Beximco Pharmaceuticals: Completion of Preference Share Placing and Update on Strategy

Beximco Pharmaceuticals Limited (“BPL” or “the Company”; AIM Symbol: BXP) announces that the placing of 41,000,000 fully convertible, six month 5% dividend, preference shares of Taka 100 each (“Preference Shares”) has been fully subscribed (the “Placing”).

The Board of Directors of the Company has allotted the preference shares to the respective subscribers against their subscriptions. The allotment of Preference Shares is summarized as follows:

Beximco Holdings Limited, a company of which Mr Salman Rahman and Mr Sohail Rahman are both Directors and which currently has an interest in 11,643,453 Ordinary Shares of BPL (representing 7.7% of the issued share capital of the Company) acquired 8,163,702 Preference Shares in the Placing in order to maintain the shareholding proportion of the original Sponsors of the Company. In addition, New Dacca Industries Limited, a company owned by Mr Sohail Rahman (Chairman) and Mr Salman Rahman (Vice Chairman) acquired an additional 6,350,000 Preference Shares in Placing.

The participation in the Placing by New Dacca Industries Limited and Beximco Holdings Limited is a related party transaction under AIM Rule 13. The directors of the Company, having consulted with their Nominated Adviser, consider that the terms of the transaction are fair and reasonable insofar as shareholders are concerned and were identical to the terms applied to all other participants in the Placing.

Half of the Preference Shares will convert into ordinary shares on 1 February 2010 and the remainder on 2 May 2010 at a 25% discount to the weighted average price of the Company’s shares on the Dhaka Stock Exchange in the three-month period before the respective dates. Changes to the Company’s ordinary share structure will be announced after each conversion date.

Use of Proceeds

The Company is currently constrained by production capacity and will use the proceeds of the Placing to undertake the following expansion and diversification projects (together referred to as Balancing, Modernisation, Replacement and Expansion or “BMRE”):

1. Completion of additional three Oral Solid Dose (“OSD”) lines at the Track II plant. The Company’s existing OSD plant has capacity for five lines of which two lines are in operation and fully utilized. With recent certifications by Australia’s Therapeutic Goods Administration (“TGA”) and the Gulf Cooperation Council (“GCC”) of these two lines, Beximco expects significant sales growth and the Company has received interest from third parties for contract manufacturing. With further approvals expected, it is essential that the remaining three lines are completed as soon as possible.

2. Setting up a new Metered Dose Inhaler (“MDI”) Unit with a capacity of 20 million units per annum. The current facility, which can produce 3.6 million units of annual production, is running at full capacity.

3. Setting up a new Dry Powder Inhaler (“DPI”) plant. Beximco is very strong in the respiratory sector owing to its long-term expertise and presence in the MDI market. However, there are certain potential products for which MDI formulation is not possible and these require DPIs. As DPIs can be sold on a single-use basis, the Company has also identified a market opportunity in semi-urban and rural areas where patients are particularly cost-conscious.

4. Expanding the current small capacity Nasal Spray facility. The Company’s existing Nasal Spray facility is of a very small capacity and does not fully meet US Food and Drug Administration (“FDA”) and European guidelines. In order to enhance capacity and to market these products to developed market standards a new facility will be built along-side the new MDI.

5. Capacity expansion of the existing multi-purpose Active Pharmaceutical Ingredient (“API”) plant. The feasibility study for a ranitidine API plant has shown that the project is extremely viable making it very attractive for both domestic and export markets. Accordingly, Beximco has entered into an agreement with one of the leading manufacturers of Ranitidine API to set up the plant on a turnkey basis including transfer of technology. The same facility can manufacture a number of other APIs which have significant demand from domestic pharmaceutical companies.

6. Setting up a new Paracetamol API Unit. The existing low capacity plant is more than 12 years old and needs upgrading. The demand for Beximco’s Paracetamol formulation has significantly grown over the last few years and the Company is currently forced to buy Paracetamol API from other manufacturers.

7. Capacity expansion of Large Volume Parenterals production facility. Although the Company is a domestic market leader in large volume IV fluid products, it does not currently have product offerings in the Total Parenterals Nutrition (TPN) market. Experts estimate current market size to be of around Tk.1000 million (in units: around 3.3 million bottles), growing more that 50% over last year. To get into this high-growth market that is currently dominated by only three companies, immediate investment is required to expand the existing manufacturing facility to accommodate the range of TPNs.

8. Capacity expansion of existing Ophthalmic and Injectable facility. Presently ophthalmics, small volume parenterals (“SVPs”) and nebulizers are manufactured in a composite modular facility with limited output. With the expected increase in sales and the introduction of a number of new products, Beximco intends to construct a separate facility to cater to market needs.

9. Setting up Liquid, Cream, Oinment and Sterile manufacturing facility. In addition to the dry fill sterile vial already available in Bangladesh, the Company believes that new injectable products have significant potential, including an unmet need for different injectable preparations. These dry-fill (powder for reconstitution) sterile products would be marketed in specialized market segments at premium prices and have the potential to generate good revenues.

10. Setting up a new Cephalosporin (finished formulation) manufacturing facility for Oral and Parenteral dosage forms. Cephalosporin has been the fastest growing antibiotic class in the last few years in Bangladesh. Most domestic pharmaceutical companies have already established their own facilities anticipating the market potential. Currently the company is outsourcing its products on a contract manufacturing basis. The Company believes that having its own manufacturing facilities will help ensure sustainable supply and a strong brand image, helping it achieve a significant share of this market.

11. Construction of a new 55,000 sq feet warehouse. Additional storage facilities are needed to deal with increased capacity and diversification.

12. Increase in working capital to support the increased level of sales.

Nazmul Hassan, Chief Executive Officer of Beximco Pharmaceuticals, commented: “This successful placing demonstrates the significant opportunities open to Beximco both in Bangladesh and internationally. The funds will allow us to increase our world-class manufacturing capacity and further diversify our business as part of our overall strategy of becoming a global pharmaceutical company.”

About Beximco Pharmaceuticals Limited

Founded in 1976 and based in Dhaka, Bangladesh, BPL manufactures and sells generic pharmaceutical formulation products, active pharmaceutical ingredients and intravenous fluids. The Company also manufactures and markets its own branded generics for almost all diseases. The Company also undertakes contract manufacturing for multinational pharmaceutical companies. The Company operates from a 20 acre site in Dhaka and currently employs over 2,400 staff.

The Company’s products are sold to retail outlets, medical institutions and other pharmaceutical manufacturers in Bangladesh, in regional markets such as Sri Lanka, Nepal, Bhutan, Vietnam, Cambodia and Myanmar and in other markets overseas, principally in East Africa, Pacific Island and Central American countries and South East Asia, including Singapore and Hong Kong.

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