group_3_690_122

Case Study on “Doing Well by Doing Good

Ethical Challenges of

Case Study on “Doing Well by Doing Good—Strategic Management of

Ethical Challenges of Eskayef Bangladesh Limited”

Strategic Management of

Eskayef Bangladesh Limited”

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North South University

A Case Study on “Doing Well by Doing Good—Strategic Management of Ethical

Challenges of Eskayef Bangladesh Limited”

Prepared for

Dr. M. Mahboob Rahman

Associate Professor, School of Business


Prepared by Group-3

Kazi Mehadi Hasan ID# 112 0568 060

Musabbirul Islam ID# 113 0074 660

S. M. Shibli Noman Khan ID# 111 0950 060

B M Mahbubul Alam Razib ID# 102 0657 060

Nazmoon Naher Nishu ID# 113 0324 660

Course: BUS 690, Section-3

Date of submission

August 31, 2012

NORTH SOUTH UNIVERSITY

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ACKNOWLEDGEMENT

It really was a great challenge for us to prepare such a unique sort of report. First of all, we present our

due regards to the Almighty, who has provided us the brilliant opportunity to work hard and complete

this case study successfully with good health & sound mind. Our course instructor, Dr. M. Mahboob

Rahman, Associate Professor, School of Business, North South University helped us all the way through

the preparation of this case study. We really want to express our gratitude towards him for giving

valuable advices and times, which helped us immensely in preparing this report.

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Table of Contents

EXECUTIVE SUMMARY .............................................................................................................................................. 5

INTRODUCTION ......................................................................................................................................................... 6

COMPANY PROFILE.................................................................................................................................................... 7

ESKAYEF’S SUCCESS STORY ........................................................................................................................................ 8

PRINCIPAL SOURCES OF ESKAYEF’S COMPETITIVE ADVANTAGE ............................................................................. 10

ETHICAL CHALLENGES THAT ESKAYEF FACES ON ITS PATH TO SUCCESS ................................................................ 12

TO WHAT DEGREE IS ESKAYEF AFFECTED BY ETHICAL CHALLENGES AND ITS RESPONSE ....................................... 14

RIVALRY SITUATION OF THE INDUSTRY ................................................................................................................... 15

SUCCESS AND ETHICS FROM BUSINESS PRESPECTIVE ............................................................................................. 18

FACTS OF SUCCESS AND ETHICS ON GROUND OF ESKAYEF .................................................................................... 19

KEY ETHICAL DILEMMA ........................................................................................................................................... 20

CONCLUSION ........................................................................................................................................................... 22

RECOMMENDATIONS FOR ESKAYEF ........................................................................................................................ 23

REFERENCE .............................................................................................................................................................. 25

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EXECUTIVE SUMMARY

A real understanding of the right and the wrong and the ability to distinguish between them is

ethics. Ethics is an important part of life and running a successful business is no exception to

this. To become successful, a business needs to be driven by strong ethical values. This report

provides a case study over Eskayef Bangladesh Limited (SK+F), a firm in Bangladesh that has

striven to implement global standards of ethics, and has been successful nonetheless. This

company is one of the leading and fastest growing pharmaceutical companies in Bangladesh. It is

a successor of Smith Kline & French in Bangladesh and was acquired by Transcom in 1990. In

one area where it has never compromised is quality. The highest global standard has been

maintained rigorously whether the company made profit or not. The principal source of the

Eskayef’s competitive advantage is its Total Quality System.

Unfortunately business cannot always be conducted ethically. The desire to maximize the profit

can lead companies to adopt unethical practices and Eskayef has to face these challenges in order

to run its business. Examples of such challenges would be unethical marketing of medicines,

manufacturing of fake medicines, not adhere to international quality standards. The company is

committed to high standard business conduct. It is vital to the reputation and financial success of

the company that it conducts business with honesty and integrity and to comply with all

applicable legal and regulatory requirements. In order to address ethics related challenges, the

government can ban promotion of targeting physicians in any form other than professional by the

pharmaceutical companies, strengthen the Directorate General of Drug Administration (DGDA),

set up many awareness campaigns and few other measures. Thus, we believe that the

recommendations that we tried to develop will be helpful in reducing the amount of unethical

practice and assist companies like Eskayef to excel in their pursuit of high quality products.

