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Download Annual Report - Renata

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The Chairman’s StatementWelcome to the 40 th <strong>Annual</strong> General Meeting of <strong>Renata</strong> Limited.The year 2012 was extremely challenging for <strong>Renata</strong> Limited. Adverse developments on the macroeconomic front as well asslowdown in the industries that we operate in severely constrained our growth. The combined effect of currency depreciation, higherborrowing costs, and collapse of the poultry industry reduced our overall bottom-line growth by approximately Taka 280 million. As aresult, net profit and sales grew modestly at 14.36% and 17.67%, respectively.Furthermore, there are unmistakable signs of slowdown and structural change in the pharmaceutical industry. Figure No. 1 belowdepicts how the growth rate has been tapering off since 2010.FIGURE NO. 1Growth Rate of Bangladeshi Pharmaceutical Industry25.00%20.00%The most plausible explanation for this downward drift is thelack of blockbuster products in the market. With new drugdiscoveries becoming fewer and far between globally, genericcompanies in Bangladesh have had to generate growth byrelying on their existing products portfolio.15.00%10.00%5.00%0.00%FIGURE NO. 2:Share of Antibiotics in the Bangladesh Pharmaceutical Market30.00%25.00%20.00%15.00%10.00%5.00%0.00%2009 2010 2011 20122008 2009 2010 2011 2012There has also been a major structural shift in the Bangladeshpharmaceutical market. For decades, antibiotics delivered bothgrowth and volumes in the Industry. However, as Figure No. 2below shows, the share of antibiotics in the pharmaceuticalindustry has been falling over the last five years. The weakeningof the antibiotic segment also explains to a large extent theweakening of the pharmaceutical market in Bangladesh. Withnational health and hygiene programmes gaining momentum,antibiotic use is likely to erode further continuing this downwardtrend.This development should not take anyone by surprise – as acountry’s overall health improves, there is usually a shift inmarket demand from antibiotics to chronic and life-styleproducts.In anticipation of this evolution, <strong>Renata</strong> has been working forseveral years to develop our non-antibiotics portfolio. Whileinroads into chronic care products have been limited, we havemade considerable progress in over-the-counter (OTC)products. In 2012, our OTC portfolio grew by an impressive 35%and now constitutes nearly 25% of our overall product portfoliocompared to 14% only five years ago.Two additional diversifications to our range of products areworth mentioning. First, our latest subsidiary, <strong>Renata</strong> OncologyLimited, will introduce a range of new oncology products in thecoming years. Second, the newly constituted herbal division hasbeen working to enter the fast growing herbal product marketwith a few well chosen products, which will be marketed throughour subsidiary Purnava Limited.We continue to believe that the most effective way to ensuresustained growth is by expanding our exports. Although accessingforeign markets has proved difficult for all Bangladeshipharmaceutical companies including <strong>Renata</strong>, there are signs ofprogress. By accessing institutional markets, we have been ableto raise our short-term growth prospects. In 2012, our exportsgrew by 89% largely due to new institutional business. In addition, 88 dossiers in 14 countries were filed, while 57 approvals fromprevious filings were received. Finally, we added several products to the development pipeline for accessing the EU markets.As I alluded to earlier, our animal health business was adversely affected due to the collapse of the poultry industry. Figure 3 showshow the outbreak of Avian Influenza (AI) reduced production of day-old-chicks by nearly 50%.•6

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