Beximco Pharma Discussion Threads

[237gmoney] 20/5/2014 15:43

Today I have sold my position in Beximco. Nothing to do with the results which were as expected (I thought the Q1 results were exceptional considering the policital troubles at the beginning of the year with the blockades etc holding back exports in the ports) but until the company addresses the fungibility between the bangladesh stock exchange and the UK stock exchange, we will always have this disparity in share prices.

I will continue to monitior and revalue the situation if anything changes.

A good little company very much under the radar from the many.

GLA.

[greg the grinch] 12/5/2014 18:28

Daniel Stewart Re-iterate Buy with 41p target :o)

[aishah] 12/5/2014 11:06

Daniel Stewart Re-iterate Buy with 41p target

[envirovision] 12/5/2014 09:25

Certainly turned a corner here imo

[aishah] 12/5/2014 07:34

Results out.

Highlights:

Corporate
· Launched 23 products in the domestic market; 6 of which were launched for the first time in Bangladesh
· Registered 38 products in 14 different countries; Madagascar, Estonia and Uganda being new to the list
· Commenced export of two ophthalmic products to Europe (Germany and Austria) for the first time
· Obtained marketing authorization for a product in Australia
· Marketing Authorization submission[s] made for one molecule in 5 European countries
· 3 ANDAs (Abbreviated New Drug Application) filed with US FDA (Food and Drug Administration)

Financial
· Net sales increased to BDT 10,490.7 million (£80.1 million) registering a y-o-y growth rate of 12.94% (2012: BDT 9,289.1 million (£78.1 million))
· Profit before tax increased 9.62% to BDT 2,093.6 million (£16.0 million) (2012: BDT 1,909.8 million) (£16.0 million))
· EPS rose by 6.37% to BDT 4.01 (restated 2012: BDT 3.77)

· The Company has declared a 5% stock dividend (i.e. 5 shares for every 100 shares held) and 10% cash dividend (i.e. BDT 1 per share) with record date set on 18 May 2014. Dividend is due within 30 days from the date of approval of the same at the Annual General Meeting (AGM)

· The AGM will be held on 21 June, 2014 at 10.30 am at the Beximco Industrial Park, Sarabo, Kashimpur, Gazipur, Bangladesh

Post year-end
· Launched 13 new products during the first quarter of 2014, including one product launched for the first time in Bangladesh

· 12 products registered in different overseas markets, including Columbia and Costa Rica

Nazmul Hassan MP, Managing Director of Beximco Pharmaceuticals, commented:

"Political turmoil made 2013 a challenging year for the entire industry, causing serious disruption to business activities, particularly during the last quarter. Despite this, we managed to achieve our growth targets, both in domestic and export markets, with our export business posting an excellent 42.79% growth over the previous year. We achieved a significant milestone by entering European markets with our ophthalmic products; this is the first time sterile ophthalmic formulations, produced in Bangladesh, have been exported to Europe. We are confident that with our focused strategy to achieve sustained growth, we are well on course to realize our targets and in creating value for our shareholders in the coming years"

[outsizeclothes.com] 12/5/2014 07:26

I take cash !!!!
At last a cash divvy makes this a yielder, and gives a solid reason to hold these. Should set a fire under the stock price here.

[4spiel] 05/5/2014 12:51

The stock dividend is described as neutral / meaningless.In stock terms true it is 'sterilised'. To shareholders most important is you get more stock and all that matters is you have more to sell and more gain if you bought for less. The problem with this GDR has not been geared to anything -like the share price or earnings of the company parent listing.. The cash dividend if continued changes this because it gives yield. Its not the first cash dividend but if its continued regularly rather than occasionally - it makes the stock undervalued. If the company can give some forward guidance it could be transformational.

[237gmoney] 02/5/2014 10:44

215k trade just gone through at 15.125p? The price didnt even blink.

More good news for foreign investment in Bangladesh yesterday.



UNCTAD Review Of Bangladesh Calls For Drug Market Opening
Published on 1 May 2014 @ 6:27 pm

An investment policy review undertaken by the United Nations Conference on Trade and Development (UNCTAD) found that Bangladesh needs to attract foreign direct investment to sustain its development and suggests that the country loosen its grip on the pharmaceutical sector. Bangladesh said the review will be carefully considered.

