Square Pharma enters outsourcing contract with Euro Pharma
Earlier last week, Square Pharma entered into a separate outsourcing agreement with Aristopharma Ltd
Square Pharmaceuticals entered into another production outsourcing contract with local drug maker Euro Pharma Ltd, according to a regulatory disclosure following a board meeting on Monday (9 August).
This is the second outsourcing contract Square Pharma signed within a week.
Under the contract, Euro Pharma would manufacture some products on behalf of Square, helping the latter in meeting the increased demand for the products.
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Also, it would help Square introduce new products, according to the regulatory filing.
Earlier last week, the company informed that it had entered an agreement with Aristopharma Ltd for contract manufacturing of its product.
The largest drug maker of the country started contract manufacturing before the pandemic and it already partnered with five factories to let Square use their production facilities to produce Square products.
Why contract manufacturing
Square Head of Accounts and Finance Md Kabir Reza said, with the steadily growing demand its own production facilities were about to reach maximum capacity utilization for some of its products.
As building new facilities take several years to be in production, while the demand growth is not sufficient to maximize capacity utilization at new facilities, the pharmaceuticals industry finds it better to keep growing its sales with the help of contract manufacturing at other competent factories.
Once the demand grows to a level that allows the new factory's sufficient capacity utilization, a company may find it feasible to build new facilities.
The same is applicable for new products that need time to have a scale that justifies the capital expenditure, according to Kabir Reza.
Right now, Square Pharmaceuticals was using contract manufacturers for around 30 products and some 40 other items were expected to follow, he said, adding that the company strictly ensures that there remains no difference between products made at its facilities and those at the partner's factories.
Euro Pharma has a proven track record of manufacturing products for Square Pharma and the latest agreement added a tablet Zox, used to treat diarrhea patients.
