Equity Coverage on ACME Laboratories Ltd.

Equity Coverage on ACME Laboratories Ltd.

The growth of the pharmaceutical industry in Bangladesh started in 1980 and now it has come a long way with success. At present, the local market size is $2.41 billion and is expected to have an annual growth rate of 15% in the next few years. This industry is now capable of meeting 98% of the country’s needs. The contribution of this industry to the country’s GDP is more than 1.83%. Besides, Bangladesh is exporting medicines to more than 147 countries in the world. The latest data of the Bangladesh Export Promotion Bureau shows, $175.42 million in pharmaceutical products exported to the different regions in the world in July– August 2023.

Major Aspects

In terms of revenue, Squrpharma holds the leading position in the pharmaceutical industry, with a market share of 18.74%. Beximco stood second with 10.90%, Incepta stood third with 10.21%, and ACME holds the seventh position with 3.97% of market share.

ACMELAB was founded in 1954 as a proprietorship firm that was converted to a private limited company namely ACME Laboratories Limited (ACMELAB). Currently, ACMELAB manufactures more than 800 branded generic products covering broader therapeutic categories like Anti-Infective, Anti-Viral, Hormone, etc. On top of that, highly skilled and experienced R&D and dedicated manufacturing & quality control deliver modern herbal, Nutraceutical products, and Ayurvedic formulary products. ACMELAB also focuses their herbal medicine since the demand of herbal medicine is increasing day by day, with a huge prospect in our country.

ACMELAB continues to work to increase its global footprint. For this purpose, BDT606 mn (out of the total fund of IPO proceeds) was allocated only for the construction of Active Pharmaceuticals Ingredients (API) projects, which will likely be completed on 30 June 2024. Besides, recently, the US Food & Drug Administration (US FDA) approved the “Chlorzoxazone 500 mg tablet” of this company, which is a prestigious accreditation and the company will enable them to export to the US market. The company is expecting the existing 13% top-line growth will be sustained in the future and the company is expanding its existing capacity to make room for future growth.

These flagship brands held substantial control over the market throughout the year. This company works to introduce a diversified portfolio in the upcoming year focusing on high-tech products. Besides a collaborative partnership agreement has been signed between ACMELAB & USAID to promote Anti-Microbial Resistance (AMR) solutions. 

Some of the flagship brands are listed below

MonasFIX-AFamiclav
MaximaCoralexDDR
EcosporinTPCOrthogen

According to the per share graph, the Net Assets Value (NAV) of ACMELAB is increasing in YOY. In the last financial year company’s NAV increased by 7.8% and the Earning Per Share increased by 35.1% which stated the company has significant progress in its bottom line. Industry as well as companies in this sector have faced challenges due to geopolitical concerns and also government’s tightening monetary policy. ACMELAB is no exception but the question is how this company deals with its difficulties and doing proactive business growth. The management of this company has taken several initiatives toward their product selection, resource allocation, and go-to-market and robust supply chain management that are expected to come out with positive results in recent years and upcoming years. Suppose we have seen the Profitability margin ratios and leverage ratios which reflect these measurements taken by the company. ACMELAB has a sustainable position to service its debt according to the leverage ratios.

Per Share

According to the per share graph, the Net Assets Value (NAV) of ACMELAB is increasing in YOY. In the last financial year company’s NAV increased by 7.8% and the Earning Per Share increased by 35.1% which stated the company has significant progress in its bottom line. Industry as well as companies in this sector have faced challenges due to geopolitical concerns and also government’s tightening monetary policy. ACMELAB is no exception but the question is how this company deals with its difficulties and doing proactive business growth. The management of this company has taken several initiatives toward their product selection, resource allocation, and go-to-market and robust supply chain management that are expected to come out with positive results in recent years and upcoming years. Suppose we have seen the Profitability margin ratios and leverage ratios which reflect these measurements taken by the company. ACMELAB has a sustainable position to service its debt according to the leverage ratios.

Challenges in Future

Bangladesh is enjoying generic drug production facilities valid until 2033 under Trade Related Aspects of Intellectual Property Rights (TRIPS) agreement. But after moving to the developing country in 2026, Bangladesh will stop enjoying this patent waiver. However, the Government is lobbying to extend the TRIPS waiver benefit until 2033. If local manufacturers want to maintain the production of these medicines, their royalty expense may increase. Therefore, the overall price of medicine in Bangladesh may shoot up. So, the Bangladesh Govt. and manufacturing industries should take the necessary initiatives to face these challenges. Pharmaceutical companies in Bangladesh must increase their manufacturing capacity, emphasize on R&D, and strengthen backward linkage to ensure sustainability. To secure an on-time supply of raw materials and backward integration, ACME Laboratories Limited has already completed its Construction work for the API Project, and machinery LC has already been opened for the said project.

The government of Bangladesh has declared the drug industry as a “Thrust” sector. So, to improve this sector, Govt. must take serious investments in R&D to create its own patented medicine and reduce its dependency on imports. Moreover, proactive measures must be taken by policymakers and industry stakeholders to mitigate the post-TRIPS scenario and deliver affordable drugs to the people.

Comments (2)

  1. Sakhawat

    13 Oct 2023 - 4:08 am

    Acme Size and Loan are little bit more. Otherwise It’s a nice company at this pricr.
    Make one Report about ACI Limited. This company has a lot of Subsidiaries, Loan is huge. Is it possible for them to continue growth repay this loan?

    • admin

      03 Jan 2024 - 5:15 am

      Sure, sir, we will try to prepare a report on ACI.

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