UNCTAD is holding the sixth session of its Investment, Enterprise and Development Commission from 28 April to 2 May.

The two main themes of the session are: entrepreneurship and productive capacity-building, and technology and innovation for inclusive development.

UNCTAD publishes investment policy reviews, which aim to help countries improve their investment policy, and "to familiarize governments and the international private sector with an individual country's investment environment." Such reviews are considered by the UNCTADCommission on Investment, Enterprise and Development. Recommendations on investment policy are then implemented with UNCTAD's technical assistance.

The investment policy review of Bangladesh [pdf] was presented to the Commission on 29 April.

Bangladesh Industry Minister Amir Hossain Amu said at the commission meeting thatelements highlighted in the review and the recommendations "have been noted and will be examined carefully." Bangladesh has yet to attract foreign direct investment (FDI) to its potential, he acknowledged. The country is viewing a target of 2021 to become a middle-income economy.

The UNCTAD policy review, which was requested by Bangladesh and financially supported by Sweden, gives a number of recommendations for reform in support of that path to that growth.

FDI Potential

James Zhan, director of the UNCTAD Investment and Enterprise Division, presenting the policy review, said Bangladesh has "an enormous potential" to attract FDI. Reasons include the country's strategic location between large emerging markets, competitive labour costs, and a vibrant private sector.

However, he said, Bangladesh is underperforming in FDI attraction. Among the reforms suggested in the UNCTAD review, he said, is to revisit the investment law in order to offer clear conditions for FDI. It should cover all forms of authorised direct investment, spell out restrictions clearly and offer non-discrimination between foreign and national investors.

He also advised that Bangladesh consider a progressive relaxation of its national pharmaceutical policy, which was adopted in 1982 to promote the development of domestic manufacture. This has led to a huge expansion of the sector, and was a great success, but the current model is starting to show its limits, he said.

The policy review includes a case study on Bangladesh's pharmaceutical industry, which states that Bangladesh "has the most advanced domestic pharmaceutical industry among LDCs [least-developed countries]." But despite this, UNCTAD recommends it to change.

Protectionist Strategy for Pharmaceutical Products?

Bangladesh is manufacturing a wide range of drugs for domestic consumption, and Bangladesh pharmaceutical firms are gradually building their export capacity, the review states. The pharmaceutical products are exported to nearby countries with a limited production capability.

Bangladesh's policy has favoured domestic industries through the 1982 adoption of the National Drug Policy and a Drugs Control Ordinance [pdf]. Through this ordinance, medicines considered useless by health authorities were pulled off the market, according to the policy report, while a national list of essential medicines was created.

Moreover, following the adoption of the ordinance, stiff restrictions on drugs importations were applied, as well as operational restrictions being imposed on multinational pharmaceutical enterprises with factories in Bangladesh, according to the policy review.

With many of their products de-registered, multinational pharmaceutical companies sold off their factories to local companies, the review notes.

The legislation also restricted alliances between local and multinational pharmaceutical companies and installed a requirement to have full production facilities in Bangladesh in order to serve the domestic market. This created the need for the drug market in Bangladesh to rely on local firms for many medications.

According to the policy review, as a result of the national drug policy, "a handful of local pharmaceutical companies have thrived." The review states that according to some studies, some 70 percent of the drug local market is controlled by the top-ten domestic companies.

"Bangladesh can be considered as one of the few developing countries in the world that is relatively drug self-sufficient," according to the policy review, which also remarked that some of the top-tier companies are exporting drugs and "venturing into the manufacture of more complex molecules as well as the production of vaccines and biosimilars."

Limits and Future of the System

The strategy adopted by Bangladesh is partly linked to the current intellectual property conditions benefitting the country. Under the 1994 World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), LDCs are exempted from enforcing IP rights on pharmaceutical products until 2016. A parallel exemption for other products ended in 2013 and an additional extension was granted to LDCs until 2021 (IPW, WTO/TRIPS, 7 June 2013).

According to the policy review, however, it is unclear "whether domestic patent legislation has fully incorporated all relevant public health flexibilities available under TRIPS to maximise the attractiveness of the country as a destination where companies can make medicines that are patented elsewhere."

In any case, the exemption, whether it is extended beyond 2016 specifically for pharmaceutical products, would not be applicable, should Bangladesh not be considered as an LDC in future years.

