An essay on a company that belongs to the oligopoly market structure

The pharmaceutical industry in Bangladesh is one of the most developed technology sectors within

Bangladesh. Manufacturers produce insulin, hormones, and cancer drugs. This sector provides

97% of the total medicinal requirement of the local market. There are so many pharmaceutical

firms in this industry. Among all these firms, few large firms dominate the pharmaceutical industry

of Bangladesh. Here, we are going to discuss about the Square Pharmaceuticals Limited Company

that belongs to the oligopoly market structure.

Square Pharmaceuticals is a pharmaceutical company in Bangladesh. It was founded in 1958 by

Samson H. Chowdhury along with three of his friends as a private firm. It went public in 1991 and

is listed on the Dhaka Stock Exchange and on the Chittagong Stock Exchange. Square

Pharmaceutical started to export different antibiotics and medicine across the world from 1987.

Now it exports its medicine to 36 countries of the world. In 2008 and 2009 it had the highest

market share in the pharmaceutical industry of Bangladesh.

Many purchases that individuals make at the retail level are produced in markets that are

oligopolies. Oligopoly arises when a small number of large firms have all or most of the sales in

an industry. Oligopolistic firms are like cats in a bag. They can either scratch each other to pieces

or cuddle up and get comfortable with one another. If oligopolists compete hard, they may end up

acting very much like perfect competitors, driving down costs and leading to zero profits for all.

If oligopolists collude with each other, they may effectively act like a monopoly and succeed in

pushing up prices and earning consistently high levels of profit. Oligopolies are typically

characterized by mutual interdependence where various decisions such as output, price,

advertising, and so on, depend on the decisions of the other firm(s). Analyzing the choices of

oligopolistic firms about pricing and quantity produced involves considering the pros and cons of

competition versus collusion at a given point in time. Here, small number of large firms such as

Square Pharmaceuticals Ltd. Company, Incepta Pharmaceuticals Company, Beximco Company

have all or most of the sales in the pharmaceuticals industry. These oligopolist firms compete with

each other to set the prices. So, this firms dominating the market enjoys a considerable control

over the price of the product. One of the most important features of the pharmaceuticals industry,

wherein, the Square Pharmaceuticals Ltd. Company has to be cautious with respect to any action

taken by the competing firms such as Beximco company, Incepta Company. Since there are few

sellers in the drugs market, if any firm makes the change in the price or promotional scheme, all

other firms in the industry have to comply with it, to remain in the competition. Thus, every firm

in this industry remains alert to the actions of others and plan their counterattack beforehand, to

escape the turmoil. Hence, there is a complete interdependence among the sellers with respect to

their price-output policies. If Square Pharmaceuticals Ltd. does a lot of advertisement while the

other pharmaceutical companies remained silent, then it will be observe that customers are going

to that firm (Square Pharmaceutical Ltd. Company) who is continuously promoting its product.

Thus, in order to be in the race, each pharmaceutical company spends lots of money on

advertisement activities. Discussion on the above describes the characteristics that Square

Pharmaceutical Ltd. Company shows and according to the discussion we can say that this company

falls under the oligopoly market category.

According to recently published Bangladesh Pharmaceutical Index, Bangladesh has a Tk. 8,000

Cr market, which is growing at 25% rate. Square Pharmaceutical as usual hold the top most rank

of Bangladesh pharmaceutical Market. There are no multinational pharmaceutical company in Top

10 position that implies the strong pharmaceutical marketing skill and product quality which play

important role to drive doctor prescribe local manufactured medicine. Square Pharmaceutical Ltd.

faces some competition in the pharmaceutical market because of some top leading companies such

as Beximco Pharmaceuticals Ltd., Incepta Pharmaceutical Ltd., Reneta Limited, ACI Limited,

Aristopharma Ltd. Among all these companies, Square Company holds the largest portion of

market share which is 18.78%. All the top leading firms other than this have the market share of

below 10%.

Square pharmaceuticals Ltd is known for taking different promotion strategic approach to keep the

top market share and maximize profit in Bangladesh. The main objectives for these kinds of

promotional strategies are basically to build positive image toward the consumer and business

parties. Let discuss some of those important promotional strategies of Square Pharmaceutical Ltd:

1) Different renowned doctors from different hospital usually visit factory. The high quality of the

manufacturing process basically gives an overall idea of the process of producing medicine.

