Square Pharma expands global footprint with entry into Philippine market

Infographics: TBS

Square Pharmaceuticals Limited, the country's leading drug maker, has taken another stride, this time towards the Philippines following its expansion into Kenya, in an effort to strengthen its presence in the global market.

On Monday evening, the board of the company decided to open a subsidiary company in the Philippines by making an initial investment of $1 million.

The company has set the plan to grab the Philippines drug market under Samson Pharma Inc, which will be incorporated in that country.

The company said in a statement that its total investment plan is $2.5 million in Samson Pharma, which will be engaged in the marketing and distribution of pharmaceutical products.

Of the total $2.5 million, the company will initially invest $1 million in Samson Pharma, it said.

Square Pharma expects that Samson Pharma will start business in April 2024.

This is the second initiative by Square to open subsidiaries abroad after it opened Square Pharmaceuticals Kenya EPZ Ltd to manufacture and sell generic pharmaceutical medicines in Kenya and the East African community.

"We are opening a company in the Philippines to sell our medicines directly to that country. Samson Pharma will facilitate us to register our medicine in the Philippines," Muhammad Zahangir Alam, chief financial officer of Square Pharma, told The Business Standard.

Why Philippines

The Philippines has a fast-growing pharmaceutical market, with total sales of about $4.19 billion in 2022, which was 4% higher than the previous year, according to the US-based Pacific Bridge Medical data.

In a research paper made by US-based Statista, the Philippines pharma market is highly dependent on import. In this country, multinational companies such as Pfizer, GlaxoSmithKline, BOE Ingelheim, and AstraZeneca are the leading drug suppliers.

Last year, the Philippines imported drugs worth $2.7 billion, which was around 65% of total demand, from the United States, India, and Germany.

The Statista paper read that the Philippines pharmaceutical industry is forecast to expand through improved government initiatives. The government has been encouraging foreign pharmaceutical companies to establish manufacturing facilities through the corporate recovery and tax incentives for enterprises (CREATE) act that will give tax incentives to pharmaceutical firms with facilities there.

Muhammad Zahangir Alam said the Philippines meets half of its medicine requirements through imports.

Ten companies from Bangladesh, including Square Pharma, export medicines to the country as well, he said.

Kabir Reza, head of accounts and finance of Square Pharma, said, "We can expand our business directly in the Philippines region through Samson Pharma."

Kenya plant

In a pioneering move to manufacture abroad, Square Pharma started setting up its plant in Kenya at an export processing zone in Nairobi in 2018, and went into commercial production at the beginning of this year.

Square, which began exporting medicines to Kenya in 2012, expects to generate approximately $4.5 million this fiscal year by shipping a wide range of 200 prescription drugs there.

The pharma company earned Tk2.24 crore from the Kenya plant in the July-September quarter this year.

The $25 million plant has created more than 100 jobs, and currently employs 38 skilled Bangladeshis, including team leaders.

The Nairobi factory was initially meant to sell 20% of the manufactured products locally and export the remaining 80%.

Square Pharma would be enhancing its business into the Africa region through this Kenya factory.

The common market of East Africa, which includes Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda, has already become an over $2 billion market for generic drugs. The International Market Analysis Research and Consulting Group forecasts that with a nearly 7% compound annual growth rate, it will become a $3.2 billion market by 2028.

Square's export basket

Square Pharma pioneered the exporting of drugs, which started in 1987. It won the national export trophy four times till the fiscal year 2021-22.

Square Pharma obtained the approval from UK Medicines and Healthcare Products Regulatory Agency and US Food and Drug Administration, which helped the company to strengthen its foothold in these regions.

Currently, Square Pharma's export market covers over 45 countries.

In July-September this year, it earned $5.44 million by exporting drugs, which was 11% higher than the previous year at the same time. In the fiscal year 2022-23, it earned around $20 million.

According to the Export Promotion Bauru (EPB), Bangladesh earned $175.42 million from exporting pharmaceutical products in the last fiscal year.

The EPB data shows the country exported drugs worth $65.36 million in the July-October period.