In either scenario, according to the policy review, the Bangladesh pharmaceutical sector sits at a crossroads and the applied model for its development, based on protectionism, might have run its course. This model does not encourage competition with generic producers elsewhere and have led the top-tier companies charging high prices, making them profitable but not competitive globally.

The protected space offered by the domestic policy has also allowed those companies to prosper, even without World Health Organization drug prequalification, says the policy review. That lack of WHO prequalification is hindering their capacity to export the review said, underlining the lack of capacity of Bangladesh's drug regulatory authority.

Amb. Abdul Hannan, said the review mentions production for essential drugs and generic medicines for the domestic market in Bangladesh, but he said, the country is not only self-sufficient but also exports to more than 75 countries.

Changes in the Pharmaceutical World Offers Opportunity

Major changes are underway in the global pharmaceutical sector, according to the report, with large multinational multinational research-and-development-based pharmaceutical firms shifting their business model. This shift is brought about by factors such as the "patent cliff" where major blockbuster drugs will be falling into the public domain within a few years. One of the new strategy is to acquire branded generic firms, mostly in developing countries, such as India, says the review.

This context, the review notes, could open "significant export opportunities for Bangladesh and facilitate the long-term growth and viability of the sector." However, that would require for example that Bangladesh firms be exposed to foreign competition, and upgrading the drug regulatory authority.

Recommendations

The review recommended that Bangladesh, in order to increase competitive pressure, consider a progressive loosening of its National Drug Policy so that foreign firms that manufacture their pharmaceutical products can sell on the Bangladesh market. That would decrease the cost of medicines and increase their quality, according to the review.

On the suggestion made by the review for a progressive relaxation of the national drug policy, Hannan said it needs to be carefully studied whether the Bangladesh pharmaceutical sector should be opened for joint venture, technology transfer through licensing and other collaborative projects with foreign firms.

In order to attract investment into the pharmaceutical sector through its TRIPS exemption, Bangladesh should also incorporate into its national legislation "relevant public health flexibilities under the TRIPS Agreement ... in clear and unambiguous terms," said the review.

Hannan added that Bangladesh could not open all sectors for FDI, and that openness should be considered in relative terms on the basis on realities on the ground. As an LDC, Bangladesh "has a responsibility to protect the interest of its growing private sector," he said.

Intellectual Property Regime

The policy review remarks that Bangladesh has intellectual property laws covering patent, copyright and trademark protection, "although these are weakly enforced."

Hannan said "the enforcement of IP laws in Bangladesh is definitely not very strong," but IP laws are in place, with the addition of a geographical indications act "adopted very recently."

He added that Bangladesh was fully engaged with the World Intellectual Property Organization to develop an intellectual property strategy for innovation, and that WIPO has almost completed its work on the matter. The country is preparing itself to be subjected to TRIPS obligations, whether because it no longer meets the LDC definition, or because the TRIPS waiver for LDC is no longer extended.

The UNCTADCommission on Investment, Enterprise and Development was established in 2008. According to UNCTAD's website, the annual meeting of the commission gathers investment and technology stakeholders worldwide. Member states, investment promotion and technology agencies, the private sector, academia and civil society participate in the commission's sessions, it says.

[greg the grinch] 01/5/2014 11:52

The sooner the stock dividend vanishes forever the better, adds no value and creates constant selling pressure for those that want a dividend in cash.

[davydoo] 30/4/2014 22:23

Thanks blobby.

I wonder if this is part of a transition away from issuing shares? Will be interesting to see next years decision.

[blobby] 30/4/2014 21:55

10% dividend on the nominal amount, which is 10 Taka. So as posted earlier this is a 5% yield.

The stock dividend makes no difference to me, you may get more shares but you are diluted at the same time so it makes no difference. UK shares for growth companies used to do this, but you hardly ever see it now.

[davydoo] 30/4/2014 19:19

Am I being stupid here, how is a 1taka dividend on a 50taka share price seen as a 10% cash dividend?

[237gmoney] 30/4/2014 15:37

Good news out today also on fake drugs sold in Bangladesh. Hopefully this will clean up the market and mean more sales for Beximco going forward.



