the next five top-selling companies, only three posted positive growths - two marginally while the other showing robust growth.

The pharmaceutical industry's cumulative business between January to September showed even a grimmer picture with a negative growth of 5.8 per cent.

Giving reasons for such lacklustre growth in sales, AKM Shamsuddin, Managing Director of multinational Rhone Poulenc Rorer Bangladesh, said political turmoil, rampant smuggling of medicines and the prevailing economic downtrend led to sales erosion of the pharmaceutical industry.

"Hartals have hit our marketing system by disrupting the distributing channels," said Shamsuddin. "People doing the medicine business has to be very cautious in their dealings with time. If we cannot reach our drugs on schedule, the market is lost. At the same time, the border areas are flooded with smuggled medicines which has hit our sales.î

The top companies, with their wide product range, went through the worst and experienced the blow of all the negative factors in the face. The smaller firms, however, showed better results because they have a limited array of products and some of them also launched new products, which brought extra sales profits for them."

The industry also complains that tariff anomalies in raw materials are keeping production costs high, which is flinging many units into losses. The surcharge that was imposed on the sector following the 1998 floods has not been withdrawn, which has also overburdened the industries. At the same time, the advance payment of 15 per cent VAT during the opening of letters of credit has increased their working capital requirements.

"As we have to pay the VAT in advance, we are incurring bank interests without even receiving the raw materials. This is an unnecessary burden for us," said Shamsuddin.

According to the IMS report, sales of the top five companies turned negative by 12.18 per cent during January-September, 1999. The next five companies, which account for 19.7 per cent of the market, saw their growth going into the negative by 4.86 per cent. The companies holding the number 11 to number 15 slots underwent the worst beating with their sales dipping by 17.48 per cent in the negative. These five companies control 10.31 per cent of the total market.

However, the number 16 to number 20 firms registered a 12.20 per cent growth. They control only about 6.65 per cent of the market.