Independent University Bangladesh

COURSE: MGT330 (Introduction to Product and Operation Management)

Group Name: Team STRANGE

Group Assignment on
BEXIMCO Pharmaceuticals LTD - Quality Management

Course Instructor:
DR. MUHOMMAD AZIZUR RAHMAN
Faculty Member
School of Business and Entrepreneurship (SBE)

Group Members ID
ARIFUL ISLAM AKASH 2031051

SHAIKH RUBAIYET HOSSAIN 2031265

MD SHAH MARUFIN MARUF 2031262

MAHERA ZAMAN 2030439

Submission date: 4th August 2022

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Letter of Transmittal

August 3, 2022
Dr. Muhommad Azizur Rahman
Faculty Member
School of Business and Entrepreneurship (SBE)
Independent University, Bangladesh (IUB)

Subject: Submission of case study on Operational Management

Sir,

With due respect, we would prefer to submit our group assignment of case study on operational

management as a mandatory requirement for ‘Introduction to Product and Operation Management’

(MGT330). The strategies we have used during the procedure, were every effective and useful for

our analysis. We have worked a renowned pharmaceutical company named ‘BEXIMCO

Pharmaceuticals Ltd’ and tried our best to put forward our analysis on Quality Management.

Therefore, we sincerely hope that our assignment would meet to your respective requirements. We

would also want to thank you for the opportunity and the guidance you provided.

Sincerely,

2031051 ARIFUL ISLAM AKASH

2031265 SHAIKH RUBAIYET HOSSAIN
2031262 MD SHAH MARUFIN MARUF
2030439 MAHERA ZAMAN

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Executive Summary

The report contains the discussion of quality control of one of the leading pharmaceutical

companies of Bangladesh, Beximco Pharmaceutical LTD. The quality control of this company has

been briefly expressed with quality management where the report contains how the Beximco

Pharma controls their quality. Following that, the methods used by the management of quality has

been shown and also discussed how the methods are helping the company to hold the position in

the top place. After that, the cost of quality has been discussed. In that part, Beximco Pharma’s

cost of quality has been showed with a brief discussion that contains how much of the length they

had to go to maintain this quality. Lastly in the analysis and findings, the report contains, break

even analysis, productivity, wastage rate, Labor Turnover to understand how the company runs

their quality management with all the sectors.

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 Table of Contents
Letter of Transmittal ....................................................................................................................... 2

Executive Summary ........................................................................................................................ 3

Introduction ..................................................................................................................................... 5

Case Study ...................................................................................................................................... 6

Quality Management of Beximco Pharmaceuticals .....................................................................6

Methods of Quality Management ...............................................................................................11
Cost of Quality ...........................................................................................................................14
Prevention cost for Beximco Pharma: ................................................................................... 15
Appraisal cost for Beximco Pharma: ..................................................................................... 16
Internal Failures for Beximco Pharma: ................................................................................. 16
External Failure for Beximco Pharma: .................................................................................. 16
Findings and Analysis ................................................................................................................... 17

Limitation of Beximco Pharmaceuticals ....................................................................................18

Solution of the limitation............................................................................................................19
Conclusion .................................................................................................................................... 21

Reference ...................................................................................................................................... 22

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Introduction

Beximco Pharmaceuticals Limited is one of the main manufacturers and exporters of medicines in

Bangladesh. In 1980, Beximco Pharma began operations after being established in 1976. Products

are now produced there thanks to licenses from Bayer AG in Germany and Upjohn Inc. in the

United States. The manufacturing facilities for Beximco Pharma are dispersed throughout a 20-

acre location in Dhaka, Bangladesh. The facilities are made up of several specially designed plants,

including a brand-new Oral Solid Dosage (OSD) plant. The location has a research facility, a

number of warehouses, and production facilities. Partners from countries like Germany,

Switzerland, Sweden, Italy, and the United Kingdom planned, built, and installed the facilities'

equipment. The medicines that are manufactured by them are exported in more than 50 countries

like the USA, Europe, Canada, and Australia. Furthermore, it is the only Bangladeshi Company

that is listed in the AIM of London stock exchange. The regulatory authorities of countries like

USA, Australia, European Union, Canada, etc. has helped Beximco Pharmaceuticals in terms of

their state-of-the-art manufacturing facilities by providing them with necessary accreditation.

Beximco's main goal is to set up their operations in other developing countries as well. So far, they

have been successful in differentiating itself from others by focusing more on high tech and

specialized products and currently they are still focusing on that in order to maintain their

competitive advantage in the market.

