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North South University

FIN 444
Section 4
Project on

Bringing Amgen in Bangladesh Through FDI

Submitted to:
Tanvir Nabi Khan
Assistant Professor
Department of Accounting & Finance
School of Business & Economics
North South University

Submitted by:
GROUP 2
Name ID
Lutful Karim 1531155630
Farhan Islam Rahat 1731787630
Md.Shahadat Hossain 1731843630
MD. Abdullah Al Mazed 1811668630
Faiaz Tahzib Chowdhury 1912641630
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LETTER OF TRANSMITTAL
20th September, 2021
Tanvir Nabi Khan
Assistant Professor,
Department of Accounting & Finance,
North South University
Subject: Submission of project on bringing Amgen in Bangladesh.
Dear Sir,
We are submitting the project which you assigned us to write based on your instructions. The
report has been created with the knowledge gained from the course "FIN444".
We finished the report by using what we learnt in your class. We linked our international
business experience to the strategies we learnt to establish Amgen's business in Bangladesh
through Foreign Direct Investment. This report includes the operational strategy and plans for
bringing Amgen to execution. We conducted extensive research before beginning this study, and
we did everything we could to find the best solution.
We express our gratitude for providing us the opportunity to work on this project. All of us tried
our level best to complete this project. With all sincerity, we hope that you will find this report
useful and detailed enough. As we are still part of the learning curve, we hope you will consider
our limitations and appreciate our work. If there are any further queries, we will be grateful to
answer them.
Sincerely,
Lutful Karim
Farhan Islam Rahat
Md.Shahadat Hossain
MD. Abdullah Al Mazed
Faiaz Tahzib Chowdhury
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Executive Summary

Amgen, Inc. continuously searches for new market to investigate and contribute to catch new
client base. Furthermore, Bangladesh is a crowded South Asian country with one of the quickest
developing economies. Also, its pharmaceutical sector is the third biggest industry and has keep
a 12%-14% development for most recent couple of years. Country Risk Assessment is vital for a
business to comprehend, recognize and assess country-explicit dangers, to settle on essential
choices. Thus we investigated the different viewpoints to decide the economic, financial and
political risks in Bangladesh. For which we have assessed Bangladesh's GDP development,
Inflation rate, public debt ratios and numerous other relative perspectives to decide their
monetary condition. We recognized Bangladesh's classification in the MSCI file, the worldwide
appraisals of Bangladesh, for example, Indicator of Economic Freedom, Business Environment
Ranking and Global simplicity of working together positioning, and furthermore the Credit
Rating of Bangladesh to dissect the monetary and monetary dangers of Bangladesh. We have
likewise examined the political dangers of Bangladesh and how to conquer them. For MNCs like
Amgen, Inc. investigating the effect of the Exchange rate is very fundamental. Subsequently we
investigated the pattern of BDT to USD for the beyond five years and examined different
strategies to estimate conversion scale through IRP and PPP. We have additionally examined
how the exchange rate risks can be overseen through different subsidiary protections (like Long
Term Hedging, Forward Contract, Currency Call Option) and furthermore the potential openings
(Transaction, Economic and Translation Exposures) to troublesome exchange rate developments
and how to handle them through different strategies. We have also examined our Operational,
Organizational and Marketing systems. For monetary arrangement we chose to contribute almost
$120 million USD with 80% own value and 20% obligation financing by taking credit from US
bank. After working out the NPV from our projected Cash Flow, we get a positive worth. This
demonstrate that we can put resources into Bangladesh, and we can generate profit from second
year. Despite the fact that putting resources into Bangladesh has a few disadvantages, but the
advantages of investing has upper hand.
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Table of Contents
Introduction ................................................................................................................................................... 5
About Our Company .............................................................................................................................. 6
Reasons Behind Selecting This Sector: ................................................................................................. 7
Country Risk Analysis .................................................................................................................................. 9
Social Risk ................................................................................................................................................ 9
Political Risk ........................................................................................................................................... 10
Financial Risk ......................................................................................................................................... 10
Elaborate Discussion on Exchange Rate Analysis ...................................................................................... 12
Historical Analysis: ................................................................................................................................. 12
Exchange Rate Fluctuations:................................................................................................................... 12
Exchange Rate Forecasting ..................................................................................................................... 13
Derivatives For Hedging Technique: ...................................................................................................... 13
Exposure to unfavorable exchange rates movements ............................................................................. 14
Operational Plan: ........................................................................................................................................ 15
Marketing Plan:........................................................................................................................................... 16
Financial Plan: ............................................................................................................................................ 18
Assumptions:........................................................................................................................................... 18
Balance Sheet:......................................................................................................................................... 18
Income Statement.................................................................................................................................... 19
Pro-forma Financial Statements .................................................................................................................. 20
Conclusion .................................................................................................................................................. 23
Bibliography ............................................................................................................................................... 24
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Introduction
In this time of Globalization, where cross-line exchange labor and products goods and services,
innovation, and flows of investment, individuals, and data is currently simple. International
finance assumes an international trade in global exchange and between economy trade of goods
and services. International finance shows us how exchange rate change can affect on both MNCs
and nearby organizations. Different financial components like inflation, interest rate help in
settling on international investment decisions. International finance guarantees the enhancement
of an organization. Additionally, numerous immature and agricultural nations get benefited
through international finance since more FDI are presently putting resources into various nations,
and lift the nation's economy. Accordingly, we can obviously see that because of international
finance and international trade the world economy is developing at a quicker rate than past time.
Bangladesh is a crowded South Asian country. It has a market-based blended economy. It is an
agricultural nation with one of the quickest developing economies. With its populace of more
than 170 million individuals, Bangladesh is the world's eighth most crowded country. As a result
of its immense populace Bangladesh is notable for cheap labor cost which attracts investors
frequently. It is one of the Next Eleven developing business sectors. The drug area in Bangladesh
has seen some sure achievements over the previous many years. This area has effectively
expanded the reliance on neighborhood organizations for restorative necessities to 90% during
this time. What's more, it is anticipated that by 2025 Bangladesh will turn into a $6b pharma
market (Chakma, 2020). Toward the start of the pandemic circumstance the economy of the
nation went low due to the closure. However, as after the initial four months the limitations were
lifted slowly, the economy began to recover as well. The drug area was a special case during this
time. During the entire pandemic circumstance this industry encountered a positive development.
The pharmaceutical sector were truly amazing in creating Covid related prescriptions inside a
brief time frame. Their work on gathering the general population request by delivering drugs like
Remdesivir, Favipiravir, Ivermectin, Isopropyl Alcohol and Hydroxychloroquine inside a
restricted time was praiseworthy. In numbers, 17.36% higher fare development in the drug
business was seen by the country during the July to November, making a pay of $69.82 million.
he domestic market size of pharmaceuticals arrived at Tk23,310 crores with 4.21% development
during the pandemic. The admirable exertion put by the pharma business likewise assisted the
country with making a striking picture before the entire world. Therefore, other countries showed
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their advantage to import drugs from Bangladesh. Nations from Central America, Asia and
Africa previously purchased drugs from Bangladesh. In this way, we can say that Bangladesh's
pharmaceutical sector can be a potential sector to invest in.