Show-cause notices served to substandard pharmaceuticals
Moniruzzaman Uzzal

The Directorate General of Drug Administration (DGDA) made the move following a directive from the Health Ministry made on April 20

The drug administration authority has issued show-cause notices to 15 pharmaceuticals companies, which have previously been identified as manufacturers of substandard drugs, asking them to explain within 15 days why their licences should not be cancelled.

The Directorate General of Drug Administration (DGDA) made the move following a directive from the Health Ministry made on April 20.

Major General Jahangir Hossain Mollick, director general of the DGDA, confirmed the news and said the notices were served to companies identified by a specialised committee, which was formed by the parliamentary body of the ministry in 2010 following the deaths of 24 children allegedly caused by the paracetamol syrup produced by Rid Pharmaceuticals Ltd.

The team of specialists had also previously identified the drugs of 29 pharmaceutical companies as posing "high risk to public health."

SEE THE FULL ARTICLE ON THE LINK BELOW

[envirovision] 30/4/2014 14:18

Well is this the catalyst for a re-rating at long last ?

[2350220] 30/4/2014 13:54

Thanks very much for the prompt reply 237gmoney.

All the best,
John

[gpadfoot] 30/4/2014 13:18

Many Thanks 237,Regards,gp

[237gmoney] 30/4/2014 13:08

Gpad those look pretty spot on to me except with GDR's I still expect a '10%' cash dividend along with the 5% stock dividend. Perhaps an email to the nomad might help to confirm this as that will need clarification.

However, EPS of 3.09p when the share price is only c.15p is pretty attractive to me. How others can't see that is beyond me.

Also NAV of c.43p when we are only priced at 15p shows there is plenty of upside here. Nearly threefold.

How many investments out there can offer you that at the moment with a 15% dividend on top

[237gmoney] 30/4/2014 12:58

John. Of course. Buying GDR's is like buying traditional shares only you dont get the voting rights as a normal shareholder would.

Therefore the record date of 18th May is the date which matters. If you are on the share register as a holder of Beximco stock (or GDRs in this case) then you are entitled to claim both the stock dividend and the cash dividend.

In my experience, once the dividend gets approved in the AGM meeting the dividend will be paid out around the end of July or beginning of August depending on who you trade with and how quickly they are at processing the payment.

Therefore any buyers of BXP from now until 18th May (or 19th May in our case as the 18th is a sunday, will also get a 15% dividend thrown in on top. Call it a brucey bonus if you like.

When traditional UK Listed companies payout dividends you usually see a corresponding decline in the share price but because the UK GDR share price of Beximco is materially already undervalued compared to the Dhaka equivalent, we are unlikely to see the same pattern happen here.

Therefore buying at this level has to be a no brainer to me but then what do I know. All in my opinion of course so please do you own research before buying.

[gpadfoot] 30/4/2014 12:55

Someone may wish to check my calcs here but looks very positiveFrom today's Prelim results :Assuming 1BDTaka=0.77penceEPS = 4.01BDT = 3.09penceNet Asset Value = 56.45BDT = 43.47pencePE Ratio in UK = 15.125p/3.09= 4.9 Stock dividend of 5% plus the cash dividend of 10%. However the cash dividend is stated at 1Taka per share, which would in Uk terms be equivalent to 0.77p and therefore approx 5%. gp

[2350220] 30/4/2014 12:32

Sorry for being a bit naive on this, but does this mean that I can go ahead and purchase some more stock now, and still get the divi in May?

TiA,
John

[237gmoney] 30/4/2014 12:12

GSK results announced today for Q1 2014 - Emerging market sales +2% but then GSK are only small players in the Bangladesh/central Asia space.

I'm sure they would love to improve on this with US sales showing 10% declines.

[davydoo] 30/4/2014 11:16

That's a big buy, getting interesting

[237gmoney] 30/4/2014 10:57

A 328,865 trade buy just gone through.....a big vote of confidence there!

A few more of those and we should soon be heading north before long

[blobby] 30/4/2014 09:58

Yep, great news. I've bought some more because of this. Yield about 5% and something back for shareholders at last.

[237gmoney] 30/4/2014 09:52

There hasn't been a cash portion of the dividend since 2009 so this is a change of Strategy for the company.

Perhaps the new major shareholders had something to do with this? But a good thing all the same. Hopefully we can close the gap on the Dhaka share price now