Following our broader overview of the Bangladesh pharmaceutical sector, we now turn our attention to one of its most distinctive players: Square Pharmaceuticals.
Political Update – Vision 2030:
Following the BNP’s victory in the February election, the new government has started implementing its “Vision for 2030.” Several aspects of this policy framework are particularly relevant for the pharmaceutical industry:
164. The price of drugs will be reasonably reduced even after ensuring reasonable profit of producers, wholesalers and retailers. Domestic production of drugs, basic ingredients of drugs and medical equipment will be encouraged.
169. WHO principles will be adopted for integration and development of traditional medicine in national health services.
More significantly, Article 26 of BNP’s broader reform agenda outlines a universal health coverage model inspired by the UK’s NHS. The main proposals include:
- Introduction of a national Health Card system,
- Allocation of 5% of GDP to healthcare,
- Expansion of social safety nets for disadvantaged populations.
If implemented effectively, this would structurally increase healthcare demand. For a market leader like Square Pharmaceuticals, this may strengthen long-term revenue stability, especially with the public-sector participation.
Demographic Shift: Long-Term Demand Growth:
Bangladesh is aging rapidly. By 2050, nearly one in five citizens is expected to be over 60 years old. An aging population naturally increases demand for medicines and long-term healthcare treatments.
This demographic transition supports the long-term growth outlook for pharmaceutical companies. Square, which already holds more than 17% market share, is well positioned to benefit from this structural demand increase.
Market Structure and Concentration:
The pharmaceutical sector listed on the DSE is highly concentrated. Square Pharmaceuticals alone accounts for approximately 51.6% of total sector market capitalization, making it the dominant player. When combined with Beximco Pharma (14.0%) and Renata (13.5%), the top three firms represent about 79% of the total market cap value; the sector’s performance is largely driven by a small number of leading firms.
Revenue Trends and Cost Pressures:
As discussed in our previous outlook, the Directorate General of Drug Administration (DGDA) introduced a five-year strategic plan for 2022–2026 aimed at strengthening regulation, improving quality standards. It is therefore useful to assess how Square’s recent performance reflects this evolving framework.
| Year | Domestic Revenue (Tk bn) | YoY | Export Revenue (Tk bn) | YoY | Operating Expenses (Tk bn) | YoY |
| 2022 | 66.71 | 1.70 | 11.84 | |||
| 2023 | 67.61 | 1.349% | 1.96 | 15.29% | 11.56 | -2.36% |
| 2024 | 68.73 | 1.660% | 2.40 | 22.42% | 14.18 | 22.66% |
| 2025 | 68.79 | 0.090% | 2.53 | 5.59% | 16.28 | 14.84% |
Table 1: Revenue Breakdown and Operating Expenses (2022–2025). Data from the company’s annual financial reports.
Export growth remains the most dynamic component, while domestic revenue growth has slowed. At the same time, operating expenses have increased due to:
- Scaling of the Kenya manufacturing subsidiary
- Rising costs of raw materials, packaging, and energy
- Expanded distribution efforts to maintain 17%+ market share
- USD volatility increasing API import costs (Active Pharmaceutical Ingredients )
- Higher labor expenses due to compensation adjustments
Although margins face pressure, part of this cost increase reflects strategic investments in international expansion and capacity building.
Group Structure and International Expansion:
Square Pharmaceuticals’ structure includes three subsidiaries:
- Square Pharmaceuticals Kenya EPZ Ltd. (100%)
- Square Lifesciences Ltd. (99.95%)
- Samson Pharma Inc., Philippines (99.998%)
The Kenya subsidiary (SPKEL) represents the most strategic expansion pillar. Kenya’s pharmaceutical market was valued at approximately USD 998 million in 2024 and is projected to reach USD 1.6 billion by 2031. Imports still account for roughly 78% of domestic consumption, while local production remains limited, creating substitution opportunities.
Contribution of Textile and Fashion Associates:
Although pharmaceuticals remain the core earnings driver, Square maintains significant investments in textile and fashion associates. In FY 2024-2025 the profit contribution of Square Textiles and Square Fashion represents approximately 12% of consolidated net profit.
Valuation:
Square currently trades at a trailing P/E of approximately 7.5–7.35x. Given its market leadership, profitability, and structural demand drivers, this multiple appears conservative.
Cordoba’s View:
Square Pharmaceuticals combines structural healthcare growth with earnings diversification and international expansion. It benefits from long-term demographic demand, maintains stability through textile associate profits, and continues to expand into new markets to generate additional revenue streams.
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