Square Pharma’s Kenya unit logs higher revenue

Bangladesh's largest drug producer, Square Pharmaceuticals, saw increased sales from its Kenya project in the second quarter of fiscal year (FY) 2023-24.

Sales of Square Pharmaceuticals Kenya EPZ, a wholly owned subsidiary of Square Pharmaceuticals PLC (Bangladesh), amounted to Tk 2.21 crore in the first quarter of FY24, before significantly increasing to Tk 6.23 crore in the second quarter.

Incorporated in 2017, Square Pharmaceuticals Kenya EPZ Ltd began commercial operations in January 2023.

It launched its products in the local market in March the same year.

In the three months to the end of the previous fiscal year on June 30, 2023, the company logged revenue of Tk 5.68 crore ($4.25 lakh).

It incurred a net loss of Tk 22 crore ($16.46 lakh) in FY23 compared to Tk 3.36 crore ($3.08 lakh) the year prior.

Higher administrative costs and foreign exchange losses increased the net loss in FY23, the company said.

The management is confident that the company is going to generate handsome profits soon as the Kenyan market is showing a positive response towards its products and growth in the near future appears promising, the drug maker said in its financial reports.

Its core business activities are the manufacturing and marketing of generic pharmaceutical products in Kenya and the majority of the East African Community (EAC).

The generic drug market in East Africa reached $2.1 billion in 2022 and is projected to expand to $3.2 billion by 2028, experiencing a compound annual growth rate (CAGR) of 6.9 percent from 2023 to 2028, Square Pharmaceuticals said.

Meanwhile, Square Pharmaceuticals saw its profit growth slow in the second quarter of fiscal 2023-24, mainly due to higher raw materials costs.

Its net sales advanced 14 percent year-on-year to Tk 1,851 crore in the second quarter of FY24 while profits grew 2 percent to Tk 524 crore in the same period.

The company's net profit increased by around 10 percent in the first quarter of the current year.

A top official of the company said most pharmaceutical companies were struggling to log higher profits as raw material costs and energy prices had increased amid the devaluation of the local currency against the US dollar.

Square Pharmaceuticals is in a comparatively better position and did not see a decline in profits due to its huge product base, he said.

Although costs rose, it passed a small portion of that onto consumers, the impact of which was seen in the profit, he added.

Raw material costs amounted to 48.9 percent of Square Pharmaceuticals' net revenue in the second quarter of FY24 compared to 47 percent in the first quarter.

In at least the last 10 years, the largest pharma company in Bangladesh saw single digit profit growth for the first time in fiscal 2022-23.