For a company that comes from what is certainly a frontier market, Bangladesh-based Beximco Pharmaceuticals has grown on an impressive scale both in terms of its global operations and the size of its business. One of the first Bangladeshi companies to expand abroad, its total assets grew about 10% in 2010, with revenue and gross profits also up substantially.

The company’s managing director Nazmul Hassan, who is a member of parliament and also the son of the country’s president, was in London recently accompanying Bangladesh’s prime minister Sheik Hasina on a state visit to the UK.

Mr Hassan says he is convinced that the good times will continue for his company after surviving the global economic crisis relatively unscathed. If anything, the real crisis for his company came during the 2007 military coup in Bangladesh, which caused a great deal of chaos and landed several of the company's officials in prison. But since the restoration of civilian rule, the situation has largely stabilised. The government’s investigation into the company found no evidence of foul play and his staff were released.

Mr Hassan dismisses Bangladesh’s reputation for corruption as something that takes place predominantly at lower levels. Today he is actively planning for more international expansion, specifically in the Gulf Co-operation Council (GCC) countries, which he sees as excellent markets for his business.

International expansion

Founded in 1976, the company has been manufacturing products of major multinational pharma firms such as Bayer and Upjohn under licensing agreements for more than three decades. Its first foray into foreign markets occurred in 1993, when it began selling to Russia.

At the time, it was a highly speculative gamble. Mr Hassan explains that the company was interested in the post-Soviet market and believed that the collapse of the Communist government there would create a huge demand for healthcare and pharmaceuticals. The bet paid off, and the company remains active in Russia. After Russia, the company expanded in markets such as Pakistan, Sri Lanka, Nepal, Vietnam and even Myanmar.

“It was tough in Russia for a while, as it is part of the European bloc so you need to have certain documentation and standards. But after Russia, it was very easy because these other countries have less regulated markets. Then we decided to go for more difficult markets, so we selected Singapore, which is the most regulated market in our region.”

Since then, Beximco has expanded around the world and is now active in 34 countries marketing 400 products, with offices in five continents. It is also listed on the London Stock Exchange. In 2009, it became the first Bangladeshi pharma firm to have operations in Brazil, complementing its presence in Chile.

Eyes on the Middle East

Mr Hassan's next move appears to be in the GCC countries. As his company is essentially a generic medicine producer, he says he is attracted by the potential for his firm there, and is shying away from more developed markets. “Beximco’s major market is going to be the Middle East. A lot of people in our industry want to go to the US and UK, but as far as I understand it, the manufacturer gets very little in those two markets. But there are seven countries in the GCC and all seven are interesting. Saudi Arabia is the biggest market. Prices for drugs are very expensive in the region, so we have some great opportunities there.”

Mr Hassan recounts a story when a Saudi health minister visited Bangladesh to look at the country’s pharma industry. According to Mr Hassan, the Saudi minister could not believe the cost and quality of Bangladeshi medicine.

The minister then brought a few samples back to his country and seven months later his secretary called Mr Hassan and exclaimed: “Your medicine works!”, to which Mr Hassan replied: “Of course it works.” After that, Bangladesh was allowed to export generic medicines to Saudi Arabia. It is now one of only four countries, along with Morocco, Egypt and Algeria, that are permitted to do this.

Enjoying Trips

Mr Hassan is also convinced that there are more opportunities for his firm thanks to the Trips (Trade Related Aspects of Intellectual Property Rights) agreement, which he believes has put his company in a unique position. Under the agreement, there are basic requirements that signatory nations’ laws must meet basic copyright laws. When the agreement came out, there was much criticism from non-governmental organisations and poorer nations, which claimed that the deal would raise prices dramatically, particularly for medicine.

After considerable debate, the 2001 Doha Declaration stated that a group of 85 poor countries would be exempt from the agreement until 2016. Of those, Bangladesh was one of the few that produces pharmaceuticals, so Mr Hassan sees his company in a unique position to market his products to poorer countries.

Notably, the one country absent from Beximco’s operations is one that would appear the most obvious: India. Mr Hassan explains that for many years India was completely closed to foreign pharma firms. It was only in 2004 that the situation for his company began to ease, but even still, Beximco is not active in the country and there is little suggestion that this is about to change in the near future.

On the developed markets front, Mr Hassan does not see his company doing more than engaging in more distribution agreements, such as the ones he already has in place with Bayer, GlaxoSmithKline, Novartis and Upjohn.

“We are not interested in going into highly regulated markets to sell our products," he says. "For those markets, we’re only interested in doing contract manufacturing for the multinationals. One thing that is for sure, we are not interested at all in a fight with any of the multinationals.”