Therefore doctors can share their experience with the colleagues and doctors which eventually

help to create positive brand image. 2) To increase the level of revenue level at the same time

promotes more products towards discount plays a very important role. Sometimes to compete with

the competitors and when the production cost drops down company give different discount toward

their customer. Sometimes many institutional customers also get different kind of discount based

on their bulk amount of discount.3) In this the era of technology we can see the square is using

online sources to promote their product. The company is using e learning program to increase the

level of knowledge of customer. They are using this online platform to use promote their

pharmaceuticals product. 4) In marketing study celebration of different events considered to be a

very important marketing strategy. Square celebrates different events with different doctors to
increase the level positive image of brand square. Some of the great events they celebrate are

known as dentist day, Mothers day, Bangla Pahela Baishak, Valentine’s Day with the doctor.

Sometimes many internee of many medical college may want to celebrates many events like

picnic, debate competition and square may sponsor those event based on the budget and the impact

of those event. Along with these activities, Square company does so many activities to increase its

brand image which in turn helps to maximize its profit.

Product differentiation is usually achieved by Square Pharmaceuticals Ltd. to attract customers in

three ways: physical differences, perceived differences, and support services. 1) Physical

differences arise when the product of one firm is physically different from the product of other

firms. These differences can exist due to materials used, chemical composition, shape, size, taste,

or color.2) Product differentiation can also result from differences perceived by buyers, even

though no physical differences exist. Such perceived differences are usually accomplished by

Square Pharmaceuticals Ltd. through advertising, especially by establishing brand names. Brand

names, in fact, are a common way to create the perception of differences among products, even if

none physically exist. However, as far as demand is concerned, perceived differences work just as

well as physical differences to attract customers.3) Products that are physically identical and

perceived to be identical can also be differentiated by support services. This is quite common in

retail trade. Square Pharmaceuticals Ltd. provides its customers with best support services and

always offers “service with a smile”.

Government fixes Price of most of the essential drugs. The company can fix price of other products

but needs to take approval of government. In pricing a product, Square Pharmaceuticals Ltd.

usually follows target pricing. Premium prices cannot be charged, as all the competitor products

are similar and not much distinguishable from each other. But prices of some products are still
higher than the competitors. But since Square Pharmaceuticals Ltd. does not compromise with the

quality, sometimes they have to charge higher to ensure the highest quality possible. Square

Pharmaceutical’s focus is to reach all level of customers. So as a market leader they usually follow

competitive price with best quality. Square company ensures its product quality by using best raw

materials and skilled & efficient pharmacists to induce customers to buy its products.

Square Pharmaceuticals Ltd. usually makes the assumption that a given strategy will provoke a

response from competitor firms, and assess the nature of the response using past experience. This

is the basis of the kinked demand curve model, in which it is assumed that any price cut by one

oligopolist will induce all others to do likewise, whilst a similar price increase would not be

matched.

Square is currently the leading pharmaceuticals company in Bangladesh. The reason for their huge

success is simply the high quality and innovative way of producing product, huge network of

distribution for their product, innovative way to introduce new product and introduces new market.

There are more than 800 plus products are currently available to the Square Pharmaceuticals

Company but still they are trying to renovate their procedure and update the technology. They are

currently using e learning program so that medical promotional officers can educate themselves

about the product. All this strategies taken by Square Pharmaceuticals Ltd. are helping the

company to achieve the largest market share and become a dominant firm in the oligopoly

pharmaceutical industry of Bangladesh.

Reference:
1) Oligopoly market. Retrieved from: https://businessjargons.com

2) (2015, December 8).Market insight: how the Bangladesh pharmaceutical sector is

performing. Retrieved from: https://www.lightcastlebd.com

3) Top pharmaceutical companies in Bangladesh. Retrieved from: http://www.pharmatips.in

4) Sakib, Nazmus. (2017, July 24).Different effective promotional materials and strategies

of Square Pharmaceuticals Limited. Retrieved from: http://dspace.bracu.ac.bd

5) Square Pharmaceuticals Limited. Retrieved from: https://www.academia.edu.