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Case Study

Quality Management of the Beximco Pharmaceuticals Limited have been evaluation with certain

criteria and steps. Firstly, the procedures of quality management have been described briefly and

afterwards, limitations have been also indicated after the evaluation of different segments of

quality management in the finding and analysis. Solutions of those particular limitations have been

given also.

Quality Management of Beximco Pharmaceuticals

Bangladesh's top pharmaceutical firm is Beximco Pharmaceuticals Ltd. Since they produce goods

of superior quality, this firm produces goods not only for the Bangladeshi market but also for the

global market. In addition, they perform IPC correctly, which is crucial for producing high-quality

goods. IPC refers to the Initial Production Check, which ensures the inspection of raw materials

along with components before production.

In several top-notch manufacturing facilities, Beximco Pharmaceuticals produces a variety of

dosage forms, including tablets, capsules, dry syrup, powder, cream, ointment, suppositories, large

volume intravenous fluids, metered dose inhalers, etc. This ensures high-quality standards that

comply with the current Good Manufacturing Practices that have been approved by the World

Health Organization (WHO).

There are departments which are directly and indirectly connected with the Quality Management

of Beximco Pharmaceuticals.

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Quality Assurance Department

The quality assurance department of Beximco Pharmaceuticals Limited ascertains the production

quality from the very beginning to the consumer. There are certain activities which are followed

by the department to ensure quality:

• Authorization of the raw materials which will be used for the production

• Overviewing the distribution operation

• Production area enrichment

• Performance evaluation of supplier

• Quality check of the product

• Considering the feedbacks

• Stability of the product quality

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Quality Control Department

The department of quality control conducts several chemical assays and analyses to determine the

results in terms of potency, presence, identification, stability, etc. The caliber of the goods is the

responsibility of the workers here. Actually, this is the plant's analytical section. The Quality

control department is divided into 3 sections

• Microbiology Section

• Analytical section

• Packaging section

Research and Development Department

In every step of creating an innovative formulation, dosage form, coating system, etc., the research

and development department of Beximco Pharmaceuticals Limited is crucial and inventive. A new

product's commercial scale development is also done through product development, along with

the preparation of the product's recipe, formulation order, manufacturing process, Batch

Production on Record (BPR), and data. The batch packaging record (BPR) is a crucial document

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since it includes all the details of the batch's packaging procedure and GMP documentation

requirements. Everything pertaining to the packing process must be included. This department has

consistently attempted to offer products of greater quality at lower prices.

Training Department

The ongoing training of personnel is one of the goals of the human resources department, so they

can adapt to the quickly shifting business environment. They intend to foster innovation as a top

priority. As a result, training initiatives are constantly carried out for the workforce in an effort to

find ways to develop their talents. Beximco Pharmaceuticals Limited employees take part in a

variety of internal and external training programs. During this time, there are six induction training

sessions for the field force, four internal training sessions, and two external training sessions for

head office staff. Factory staff also participated in 206 hours of internal training sessions.

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Safety Department

In the pharmaceutical sector, increased productivity and labor sustainability are essential elements.

The continual exposure of pharmacists to chemical and biological dangers poses a major risk to

their health. Additionally, poor safety standards and non-compliance may have an adverse effect

on employee productivity and, in the long term, negatively affect the viability of the firm. As a

result, it's crucial to implement the best health and safety procedures and to make sure that every

employee abides by the relevant laws.

Beximco Pharmaceuticals Limited takes following measurements to ensure the safety:

• Presentation of Safety measurements in training session

• Precautions for fire and other unexpected accidents

• Enough supply of PPE (Personnel protective Equipment) for employees

• Availability of First Aid Kit.

• Ambulance service for emergency cases

• Free Medical Check-up activity

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Methods of Quality Management

Monitoring various organizational processes and activities to make sure that the goods and services

provided, as well as the methods employed to provide them, are consistent is known as quality

management. It aids in achieving and preserving the organization's intended level of quality.

Quality planning, quality improvement, quality control, and quality assurance are the four parts of

quality management. Beximco Pharma uses quality management, where they establish the desired

level of product quality and the permitted range of deviations from the desired quality. The

permitted range of goal deviations, however, was not made public. Beximco pharma has expressed

the opinion that using this Quality Management during the production process enables their

businesses to provide customers with a high level of confidence that a given service or good will

satisfy their needs. the firms cannot implement Total Quality Management.

What is TQM?

