Square to start drug production in Kenya by August

Square Pharmaceuticals Ltd is going to be the first Bangladeshi drugmaker to produce medicines in a foreign country as it starts manufacturing in Kenya by August this year.

The pharma giant has already completed construction of its manufacturing plant in the Kenyan capital Nairobi at a cost of Tk170 crore.

Square looks to get hold of the $30 million drug market in Kenya and five other East African countries – Tanzania, Rwanda, Burundi, Uganda and South Sudan – and fulfil the unmet demands of medicines in those countries.

All infrastructural work, including installation of all necessary equipment in the factory, is complete, Square Pharma Managing Director Tapan Chowdhury said at a webinar on Wednesday.

"Today [Wednesday] we had a meeting with the health minister of Kenya. We will be able to start production in mid-July or early August this year," Tapan said.

Company officials say they had a target to start production in the Kenyan factory in 2020. But, that did not happen as infrastructural work remained suspended for some time because of the pandemic. Now, all work has finished. Manufacturing will start soon after discussing with the Kenyan government.

As per the existing law of Bangladesh, no local company is allowed to transfer its capital to another country. But they can do so with the approval from the Bangladesh Bank.

The central bank has already given conditional approval to a number of companies to open factories abroad and transfer capital.

Among them, the DBL Group has set up a garment factory in Ethiopia, while BSRM built a steel plant in Kenya, and Akij Group acquired Robin Textile in Malaysia and invested in it.

Habibuzzaman, company secretary to Square Group, said Square Pharma was the first company to invest legally abroad with money from Bangladesh, thus opening up a new window of opportunities in the country's pharmaceutical sector.

"As a listed company, we reported our investment to stock exchanges. They will also be informed of our production launch. Our all preparations are over," he also said.

According to the company's 2017 disclosure on the Dhaka Stock Exchange, Square invested $20 million to set up a drug manufacturing plant in Kenya. Square Pharma spent $8 million from its own fund and the rest of the amount was arranged through a loan.

Square currently exports medicines to 42 countries, including 19 in Asia, 13 in Africa, three in Oceania, six in Central and South Americas, and the United Kingdom.

In the fiscal 2019-20, the company exported medicines amounting to Tk165 crore to different countries. It was the second highest earnings through medicine exports after Beximco's Tk235 crore. Square Pharma's export growth was 10.98% last year.

Square is the top pharmaceutical company in the country though it is the second largest drug exporter. At present, the company has about 17% share in the country's pharmaceutical market. Incepta, which stands second, has less than 10% stake in the local market.

When all businesses reeled under pandemic effects, Square Pharmaceuticals witnessed its sales grow by 18.68% to Tk5,293 crore last year.

According to the latest audited financial report for the fiscal 2019-20, the assets of Square Pharma,  which started its journey with only Tk20,000 in 1958, amount to Tk6,985 crore.

The late Samson H Chowdhury was the pioneer of Square Pharma. Tapan Chowdhury from Samson's third generation is currently its managing director.

Stock market performance

Square Pharma is one of the top-performing companies in the country's stock market. It is a company of investors' confidence and trust as it continues to give its shareholders dividends.

Square is one of the few blue-chip companies on the Dhaka Stock Exchange (DSE). Square Pharma has been included in the DS-30 index comprising the top 30 companies listed on the DSE.

According to stock exchange sources, Square Pharma was listed on the stock market in 1995. On Wednesday, the company's share price was Tk207 with a face value of Tk10 each. As per values of its shares, the company's market capital now stand at Tk18,348 crore.

Square Pharma gave a 52% dividend to its investors last year.