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INTRODUCTION

Large corporations or small businesses, all types of business often face ethical issues and

challenges. A true understanding of the right and the wrong and the ability to distinguish

between them is ethics. Ethical issues in business used to define administrative rules and

regulations or a standard that must be followed. However top level management and small

business owners have now realized that "business ethics" if properly interpreted means the

standards of conduct of individual business people, not necessarily the standards of business as a

whole.

We have seen successful and profitably running businesses suffer from a downfall and some

seemingly effective firms receive a great fall in their profits and popularity. One of the main

reasons behind these surprising failures was the lack of business ethics. Ethics is an important

part of life and running a successful business is no exception to this. To become successful, a

business needs to be driven by strong ethical values. The mindset of a businessman creates a

mindset for his company, which in turn sets the work culture of that business firm. For a business

to prosper and maintain its wealth, it ought to be founded on certain ethical principles. A

business that is based on ethics can run successfully for long years.

To reestablish this fact we have conducted a case study over Eskayef Bangladesh Limited

(SK+F), a firm in Bangladesh that has striven to implement global standards of ethics, and has

been successful nonetheless. It is one of the fastest growing pharmaceutical companies in

Bangladesh and is engaged in the manufacturing and marketing of a wide range of therapeutic

drugs, bulk pellets and animal health and nutrition products. We tried to cover some of the

primary ethical challenges faced by Eskayef and also assessed the degree at which the

company’s success affected by those ethical challenges and the firm’s responses to those

ethical challenges in the context of pharmaceutical industries of Bangladesh.

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COMPANY PROFILE

In Bangladesh the pharmaceutical sector is one of the most developed high-tech sectors and is

contributing in the country's economy. The approximate total pharmaceutical market size in

Bangladesh is about 436 million USD per year. Around 95% of the total requirement of

medicines is created by the local companies and the rest 5% is imported. After the

promulgation of Drug Control Ordinance - 1982, the development of this sector was accelerated.

Due to recent development of this sector it is exporting medicines to global market including

European market. There are 246 licensed pharmaceutical factories in Bangladesh, six of them

are owned by multinational companies producing about 10.4% of the local production.

Locally produced drugs meet 93.4% of the local drug demand in Bangladesh. Leading

pharmaceutical companies are expanding their business with the aim to expand export market.

Eskayef Bangladesh Limited (SK+F) is one of the leading and fastest growing pharmaceutical

companies in Bangladesh.

Eskayef is a successor of Smith Kline & French in Bangladesh. It was acquired by Transcom in

1990. It currently has an annual turnover of USD 39 million and approximately 1250 employees

are working in this company. Eskayef envisions a leading role for itself as a catalyst for

improvement of the healthcare environment. The company's mission is to maintain people's

health and combat disease to enhance the quality of human life so that people may live longer,

healthier and more meaningful lives.

A fundamental policy of Eskayef is that all employees must observe and comply with the laws

and regulations applicable to the company’s business and that they act with high standards of

business integrity. With qualified, trained and skilled professionals on its staff and its

unswerving standards of quality control, this company has distinguished itself as one of the most

respected names in the pharmaceutical industry.


ESKAYEF’S SUCCESS STORY

Eskayef, in its first year in 1990, turned over Tk 1.30 crore with a loss of Tk 90 lakh. Since then

the company has not looked back. In one area where it has never

highest global standard was followed and maintained rigorously in that period of time, no matter

whether it made profit or not.

Chart

In 2010 Top four local pharmaceutical companies poste

first eight months. Intercontinental Marketing Services (IMS), a global intelligence agency for

the pharmaceutical market showed a 34.9 percent rise in Eskayef sale in the first six months of

the year and managed Tk 426 crore in sales

highest among the local companies, 49 percent growth during January

year. This local pharmaceutical industry was worth Tk 7,000 crore at that time. Increased

prescription coverage, an improved quality of products and its marketing strategy contributed to

growing sales in local and international markets.

