Factors behind exiting from the Bangladesh pharmaceutical industry and closing down the pharma businesses unit of GlaxoSmithKline Bangladesh Ltd.

Abstract

The pharmaceutical industry in Bangladesh has been increasing in recent years and currently, the market stands at 142 billion BDT. Demand for good quality drugs is on the rise and the local market demand will to reach BD 160 billion BDT by 2018. Bangladesh pharmaceutical companies supply generic products and can charge premiums for their products. The top 10 companies have about 67% of the market. It is very complicated to enter this sector due to a high investment. GlaxoSmithKline Bangladesh Ltd is one of the renowned pharmaceutical company, listed on the Dhaka Stock Exchange, and has been successful in the stock market. The company has a very high dividend payment rate that primarily attracts the company's shareholders. The profitability of this company declined from 2016 to 2017. The company has a very low current ratio that could pose a threat to it. Therefore, the company should focus more on this problem and should be careful to monitor the debts. Although, after comparing the financial report with other pharmaceuticals found that GSK had a good financial performance because of the performance of their consumer health sector. On the other hand, sales of the pharmaceutical unit are shrinking as they could not cope up with the rivals and failure to match the current market demand leads to a decrease in sales. Therefore, that may lead their pharmaceutical business unsustainable. The pharmaceutical unit is incurring losses for the last three years consecutively. Hence, the GSK shareholders and board of directors decide to close the pharmaceutical business unit and continue their operation in Bangladesh with consumer healthcare business, which is profitable. Therefore, the aims are to identify the factors that influence GSK Bangladesh Ltd. to close down its pharmaceutical business unit in Bangladesh although the industry is growing at 15% more than GDP growth rate of the country. It also focuses on the processes that need to give attention as a multinational pharmaceutical company while existing from Bangladeshi market.