Investors said they were increasingly tilting to the pharma sector as the sector’s growth is positive due to rapidly growing local market
Earnings Per Share (EPS) of pharmaceutical and chemical companies, listed on the Dhaka Stock Exchange (DSE) have posted robust growth in the first quarter of the current fiscal year, thanks to major market expansion both at home and abroad.
According to unaudited financial reports July-September’18, disclosed on the DSE website, 27 out of 31 companies have published their reports on earnings.
17 companies have registered positive growth in earnings.
According to the DSE website, ACI Formulation reported the highest growth in earnings, registering a 264% growth in the first quarter of fiscal year 2018-19, compared to the same period last year.
During the same period, Wata Chemicals earned 202% higher, earnings of Advent Pharma saw 154% growth, and AFC Agro’s earnings per share (EPS) posted only a 4% rise, the lowest among the positive performers.
Meanwhile, eight companies showed negative growth in earnings in the 1st Quarter (July-September 2018). Among the bad performers, ACI Limited has seen a 47% decline in earnings, the greatest fall, while Global Heavy Chemical registered a 4% negative growth.
Investors said they were increasingly tilting to the pharma sector as the sector’s growth is positive due to rapidly growing local market. They are hoping for better dividends next year from most of the pharmaceutical companies.
Abdul Muktadir, a share market investor told the Dhaka Tribune: “Income growth is only guaranteed if you invest in pharma sector stocks, as their EPS is much better than before.”
Venting his frustration, Muktadir said the business of stocks has turned out to be a curse for investors now, as only a few listed firms promise good dividends.
Out of 31 listed companies in the sector, 24 are listed in the ‘A’ category , meaning the companies regularly provide dividends to shareholders. The remaining seven listed firms fall under the B, N, and Z categories.
Bangladesh is the only least developed country around the globe that meets up to 97% of its own demand for pharmaceutical products, with a yearly market size of nearly Tk200 billion, say policymakers and industry insiders.
In addition, Bangladeshi pharmaceutical products are being exported to 199 countries, and generated over $100 million in the last fiscal year.
Due to healthy EPS and dividends, pharmaceutical stocks continue to attract both long-term and institutional investors.
Md Asad Ullah, executive director and company secretary of Beximco Pharmaceuticals Limited, told the Dhaka Tribune: “Our country's pharmaceutical products are now being exported to 199 countries, including the USA. The demand for Bangladeshi pharmaceutical products in the global market is increasing, mainly due to product diversification and their superb quality.”
“We have been doing well in the domestic market too, as many drug companies are expanding their production units to meet growing local demand,” he added.
Asad further said stock market investor interest in the pharmaceutical sector is increasing due to the high potential of the industry, and stocks of pharmaceutical companies are among the top choices for long-term investors.
A recent study by LankaBangla Investment Ltd revealed that local players dominate Bangladesh's pharmaceutical market. The top ten companies hold 68.49% of market share, while the top twenty companies hold 86.33%.
Square Pharmaceuticals holds 17.73% of market share, while Incepta holds 10.21%, Beximco 8.39%, Opsonin 5.54%, Renata 4.97%, Healhtcare Pharma 4.57%, ACI 4.43%, Aristopharma 4.38%, Eskayef 4.36%, and Acme 3.91%, according to the study.
The listed pharmaceutical and chemicals sector companies are ACI Limited, ACI Formulations, The ACME Laboratories, Active Fine Chemicals, Advent Pharma, AFC Agro Biotech, Ambee Pharmaceuticals, Beacon Pharmaceuticals, Beximco Pharmaceuticals, Beximco Synthetics, Central Pharmaceuticals, Far Chemical Industries, Global Heavy Chemicals, GlaxoSmithKline (GSK) Bangladesh, The IBN SINA Pharmaceutical Industry, Indo-Bangla Pharmaceuticals, Imam Button Industries, JMI Syringes & Medical Devices, Keya Cosmetics, Kohinoor Chemicals, Libra Infusions, Marico Bangladesh, Orion Infusion, Ambee Pharma, Orion Pharma, Pharma Aids, Reckitt Benckiser(Bd.), Renata Ltd, Salvo Chemical Industry, Silva Pharmaceuticals, Square Pharmaceuticals, and Wata Chemicals Limited.