sales in the year 2011, the highest in the industry, riding on product

marketing. Its sales in the animal health business segment also posted the highest growth, taking

the turnover to Tk 61 crore in 2011 year, which was Tk 45 crore in 2010. In 2012 the company

has set a target to take its sales to


ESKAYEF’S SUCCESS STORY


the company has not looked back. In one area where it has never compromised is quality. The


Chart-1: Sales of top five companies in 2010

Top four local pharmaceutical companies posted over 30 percent growth in sales in the

Intercontinental Marketing Services (IMS), a global intelligence agency for

showed a 34.9 percent rise in Eskayef sale in the first six months of

426 crore in sales during April 2009 to March 2010. It recorded, the

highest among the local companies, 49 percent growth during January-March of that calendar


ription coverage, an improved quality of products and its marketing strategy contributed to

growing sales in local and international markets. Eskayef posted nearly 25 percent growths in

sales in the year 2011, the highest in the industry, riding on products innovation and aggressive



has set a target to take its sales to Tk 563 crore.

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compromised is quality. The


d over 30 percent growth in sales in the

Intercontinental Marketing Services (IMS), a global intelligence agency for

showed a 34.9 percent rise in Eskayef sale in the first six months of

during April 2009 to March 2010. It recorded, the

March of that calendar


ription coverage, an improved quality of products and its marketing strategy contributed to

Eskayef posted nearly 25 percent growths in

s innovation and aggressive



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Eskayef is an extremely quality driven and scientific information based company. Its

manufacturing facility at Tongi has achieved the approval from the UK MHRA (United

Kingdom Medicines and Healthcare products Regulatory Agency). The approval of UK MHRA

was given based upon the rigorous inspection by the Department of Health of UK Government

on August 08, 2008..It is the only company in Bangladesh to get both UK MHRA and TGA

(Therapeutic Goods Administration), Australia accreditation. Under the contract of

manufacturing deal between Eskayef and the world's biggest insulin maker Novo Nordisk, a

high-tech insulin manufacturing plant has been opened at Tongi in the hopes of providing world-

class medicines to the country's growing diabetic patients. The plant is the third set up by Novo

Nordisk in Asia after China and India.

As the first pharmaceutical company of Bangladesh, Eskayef has exported their first

consignment to Indonesia as the first medicine export to Indonesia. Eskayef is growing more

global since 2005 and exporting bulk pellets and finished products in Asia, Africa, and Central

America and also in the process of exporting in the European countries. The company is also tied

up with the world leader in eye care solution Allergan Inc. Ireland. Also as a part of business

expansion, it has already submitted more than 200 registration dossiers in 15 new countries and

another 8 countries are under registration pipeline.

In addition to their success, Mr. Latifur Rahman, chairman of Eskayef Bangladesh, has been

conferred with the "Oslo Business for Peace Award 2012.The achievement has inspired local

entrepreneurs to do ethical and responsible business. He has set an example through Eskayef that

business is possible with ethics and integrity

Eskayef Bangladesh Ltd has also involved in many CSR activities. In 2005 On the occasion of

the Bangla New Year, it distributed 'Neosaline', a glucose-based oral rehydration in the city.

Moving pickup van of the company distributed the Neosaline among the people in Shahbag, TSC

and Ramna areas. In 2007, Eskayef donated 3000 bird flu capsules (SK-flu) to Health and

Family Welfare Adviser at the conference hall of health ministry in the city on April 24. In 2008

the company provided Centre for the Rehabilitation of the Paralyzed (CRP) with some donations

for the treatment, education and development of the children with disabilities of CRP.

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PRINCIPAL SOURCES OF ESKAYEF’S COMPETITIVE ADVANTAGE

The principal source of the Eskayef’s competitive advantage is its Total Quality System. It has

inherited the Standard Operating Procedures and Quality-Approach of SmithKline & French.

The management of the company believes in effectiveness of a quality system based on the

principle of continuous improvement, progress and prevention as per WHO recommended

guidelines. It’s WHO audited plants produce the products conforming to the highest international

standards.

At each and every stage of the manufacturing process it uses the most advanced technology for

quality control and to maintain the excellence that it strives to achieve. It has also built the

Quality Assurance System to satisfy the high quality demands. This system maintains the

specifications of the international standard. These procedures assure consistent high quality,

improved safety of the work environment.