TQM system reduces all form Nonvalue added activity in all the level. TQM is all about the

streamlining the flow of values through the organization. It is understood that most of the apparel

firm in global level has implemented this system & found significant level of process

improvement. Even though many of the organization has sophisticated machines and production

set up, if the people who is engaged with the production process should not culturally qualified it

is no use. As of Now we have not given up this attempt.

Beximco Pharmaceuticals Ltd Target costing is a strategy that estimates the price of a good or

service based on its sales price minus a desired profit. Essentially, it is a tool for making decisions.

It is a market-driven method of assessing the link between pricing and cost, in contrast to

traditional costing for calculating cost. Target costing is frequently used at Beximco Pharma to set

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targets for product costs. Costing Based on Activity Activity-based costing (ABC) was created to

offer more precise methods of allocating indirect and support resource costs to activities, business

processes, goods, services, and consumers. By recognizing all of an organization's activities, the

activity-based costing technique generates a more accurate product cost.

However, the crucial operational operations. The objective is to assess and then price out all the

resources required for activities that support the production and delivery of goods and services to

consumers rather than to allocate common costs to products. It is crucial to activity-based

management because of this. Even if the company approach isn't fully implemented at Beximco

Pharma, it nonetheless strives to adhere to its principles alongside the Standard costing procedure.

What is a Lean System?

Lean Systems Operations systems that maximize the value added by each of a company’s activities

by removing waste and delays from them.

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Process Considerations in Lean Systems

Pull Instead of using a push system, a pull system means that management will make decisions.

Demand pull principles are used to operate the manufacturing production line. Only when the

manufacturing process can respond to a pull system will a pull system function. However,

Beximco Pharma uses a push mechanism rather than a pull system. In the context of Bangladesh,

push system is seen to be more effective than pull, according to the Beximco Pharma authorities.

Pull systems are challenging to deploy since JIT is not feasible in the company and it is thought

that it is best to avoid producing unneeded items and to not retain inventory on hand.

Just in Time Concept

By focusing on continuous improvement, just-in-time (JIT) reduces throughout times. By creating

a continuous production process, JIT reduces inventory. Only the inventory necessary for

production is held by employees under a JIT system until the next order is received. Less inventory

means less storage space and storage equipment needed, reducing inventory costs while increasing

productivity. Companies need a supply chain infrastructure to adopt JIT. Beximco Pharma imports

most of its inventory and raw materials, so JIT cannot be implemented. Applying JIT increases

costs instead of decreasing costs due to ordering costs.

As mentioned, this sort of activity is mostly carried out by the Strategic Brand Management (SBM)

Department of Beximco Pharma. The pursuits of SBM include Market research, choosing a new

product, designing, and testing it (DTP), managing a sample store's logistics, and making a plan

Beximco Pharma determines the product life cycle in collaboration with the SBM divisions.

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Cost of Quality

A company’s product or service will only become successful in market if the company’s product

and service have a great quality. As the quality is one of the most important things to satisfy a

customer. Moreover, it is also one of the important factors to make a customer loyal towards the

company. However, in order to maintain a company’s quality, they have to put a lot of efforts to

it. Such as testing cost, machine cost, maintenance cost etc. So, it is a measurement of cost that

helps the company to understand how much the company is using their resources to get rid of poor

quality.

Beximco Pharmaceuticals Ltd is one of the most prominent pharmacy companies in our country.

They are serving this country for many years, and they have done an amazing job to take care of

their quality for medicines. As medicine is a necessity good, this has to be at the top-notch quality.

If one does not take the quality control of the medicine seriously then the company will face

customer turnover along with shut down fear. For the case of Beximco pharma, it has done an

amazing job to keep the medicine quality in good shape not only hold their customers and the

market but also to compete with their competitors. In order to maintain this much excellence in

the quality control, they have to pay a price for it. That is where the cost of quality comes and

Beximco pharma uses it in various ways to keep their failures at a minimum rate while producing

the product.

There are 4 classifications in cost of quality. They are Prevention Costs, Appraisal Costs, Internal

Failures, External Failures. The first two are the conformance or cost of good quality and the last

two are non-conformance or the cost of poor quality.

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 cost of quality

non-
conformance
conformance

prevention Internal External

Apprisal cost
cost failures failures

Figure 1: Classification of Cost of Quality

Prevention cost for Beximco Pharma:

Prevention cost means that the company will predict and prevent the defects of the product before

it happens. It means that there will be no place for the company to have any defects as they are

already trying to clear their problems for the quality before it takes place in the production

For Beximco Pharma, in the matter of Prevention costs, they try to establish a product specification

and they plan for the next batch production’s quality. They train their employees with their own

quality management system to cope up with the prevention strategy they need to follow. As

mentioned above, the medicine is a necessity good, so the company needs to meet a certain amount

of production each day. That is why it’s really tough for them to go back and forth to deal with the

quality. For this reason, only, they take a step to prevent any failure before it takes places in the

production.

