Profitability Ratio Analysis of Beximco Pharmaceuticals Ltd. (Beximo Pharmacy)
Introduction:
Beximco Pharmaceuticals Ltd. (Beximco Pharmacy) is one of the leading manufacturers of medicines and active
pharmaceutical ingredients (APIs) founded in Bangladesh. Incorporated in the late 70s, the journey of Beximco
pharmacy began with being a distributor, importing products from global multinational corporations like Bayer,
Germany and Upjohn, USA and sold them in the local market. They gradually started manufacturing here in
Bangladesh and distributed under licensing arrangement. Over the years, the company has successfully managed
to grow from strength to strength and today it has become a leading exporter of medicines in the country.
Moreover, the company have also won National Export (Gold) Trophy a record number of four times.
Benchmarked to global standards, manufacturing facilities of the company have been accredited by the major
global regulatory authorities, and it has so far expanded its geographic footprint across all the continents.
Beximco Pharmaceuticals Ltd. currently has a portfolio of more than 500 products and encompasses all the major
therapeutic departments, and it has successfully differentiated itself from its competitors by offering technology
driven specialized products. The company is blessed with a dedicated workforce of around 3,000 people and
the simple philosophy and principle on which it was founded remains the same till date: producing premiumquality universal drugs and to make them affordable to our people.
Profitability Ratios:
1. Operating Profit Margin: (Operating Profit/Sales)*100
Company
Beximo
2017
22.23 %
2018
2019
22.20 %
22.73 %
2020
21.90 %
Beximo Pharmacy
23,00%
22,50%
22,00%
21,50%
21,00%
2017
2018
2019
2020
Beximo Pharmacy
Operating margin, also called the return on sales, is a measurement of how many dollars of profit a company
earns per dollar of sales after paying operating expenses. It considers costs such as wages, overhead, and
materials, but does not include non-operating expenses like taxes or interest. Beximo company had an operating
profit margin of 22.23 % in 2017. It means that if they are generating $100 of sales, after paying off the direct
expenses and cost of goods sold, the company is generating $22..23 of gross profit. It is at a favorable position
and has improved in 2018 with 22.73% margin.
2. Gross Profit Margin: (Gross Profit/Sales)*100
Company
Beximo
2017
2018
46.33%
2019
46.55%
46.77%
2020
46.46%
Beximo Pharmacy
47,00%
46,80%
46,60%
46,40%
46,20%
46,00%
2017
2018
2019
2020
Beximo Pharmacy
Gross profit margin is a ratio that indicates a company’s sales performance—specifically, the percentage of
revenues left after deducting the cost of goods sold. Here in 2017, for every $100 sales there is a $46.33 worth of
profit.
3. Net Profit Margin: (Net Profit/Sales)*100
Company
Beximo
2017
14.36%
2018
2019
13.33%
14.30%
2020
13.80%
Beximo Pharmacy
14,50%
14,00%
13,50%
13,00%
12,50%
2017
2018
2019
2020
Beximo Pharmacy
In 2018, Beximo generated $14.30 of profit after paying all expenses and taxes for the year. The profit further
decreases in 2019 that may be a result of a higher cost in their production or lower sales price, but good thing
they slightly recovered in 2020.
4. Return on Total Assets (ROA): (EBIT/Total assets)
*EBIT = Earnings before interest and taxes
Company
Beximo
2017
2018
6.53%
2019
5.79%
6.18%
2020
7.07%
Beximo Pharmacy
8,00%
6,00%
4,00%
2,00%
0,00%
2017
2018
2019
2020
Beximo Pharmacy
The return on total assets shows how effectively a company uses its assets to generate earnings. This allows the
organization to see the relationship between its resources and its income, and it can provide a point of
comparison to determine if an organization is using its assets effectively than it had previously. We can see in
2018 that the Bexemo’s ROA decreases, this may indicate that the company might have over-invested in assets
that have failed to produce them revenue growth. They might have improved the efficiency of their current or
fixed asset in the following years that leads to an increase in their ROA.
5. Return on Equity (Net Profit/Total Equity)*100
Company
Beximo
2017
2018
1.71%
2019
2.12%
2.36%
2020
2.14%
Beximo Pharmacy
2,50%
2,00%
1,50%
1,00%
0,50%
0,00%
2017
2018
2019
2020
Beximo Pharmacy
ROE shows us how effectively a company is utilizing its capital. We can see in 2020 that there is a decline in
Beximo’s ROE. Declining ROE indicates lower returns on every unit of shareholder investment. Maybe they are
also affected because of the pandemic, or they become a little less efficient at creating profits and increasing
shareholder value. This is going to make it more difficult for Beximo to secure equity financing. As such, unless
Beximo becomes more willing to take loans, it will be difficult for the company to secure capital altogether.
Conclusion:
Any economic action is driven primarily by the desire to be profitable. The ability to be profitable depends on the
efficient utilization of resources, reduced costs, and effective management. It would be helpful to increase
production capacity and use advance technology to cut down cost of production and wage cost to increase
profitability, not only against the investment, but also for investor’s return point of view. The business venture
must generate a profit from operations to achieve this.
After analyzing the profitability of Beximco Pharmaceuticals from the year 2017-2020, we can see that the Gross
Profit somewhat remained stable and steady over the years which indicates that the company is performing well.
Even though these ratios are only assumptions and predictions, we can say that the overall profitability ratio of
the Beximo Pharmacy in the selected years is in all the selected variables is somewhat good but could be better.