For any pharmaceutical company maintaining quality of the products as well as working

ethically is very essential for the organization’s success. Eskayef is no different. One of their

main reasons of being outstandingly successful is that they are committed to high standard

business conduct. It is vital to the reputation and financial success of Eskayef that they conduct

their business with honesty and integrity and in compliance with all applicable legal and

regulatory requirements. It discloses data from international clinical trials no matter what the

outcome indicates. It conducts sophisticated pharmacovigilance programs to identify new

adverse events, address them and communicate them quickly to regulatory agencies as well as to

healthcare professionals and patients.

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In addition to exacting manufacturing standards the company does everything to protect patients

from counterfeit products.

Eskayef rigorously investigates all cases of counterfeiting of its medicines. In the fight against

counterfeiting, Eskayef is equipped with the following means to act responsibly:

� Modification programs for the packaging of the products to make the

manufacturing/copying of counterfeits more difficult and to facilitate detection.

� Special security seal on the packaging of each product.

� A taskforce having representatives of all Group departments concerned (Operations,

Legal, Regulatory, Manufacturing, Quality Assurance and Security) to act as a

continuous vigilance team.

� Security investigations and legal actions.

From the very beginning, rapid business growth has propelled Eskayef to a position of eminence

among the pharmaceutical companies operating in Bangladesh today. Its manufacturing facility

has transcended the frontiers after the accreditation of UK MHRA. The dedicated cephalosporin

plant of this company is the top class state-of-the-art manufacturing facility in Bangladesh

Pharmaceutical industry. The company manufactures high quality pharmaceutical health care

products. Its Quality Assurance practices of WHO recommended standard was certified by both

UNICEF and SB’s international Auditors.

Eskayef started its operation with pharmaceutical finished products for the home

market. Over time it has managed to diversify its operations into bulk products as well as animal

health and nutrition products. Now it manufactures and markets 160 pharmaceutical products

with more than 300 dosage forms and has established 22 products as the brand leader in the

market.

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ETHICAL CHALLENGES THAT ESKAYEF FACES ON ITS PATH TO SUCCESS

Unfortunately business is not always conducted ethically. The desire to maximize the profit and

move ahead of other companies can sometimes stimulate companies to find loopholes in laws

and regulations and to exploit such opportunities as well as develop new means to outsmart the

competitors. In doing so, some ethical boundaries at times are overstepped, and listed below are

some ethics related challenges or factors which seem to be taking place in the Bangladeshi

pharmaceutical industry and Eskayef has to face these challenges in order to run its business.

� Unethical marketing of medicines is pretty common in Bangladesh. Examples of such

activities which are observed include off-label promotion of drugs, delivery of half truths

about the product, dodging of contraindications, and exaggeration of usefulness.

� As pharmaceuticals are not allowed to promote their medicines to the mass people, and

the patients follow the prescriptions given by the physicians, pharmaceutical companies

try to influence the physicians in numerous ways.

� Pharmaceutical companies give gifts to the physicians in the form of desk items,

household and personal items, patient care leaflets etc, thus trying to persuade the

physicians to prescribe their medicines to the patients.

� It has been found that 50 percent of medicines in Bangladesh are inappropriately

prescribed, dispensed or sold.

� It is interesting to note that the whole issue of ethics in medical practice is taught in the

third and fourth year of the MBBS course. The topic is very small in comparison to other

topics in the syllabus, and it is taken very casually by most students and hence, the

matter of ethics hardly receives the required attention. This matter is really worth noting

considering the condition of ethical medical practicing in Bangladesh, and gives us the

impression that the concept of ethics is not of high importance to the health sector in

Bangladesh.

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� Improper or imperfect recruitment of employees can be a major issue as well. For

pharmaceutical companies, Human resource is a very important aspect, and how

competent the employees of a company are can play a major role in the success story of

an organization. The most suited and candidates most adequately educated to work in

this industry should be recruited.

� Rid Pharmaceuticals Ltd was once held responsible for the death of 27 children after

they had taken paracetamols manufactured by the company. Hence, there has been a

requirement to introduce quality control mechanisms which will be monitored by the

government.