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Appraisal cost for Beximco Pharma:

Appraisal cost means that the company incurred a cost that was done by maintaining promising

quality of a product. It can also get incurred by the production process. It is a normal thing to

consider for a company as there are many factors that will bring more cost just to keep a good

quality.

For Beximco Pharma, Appraisal costs are incurred by checking the machines and paying the

company workers some extra incentive to work on, material checking and production machines

materials etc.

Internal Failures for Beximco Pharma:

Internal failures means that the defect will be discovered in the time of the production. It’s a failure

as there is a chance that the company may have to reject the product. This is also a pain for the

company as they need to work on the same thing again.

For Beximco Pharma, Internal failures are least of their problems as they use high quality machines

that gets their input from the computers so that’s why there are less chances for the company to

face this problem. There is a slight chance that the company might face this problem as mistakes

are not avoidable, it becomes an easy fix for the company every time.

External Failure for Beximco Pharma:

External failures are the failures that arises when the customer receives the faulty product. It is a

shame for the company as it clearly shows how ignorant they are of their quality control.

Sometimes it also becomes a matter of luck.

For Beximco Pharma, the company keeps no place for that kind of failure as medicine is a good

that everyone needs in a good shape. There should not be any chance of the product to show any

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kind of fault. That’s why the company does not see any kind of external failure and they are doing

a tremendous job at keeping their quality top notch.

Findings and Analysis

Labour Turnover- As we know that labour turnover tells us about the number of people leaving

an organization each year. It can be expressed as:

Number of people leaving in 1 year/ Total number of people employed x 100.

In terms of Beximco Pharmaceuticals the number of people currently working are 5000+.

According to the annual report of Beximco Pharmaceuticals 2018-2020 we can see that the labor

turnover rate was around 9.5% (446/4523 x 100) which indicates that 434 out of 4523 employees

have left their job in 2018. In 2019 the labour turnover rate increased to 11.85% which indicates

that around 557 out of 4700 employees were no longer working in Beximco. One of the primary

reasons behind this was the Covid-19 Pandemic which might have forced the company to be made

some of their employees redundant to reduce their expenses. However, things did improve in 2020

as the labour turnover decreased from 11.85% to 6.15%. We can say around 294 employees

(11.85% x 4789) has left within 2018-2019 which is less compared to the previous years. Some

of the major factors that has contributed towards this decline are:

• Training and development programs conducted by both local and international experienced
trainers.

• Free health check-ups.

• Merit-based scholarship for children of the existing employees.

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 • 24-hour hotline service for employee and their family members

• Inter-company sports event

• Other supportive factors like free lunch for factory workers, cultural programs, etc.

Figure 2: Labour Turnover Rate of Beximco Pharmaceuticals 2018-2020

Limitation of Beximco Pharmaceuticals

Beximco Pharmaceuticals has a wide range of products starting from Oral Solid Dosage (OSD),

Inhalers, Eye drops, Human insulin, Semi Solid & Liquid etc. They have been continuously

meeting the demands of the population with their product range. Their manufacturing facility is

huge covering an area of 23 acres located at Tongi, Gazipur. In this facility they produce 5 billion

units of OSD, 35 million units of Inhalers, 37 million units of liquid dosage annually. However, in

terms of the Human Insulin category they are collaborating with a European company which has

a production capacity of 3 million vials and cartridges. This might be a real problem for Beximco

because the number of people diagnosed with diabetes is increasing rapidly in Bangladesh. 1 in 11

adults are being diagnosed with diabetes every day. Around 8.3 million or 9.2% of adult population

have diabetes and some 15 million adults might be diagnosed with diabetes by 2024 said by Mihail

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Briciu, managing director of Novo Nordisk Bangladesh in an interview with daily star. (Reference

no.3, daily star) As a result, the amount what Beximco is getting by partnering with the European

company may not be enough to cover the future demands for insulin. In addition, as they are not

currently producing it using in house facility so the cost of making each unit of insulin is higher to

compare to Novo Nordisk Pharmaceuticals. For instance, Beximco’s Gensulin-N 10ml vial is sold

at 415 BDT whereas Novo Nordisk’s Insulin N 10ml vial is sold at 195BDT. As a result, this

higher competition might cause additional barriers for Beximco in near future as Novo Nordisk

has already been in the market since 1958 and with recent upgradation in their local facility, they

have ensured to improve quality of the insulin further and make it more affordable for the people.

