Therapeutics Bangladesh gets a kiss of life

TBS Infograph

Therapeutics Bangladesh Ltd, a pharma industry pioneer in the post-independence period, has been existing only on the list of the stock exchange for more than a decade.

Now the first-generation private company is getting a fresh lease of life as business conglomerate TK Group has taken it over.

Founded by Bangladesh's first commerce minister MR Siddiqi in 1974, the drug company was acquired by former foreign minister Morshed Khan in the early '80s before sliding into oblivion in 2008.

Samuda Chemical Complex Ltd, a TK Group concern, has acquired 94% shares of Therapeutics Bangladesh, a defunct company at the Dhaka Stock Exchange's over the counter board.

The drug maker went off-production more than a decade ago in line with the political demise of its then-owners – former foreign minister and BNP leader M Morshed Khan and his family.

Their lack of efforts did not let the pioneering local drugs maker in Chattogram come back until now, despite the fact they had a cumulative investment of around Tk100 crore there, according to sources in Chattogram.

"We are acquiring the company with a plan to run it which should enable us to enter in the pharmaceutical business," said MA Kalam, chairman of TK Group.

"Things are under process right now," he said, declining The Business Standard requests for further comments on the top-tier conglomerate's plan regarding Therapeutics.

He did not disclose the deal value for the dormant OTC firm now only having its abandoned two-storey factory complex of 83,000 square feet at Chattogram BSCIC Industrial Area, some unpaid utility bills and bank loans and, most importantly, the licences to manufacture over 150 generic drugs.

Sources said TK group is spending around Tk30 crore to acquire Therapeutics Bangladesh.

Successful conglomerate is in expansion mood

Samuda Chemical along with its sibling Samuda Food Products Ltd is going ahead with a plan to invest over Tk1,700 crore at Bangabandhu Sheikh Mujib Shilpa Nagar, a developing industrial hub in the Chattogram belt.

TK Group, founded by two brothers Mohammed Abu Tayab and Mohammad Abul Kalam in 1972, now has over 40 active business units operating in edible oil, flour, cement, steel, timber and wooden boards, paper and packaging, textile, chemical, petrochemical, leather, shipbuilding, shipping, fast food, hatchery, software, insurance and a few other sectors, and employ more than 12,000 people.

Therapeutics Bangladesh

MR Siddiqi, the first commerce minister of independent Bangladesh, established Therapeutics Bangladesh in 1974 as the first local modern drugs factory in Chattogram, according to Kalurghat BSCIC Industrial Area officials.

Morshed Khan acquired the business in the early 1980s and listed it in the Dhaka Stock Exchange (DSE) in 1985.

Over the next two decades in the bourse, the company grew its paid up capital to nearly Tk14 crore.

Sponsors and directors – M Morshed Khan and his family – used to own 94% of the company shares, while institutional investors own 2% and the remaining are still owned by the general public.

Therapeutics Bangladesh was a hotcake stock on the streets in the 1990s.

However, after going off-production in 2008, during the rule of the then army-backed caretaker government, the company did not convert its shares into electronic format as instructed by the regulator.

The DSE delisted it from the main trading platform and sent it to the OTC market a decade ago.

Amid no operations and the bank loans almost equal to its paid-up capital, the company posted Tk3.55 loss per share for the fiscal 2018-19, following negative earnings per share of Tk4.07 in FY18 and Tk3.67 in FY17.

Consecutive losses squeezed the company's net asset value to negative Tk6.22, which means the company is on Tk6.22 net liabilities against each share having face value of Tk100.

Based on the last trading price of Tk400 on 18 December, 2017 at the DSE OTC, Therapeutics' market capitalisation is over Tk50 crore.

The discount in acquisition makes sense as the company would need much more investments to float with modern machinery after having the civil reconstruction done, regularising bank loans and the unpaid bills cleared.

Chattogram BSCIC General Manager Ahmed Jamal Naser Chowdhury told The Business Standard that TK Group had already paid most of the unpaid utility bills.

Abu Bakar Siddique, his colleague at Kalurghat BSCIC Industrial Area, said the factory now owes BSCIC Tk4-5 lakh and this along with bills to the other service providers is set to be cleared soon.

Former BNP leader and businessman Morshed Khan and his family members fled the country last year, escaping corruption cases under trial.

The family's once glorious business profile within the country is on the verge of collapse as their telecom operator Citycell is defunct, the business of Hyundai cars went in the hands of other local entrepreneurs, and the Khan family is escaping money laundering cases.

The factory building with broken window glasses, weeds growing on the cracked walls now seems to be in need of reconstruction. The leftover machinery inside is nothing more than scraps. Three security guards appointed by the new owners were found patrolling inside the plot.

The last of the once-a thousand employees, who was acting as the company secretary, died of Covid-19 last year and the company failed to submit its 2020 reports to the DSE.

Sources said a managing director is now working mainly to transfer the business to the new owners.

A relative of Morshed Khan told The Business Standard that many pharmaceutical professionals in the Chattogram region became renowned from Therapeutics.

"The factory was shut down mainly because of political discomforts among the board members," the relative added, requesting anonymity.

According to the Drugs Administration, around 30 Chattogram pharmaceutical factories closed down over the past three decades that caused the loss of 4,000 jobs.

The country has over 1,300 small, medium and large firms manufacturing pharmaceutical products to meet over 95% of the local market demand.

However, the large firms have the lion's share and some of them are doing very well in the export markets across 160 countries.

Therapeutics Bangladesh will need fresh investments to clear liabilities, set up production facilities, and build new teams, which would not be a big deal for the acquirer, said a BSEC official who is informed about the details of the regulator's ongoing work to bring the derailed old listed firms back on the track.

As a small-cap company by definition now, Therapeutics can also raise capital from the DSE's small-cap platform through qualified investors offer, according to regulatory sources.

The BSEC has decided to allow the company to shift to the SME board from the OTC as soon as it accomplishes its transformation process and share dematerialisation by joining the electronic central depository system.

Retail investors can only sell stocks in the SME platform of the stock exchange, while qualified investors are entitled to both buying and selling there.