� The rise in the prices of medicines has become a great concern. The manufacturing

companies claim that this is due to the rise in prices of the raw materials in the

international market and the depreciation of the taka against the US dollar. Moreover,

this rise has been within a very short interval of time.

� It has been found in a study that the price variation amongst the various pharmaceutical

companies is higher in case of Over the Counter (OTC) products and antibiotics, and the

price variation is less among the chronic care products. Thus, there is a notion that the

companies are considering per pill profit even though there are strict price regulations set

by the government.

� Fake medicines are a real threat to public health. Even though there is no data available

concerning the specific quantity of adulterated drug sale in the country, law enforcing

agencies seize huge amounts of such drugs every year across Bangladesh.

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TO WHAT DEGREE IS ESKAYEF AFFECTED BY ETHICAL CHALLENGES AND ITS RESPONSE

Problems such as fake medicines, unethical means of promotion, poor quality of manufactured

medicines and similar issues cannot be ignored. These factors have a direct impact on the

revenues generated by the pharmaceutical companies and therefore the companies have to react

to these challenges. Eskayef is committed to high standard business conduct. It is vital to the

reputation and financial success of Eskayef that they conduct business with honesty and integrity

and in compliance with all applicable legal and regulatory requirements.

“In one area where we have never compromised is quality"—Latifur Rahman, Chairman of Eskayef.

Its manufacturing facility in Tongi has achieved approval from the UK MHRA (United Kingdom Medicines

and Healthcare products Regulatory Agency) and TGA (Therapeutic Goods Administration) of Australia,

to help it become the only company in Bangladesh to get both the accreditations.

"We will soon take our products to the United States,"— Latifur Rahman, the Chairman of Eskayef

Total Quality System is the key to maintaining the quality by Eskayef. They have inherited the

Standard Operating Procedures and Quality-Approach of SmithKline & French. WHO audited

Eskayef’s plant and the medicines manufactured conforms to the highest international standards.

It is a fundamental policy of Eskayef that all employees observe and comply with the laws and

regulations applicable to the company’s business and that they act with high standards of

business integrity. No manager has the authority to order or approve any action that is contrary to

any laws or regulations, or to the relevant Standards, and employees should not compromise the

Standards for the sake of results under any circumstances. All employees are expected to follow

the law and adhere to high ethical standards. Openness, trust and integrity are fundamental

Eskayef values which must be respected. Each employee is entitled to fair, courteous and

respectful treatment by his or her supervisors, subordinates and peers. Eskayef does not tolerate

discrimination or harassment based on race, religion, creed, national origin, sex, disability, age or

any other relevant category. Furthermore, no employee may personally benefit in an improper

way.

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RIVALRY SITUATION OF THE INDUSTRY

Pharmaceutical sector is technologically the developed manufacturing industries in Bangladesh

and the third largest industry in terms of contribution to government’s revenue. The industry

contributes about 1% of the total GDP. There are about 250 licensed pharmaceutical

manufacturers in the country; however, currently a little over 100 companies are in operation. It

is highly concentrated as top 20 companies produce 85% of the revenue. According to

IMS, a US-based market research firm, the retail market size is estimated to be around BDT 84

billion as on 2011.

Based on the IMS report for the fourth quarter 2011, Square Pharmaceuticals (DSE:

SQURPHARMA) holds the top market share in the retail market - 18.7%, followed by

Incepta Pharmaceuticals (INCEPTA) - 9.3%, Beximco Pharmaceuticals (DSE: BXPHARMA)

- 8.8%, Opsonin Pharma (OPSONIN) - 5.1% and Renata (DSE: RENATA) - 4.9%. The top

five companies held 46.8% market share in 2011, slightly more than their 46.2% market

holding in 2010 - indicating cumulative revenue growth in excess of the sector growth.

Among the top five, three are listed in DSE – Square, Beximco and Renata. Top 10 companies

held 67.7% of the market in 2011 as shown in chart 1. Growth at par with the entire

market meant that there cumulative holding did not change from 2010 level. However, the

market share shifted among the top players. SQURPHARMA lost 0.5% market share in the

last year (from 19.2% in 2010) while the next four companies gained 1.1% market share in

the same period. Growth in local sales of these four companies – INCEPTA, BXPHARMA,

OPSONIN and RENATA – was 28.5% in 2011, increasing their market share from 27.0% in

2010 to 28.1% in 2011. Chart 2 in the next page compares the growth rate for the top companies.