As a result, Beximco might see a fall in profitability for this specific category.

Solution of the limitation

To cope up with this competition Beximco can do two things. First, they can increase their in-

house capacity and instead of depending on the European company only. They should buy the

Human Insulin from other local suppliers too. This will help them to charge a price that will be

competitive and make some minimum profit as well. In addition, they can also put more money

on research and development and come up with a better version of their Human Insulin compared

to their competitors. For instance, by making it 6 times stronger than short human insulin and 4

times quicker than the conventional rapid acting insulin. However, this process will be time

consuming and costly too. Another option is to go in a partnership with Novo Nordisk, this will

help them obtain their expertise in making insulins along with benefit of lower risk. Since they are

already dominating the market so being in a partnership will actually benefit Beximco more as

they no longer have to think about the capacity issue.

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Capacity and Utilization- The below chart shows the capacity and utilization for the different

product categories of Beximco Pharmaceuticals. Between 2017-2021 we can say that Beximco has

utilized their capacity very efficiently over the years. One of the main contributing factors for such

results could be the support that they have got from Bangladesh government in terms of their API

facility, commitment of both employees and management, workplace design, etc.

Figure 3: Capacity and Utilization of Beximco Pharmaceuticals 2017-2021

Efficiency= Actual output/ effective capacity

Details Workings ($000) 2017- 2018- 2019- 2020-
2018 2019 2020 2021
Tablet, 4350/5000x100=87% 87% 111.2% 116.8% 117.7%
capsule 5560/5000x100=11.2%
(OSD) 5843/5000x100=116.8%
5885/5000 x100 117.7%
Liquid, 9500/6000x100=158.33% 158.33% 165% 168.3% 171.6%
Cream 9900/6000x100=165%
and 10100/6000x100=168.3%
Ointment 103/6000x100=171.6%

Figure 4: Efficiency

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Conclusion

Pharmaceutical industry in Bangladesh is highly competitive everybody wants to increase their

market share by providing various products to the customer. As a result, companies need to

develop an effective business strategy as well as policy in order to make their position higher in

the industry. Beximco pharma is no different of that.

The management of BPL always tries to maintain a steady growth by delivering their quality

product across the country. This report analyzes the strategic management process of BPL. In

analysis we found that Beximco pharma follows different strategy to gain their market share in the

strategy. Their function level strategy is more focused on improving product quality and increasing

distribution network. In corporate level they are more focused on getting more recognition

globally. However, in business level strategy they try to increase their domestic sell. With their

overall strategy the company is competing in the pharmaceutical industry successfully. However,

they are always ready to make adjustment to their strategy in any situation through their efficient

employee and management. Beximco believes that quality and control should be ensured, and

these can be ensured by using proper cost accounting information. Relevant and reliable cost

information can be ensured by implementing by using effective cost accounting methods. And

they do the best one fit in the context of Bangladesh.

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Reference

beximcopharma. (n.d.). Retrieved from beximcopharma: beximcopharma.com

Deb, S. K. (2020). Assessment of Financial Performance: A Scrutiny on Beximco Pharmaceutical
Ltd. Indian Journal of Economics and Development. Retrieved from
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3665380
DISCUSSED OVERALL PHARMACEUTICALS ACTIVITIES OF BEXIMCO PHARMA LTD.
(n.d.). Retrieved from The Lawyers and Jurists:
https://www.lawyersnjurists.com/article/discussed-overall-pharmaceuticals-activities-of-
beximco-pharma-ltd/
LIMITED, B. P. (n.d.). ANNUAL REPORT 2019-20. Retrieved from
https://www.annualreports.com/HostedData/AnnualReportArchive/b/LSE_BXP_2020.pd
f
Report, S. B. (2020). Novo Nordisk launches world’s fastest acting insulin in Bangladesh.
Retrieved from The Daily Star: https://www.thedailystar.net/business/news/novo-nordisk-
launches-worlds-fastest-acting-insulin-bangladesh-1963241
Securities, I. L. (2021). BEXIMCO PHARMACEUTICALS LIMITED. Retrieved from
https://www.ilslbd.com/research_reports/Equity%20Note%20-
%20Beximco%20Pharmaceuticals%20Limited-%20December%202021.pdf

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