Beximco Pharma secures €24.9m for business expansion
Beximco Pharmaceuticals Limited has secured a €24.9 million loan, which is equivalent to over Tk300 crore, from the German bank ODDO BHF SE to expand its production capacity, aiming to increase its footprint in both local and export markets.
The pharmaceutical giant made the disclosure through its website.
According to the company's information, Beximco Pharma and the German bank signed an agreement in February to secure a loan for purchasing machinery and equipment by 31 December. The loan will primarily be used for replacing and maintaining machinery, with a portion allocated for expanding the company's manufacturing facility.
Additionally, Beximco Pharma has received approval from the Bangladesh Investment Development Authority (Bida) to obtain the foreign loan, the company added.
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But the company declined to make any official comments on this loan agreement.
The company, in its disclosure, further stated that the loan, which will be paid directly to the machinery and equipment suppliers, has an interest rate of 6-month Euribor (Euro Interbank Offered Rate) plus a 1.3% margin. Repayments will be made in half-yearly instalments over five years, starting June 2025.
The 6-month Euribor interest rate is the interest rate at which a selection of European banks lend one another funds denominated in euros whereby the loans have a maturity of 6 months.
Earlier, Beximco Pharma had obtained a loan of €19.05 million from the same bank for business expansion. The loan was fully paid off in January this year.
The company has consistently increased its production capacity, including the installation of a third factory, Unit-3, which began operations in 2021 after an investment of over Tk1,000 crore. Additionally, Beximco Pharma acquired the local operations of multinational drug makers Nuvista Pharma and Synovia Pharma, both of which are now operating as its subsidiaries.
An equity note on Beximco Pharma by EBL Securities said that the company generates a major portion of its revenue from selling drugs in the domestic market, which constituted an average of 90% of its total revenue from FY19 to FY23. During the same period, the company earned an average of 9.4% of its total revenue from export and 0.2% from contract manufacturing.
Zuhaier Shams, senior research associate at EBL Securities, told The Business Standard, Beximco Pharma is the top pharmaceutical exporter in the country, reaching 68 destinations, including highly regulated markets such as the US and Europe. From FY19 to FY23, Beximco Pharma contributed an average of 20% to the total drug exports of Bangladesh.
He forecasted that the company's profitability would improve due to a recent 50% decline in the price of active pharmaceutical ingredients (API) in the Chinese market, the most significant drop since the pandemic. Beximco Pharma primarily imports APIs from China and India.
As a result, the gross profit margin for Beximco Pharma, along with other pharmaceutical firms, is expected to increase this year due to the reduced API prices, he added.
The EBL Securities equity note said, the pharmaceutical industry of the country is worth Tk31,200 crore as of March 2024 and is highly concentrated among the top ten pharmaceutical companies, which collectively possessed 71.6% market share during this period.
Beximco Pharma has consistently ranked third among the top ten pharma companies over the last 10 years, holding 9.6% market share as of March 2024, it added.
The company's consolidated net revenue increased by over 13%, reaching Tk3,305 crore in the July-March period of FY24 compared to the same period the previous year. It also logged a 23% growth in consolidated profit, reaching Tk437 crore during the same time frame in comparison to the previous year.
It had paid a 35% cash dividend to its shareholders for FY23.
Beximco Pharma's shares closed at Tk122.70 on Tuesday at the Dhaka Stock Exchange.