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If we go further down the list of top pharmaceutical companies, the top 15 companies

held 77.7% market share in 2011 (which remained unchanged from 2010 level) and top

20 companies held 84.9% market share in 2011 (slightly higher than 84.6% in 2010). It can

be easily seen from the numbers that the concentration of sales is centered among the top

players, in particular, the local manufacturers. Local manufacturers dominate the industry,

enjoying about 90% market share while multinationals hold little over 10% market share. Apart

from SQURPHARMA, BXPHARMA and RENATA, three other companies among the top 20

companies are listed in the DSE - ACI (ranked 7th), GlaxoSmithKline Bangladesh (ranked 15th)

and The IBN SINA (ranked 20th).


The Chart given below gives us an idea of the percentage market share of the major players in

terms of sales in Tk. in the industry in 2012.

Company

SQUARE INCEPTA PHARMA

Market Share (%)

18.42

Chart 3: Market share of Pharmaceutical companies

From the chart it can be seen that Square pharmaceuticals is the market leader, with Eskayef in

6th position. ACI is the closest competitor of Eskayef with a percentage share of 4.31 percent.

44%

Market Share of Various

Pharmaceutical Companies in



terms of sales in Tk. in the industry in 2012.

INCEPTA PHARMA

BEXIMCO

OPSONIN PHARMA

RENATA

9.52 8.88 5.52 4.92

Chart 3: Market share of Pharmaceutical companies -


position. ACI is the closest competitor of Eskayef with a percentage share of 4.31 percent.

18%

10%

9%

5%5%5%4%

Market Share of Various

Pharmaceutical Companies in

Bangladesh-2012SQUARE

INCEPTA

PHARMA

BEXIMCO

OPSONIN

PHARMA

RENATA

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ESKAYEF

A.C.I.

OTHERS

4.74 4.31 43.69

-2012


position. ACI is the closest competitor of Eskayef with a percentage share of 4.31 percent.

SQUARE

INCEPTA

PHARMA

BEXIMCO

OPSONIN

PHARMA

RENATA

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SUCCESS AND ETHICS FROM BUSINESS PRESPECTIVE

From an ordinary insight, we can say success is fulfillment of any plan or target. When we are

defining the success in arena of business then it means achieving the expected rate of return on

investment which is the yardstick to measure success for any business firm for its survival

concern. Achieving that rate of return and the growth of profit can sustain only through

managing the targeted customer base by serving them better than the other competitors to ensure

the satisfaction. This is the major challenge for any business firm across the industry and

regional territory and that is why the format of game is manipulated or violated through unethical

means.

From an organizational management perspective, ethics is meeting the promise which it has

made. The first promise businesses make to its shareholders is that they will maximize the value

of the firm (growth in profit), second promise they made to the customers both internal (HR) and

external that they will provide some exceptional value (ensuring quality) to them and third

promise they made to the society that they will not violate any legal or social norms of doing

business in a particular region or country (paying corporate tax). Apart from these, we believe

there is no such logical and relevant ethical issue which a business organization should address

while doing operation since business firm is not a charity organization and it has certain promise

to keep to the shareholders and customers who are the part of this society. There are certain

differences between firms who are in the social business and corporate business, moreover the

ethical background should not be same through a one blanket approach.

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FACTS OF SUCCESS AND ETHICS ON GROUND OF ESKAYEF

Eskayef is one of the leading pharmaceutical companies in emerging economy of Bangladesh.

There are many factors which are behind their success as well as there are certain ethical issues

which have been faced by Eskayef on their way of doing business. If a business firm wants to

keep its prime promise to the shareholders then it needs to satisfy the customers, as we know

only internal customers (HR) can make the external customers. The HR policy of Eskayef is one

of their major success factors and which is giving them the advantage over the competitors to

satisfy the external customers and consumers. The fair recruitment process, standard

remuneration, job environment, equality, transparency of appraisal, recording all documentation

and the scope of knowledge expansion are the factors which has helped Eskayef to establish a

well trained and developed human resources team to satisfy the customers while other

pharmaceutical companies in Bangladesh are practicing the dominant HR policy only to ensure

profit by exploiting the employees through the loop holes of weak labor law and poor

monitoring. In addition with that it should be kept in consideration that only good HR can’t

ensure the quality while we are discussing about a critical industry like pharmaceutical. The

quality is vital driver for the success and ensuring the ethical obligation of manufacturing drugs

while majority of the firms in this industry is manufacturing the drugs in such way which can be

a threat to death for the patients. Let’s see the other side of the coin, although quality inspection

is an additional expenditure but Eskayef has build their quality control mechanism in such a way

which meets the international standard and the ingredients which are been used to manufacture

drugs mostly are imported from advanced nations.

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KEY ETHICAL DILEMMA

The key interesting fact of pharmaceutical industry is their marketing and promotional strategy

which they design to meet their marketing and sales need. According to the regulation, any

pharmaceutical company can’t go for direct marketing or promotional activities. To bypass this

regulatory clause many pharmaceutical companies design a tricky promotional strategy to ensure

the marketing and promotion of their products in market by giving gift to the physicians.

“Pharmaceutical companies have been providing everything except grocery (kacha bajaar).

During the last Eid they provided perfumed rice (polao er chal), sugar, vermicelli (semai) etc.

So it’s not easy to say what they don’t offer us.”---A Doctor

Now the burning question can come to the mind that is that ethical or not to giving gifts to the

physicians. It’s a matter of debate still but we need to analysis an issue not only by the intention

but also by the reaction. According to a recent research 52.94% of the pharmaceutical companies

thought that the promotion of pharmaceuticals depended on gift items to physicians. Most of the

physicians like regular visit of pharmaceutical company representative with any sort of gift,

17.5% of physicians prefers visit with expensive gift and only 6% of physicians prefers visits

with cheap gift. In conventional marketing program most of the company offers some gift items

to the salesmen to motivate them so that they influence customer to purchase their company

product. Consumers can easily examine the quality of product from his experience but not for the

pharmaceuticals products since this is a different industry where physicians (seller) have much

more knowledge about the product than that of patients (consumers) and physicians have the

buying decision power over the patients. 82.4% pharmaceutical companies thought

pharmaceutical marketing is different from the conventional marketing programs. Then it should

be also admitted by the pharmaceutical companies that influential motivation to the physicians to

prescribe sensitive products like drugs can cause much more damage to society than that of any

conventional product.

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Only 11.7% of pharmaceutical companies believe that promotional strategy should be designed

by ensuring high quality and making the drugs available to patients. In a pharmaceutical industry

where majority of manufactures and physicians are giving priority to promotional gift items

above the quality and distribution, moreover the probability and level of getting caught and

punishment is very low there should be high chance that most of the competing firms will avoid

compliance due to survival and profit concern as non compliance has strong dominance over

compliance. It is tough for any firm to sustain in long run by addressing compliance in context of

Bangladesh.

Here is the dilemma for a firm who wants to operate with respecting the compliance but the

regulatory and industry nature is not letting it to be on right track. The firms which prefer the

ethical issues over earning the profit growth in wrong manner should influence or motivate the

regulatory bodies to be involved in this industry for having the socially optimal Pareto Nash

Equilibrium. The regulatory intervention like the case of tobacco industry in U.S.A. is needed in

form of restricting the promotional gift items to the physicians and only then the competition will

be on quality and availability of drugs, moreover most of the firms will meet the ethical

obligations to shareholders, customers and society by the smooth way of their business

operation.

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CONCLUSION

The Bangladeshi pharmaceutical industry has great prospects within the economy. The industry

has the presence of some global pharmaceutical giants, and these giants are facing stiff

competition from some strong local companies. All in all the competition for the larger chunk of

the market share is extremely competitive. In such environments, doing well by doing good, or

as it can be said, doing ethical business adds another dimension to the entire competition. As it

has been found out, various ethically questionable practices have been adopted by companies in

the industry in order to boost their sales volume. With direct promotional activities being

restricted, the marketing part of the sector becomes even more difficult to execute and then of

course, be successful at it. As medicines manufactured in Bangladesh are now being exported, it

is of extreme importance that the quality of the medicines is of international standards, as this

will help the nation earn foreign currency along with good reputation. Fake medicines are a huge

threat, to both the people buying them, and the actual manufacturers, the law enforcing agencies

to try their level best to stop such acts from occurring. We believe that the recommendations that

we tried to develop will be helpful in reducing the amount of unethical practice and assist

companies like Eskayef to excel in their pursuit of high quality products.

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RECOMMENDATIONS FOR ESKAYEF

Eskayef is a company which is committed to high quality product. In order to continue its growth

it has to make sure that it is fully ready to face challenges posed by the industry as well as the

ethical issues that are present. Listed below are a few initiatives that Eskayef can adopt along

with the help of the government to address such matters.

� Promotion targeting physicians in any form other than professional by the pharmaceutical

companies have to be totally banned in order to create a level playing field for all the

companies, where the pharmaceutical companies shall only compete in terms of price of

the medicine but at the same time maintaining the acceptable level of medicine quality.

Interestingly neither doctors nor medical representatives were found to be aware about

the existing code of pharmaceutical marketing (e.g., clause 19-2 which states that “no gift

or financial inducement shall be offered or given to members of the medical profession

for purposes of sales promotion”.)

� Set up awareness campaigns in educational institutes such as Universities and School,

thus enhancing the health related knowledge of the youth as they would recognize the

importance of being healthy and at the same time understand how important it is to act

ethically if one is involved in the health sector. At the same time, educating the health

professionals (including medical representatives) on ‘code of pharmaceutical marketing’

and building awareness on drug prescribing ethics is very important. Promotions

targeting the drug shops should also be banned and properly regulated.

� Persuade the government to set up strong quality inspection regulations so that the best

quality or at least medicines of acceptable quality is produces by all the firms in the

industry. More support can be sought from WHO so that high standards are always

maintained.

P a g e | 24


� Strong monitoring of the Law enforcing agencies is needed in order to stop the

manufacturing of counterfeit medicines as such practices tarnish the image of the nation

as a medicine exporting country and at the same time can be very risky for the patients

and cause great financial losses to the original medicine manufacturers.

� The Regulatory authority of Bangladesh, The Directorate General of Drug

Administration (DGDA) could be strengthened as it seems to suffering from manpower

crisis. If such is the case then competent people should be appointed as soon as possible

so that the regulatory body can perform its duties in the best possible manner.

P a g e | 25


REFERENCE

� Eskayef Bangladesh Limited website http://www.skfbd.com

� Banglapedia (2003). Pulished by Asiatic Society of Bangladesh. ISBN 984-32-0585-5,

Bangladesh 3: 392

� The Daily Star website: http://www.thedailystar.net

� www.wikipedia.org

� Sanofi Anti-Counterfeit Coordination Newsletter #3, August 2012

� Interview with Mr. Md. Rabiul Islam, Product Executive, sanofi-aventis Bangladesh

Limited

� IMS MAT Q2/2012

� Bangladesh Health Watch report 2009, How Healthy is Health Sector Governance?

� Chowdhury, Nishat & Kabir, Eva Rahman. Per pill price differences across therapeutic

categories: A study of the essential drug brands marketed by multinational and local

pharmaceutical companies in Bangladesh, African Journal of Marketing Management

Vol. 1(9) pp. 220-226, December, 2009

� Sultana, Saki & Khosru, Kamrul Hasan. Practice of using gifts as promotional materials

for marketing of pharmaceutical products in Bangladesh: A survey conducted on general

physicians and representatives from pharmaceutical companies, Stamford Journal of

Pharmaceutical Sciences

� Issue Monitor, Sharing Knowledge on Topical Issues in the Pharmaceutical Industry,

June 2011, Volume 09, KPMG INTERNATIONAL

� http://www.bangladesh-web.com/view.php?hidRecord=154642

� http://www.newstoday.com.bd/index.php?option=details&news_id=19993&date=2011-

02-12

� http://www.unbconnect.com/component/news/task-show/id-41429

� http://www.thefinancialexpress-bd.com/more.php?date=2012-07-09&news_id=135861

� http://www.thefinancialexpress-bd.com/2009/08/02/74962.html

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