About Our Company

Amgen is a pharmaceutical company that was formed in 1980 by a group of scientists and
venture capitalists with a $19 million private-equity placement from venture capital firms and
two major corporations. It began operations in 1981 in Thousand Oaks, California, in close
proximity to thriving research centers at three nearby universities, among them UCLA and the
California Institute of Technology. The company's impressive scientific advisory board included
several members of the National Academy of Sciences; its first chairman and CEO was George
B. Rathmann, former vice-president for research and development in the diagnostics division of
Abbott Laboratories. (Amgen, Inc. - Company Profile, Information, Business Description,
History, Background Information on Amgen, Inc, 2021)

Amgen is committed to unlocking the potential of biology for patients suffering from serious
illnesses by discovering, developing, manufacturing and delivering innovative human
therapeutics. This approach begins by using tools like advanced human genetics to unravel the
complexities of disease and understand the fundamentals of human biology. Their belief—and
the core of our strategy—is that innovative, highly differentiated medicines that provide large
clinical benefits in addressing serious diseases are medicines that will not only help patients, but
also will help reduce the social and economic burden of disease in society today. Amgen focuses
on areas of high unmet medical need and leverages its expertise to strive for solutions that
improve health outcomes and dramatically improve people's lives. A biotechnology innovator
since 1980, Amgen has grown to be one of the world's leading independent biotechnology
companies, has reached millions of patients around the world and is developing a pipeline of
medicines with breakaway potential. (About Amgen, n.d.)

Amgen, Inc. stands out in the biotechnology industry as one of the only businesses to transform
itself from a drug development company into a pharmaceutical manufacturer while
simultaneously maintaining steady sales. The largest independent biotechnology company in the
United States, Amgen owes its transformation mostly to two gene-spliced drugs, Neupogen and
Epogen. The company continues to develop human bio-pharmaceutical products using
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proprietary recombinant DNA technology. Fulfilling Amgen's mission to be the world leader in
developing and delivering cost-effective therapeutics based on advances in cellular and
molecular biology depends upon the company's ability to make continued progress in unlocking
the power of cellular and molecular biology to develop products that satisfy the unmet medical
needs of patients worldwide.

Reasons Behind Selecting This Sector:

The pharmaceutical sector of Bangladesh is for sure a promising one. In the course of recent
many years this area has transformed its reliance on brought medications into reliance on nearby
medicines in a sensational manner. Be that as it may, it was indeed the huge difficult work and
brightness of individuals from the pharmaceutical industry that made this possible. With
legitimate in reverse incorporation, quality research and improvement, gifted human resources,
Bangladesh's pharmaceutical industry has the capacity to arise as a world innovator in creating
off-protected generic medicines. There are many purposes for putting resources into this area. A
portion of the significant reasons are given underneath:

• Potential development rate: According to a report from a Dublin-based market

knowledge and examination firm, Research and Markets expresses that "The
pharmaceutical market of Bangladesh is relied upon to outperform $6 billion by 2025
with an outright development of 114% from its 2019 levels". "The pharmaceutical market
has been seeing astounding development as of late, and it is relied upon to have a build
yearly development pace of something else than 12% during the 2019-2025 period," said
the report named "Bangladesh Pharmaceutical Market Future Opportunity Outlook
2025." At present this industry is adding to practically 1.83 percent of GDP and is relied
upon to fill fundamentally in the coming years.
• Increased Income and aging population: As, the income level of Bangladesh is rising,
drug buying power is probably going to ascend as individuals are turning out to be more
wellbeing cognizant day by day. Then again, the nation's aging population is expanding.
On an overview it is discovered that by 2030 around 25 percent of populace will be more
than 50 years old. So the market is likewise upgrading. As indicated by IMS Health,
annual pharmaceutical sales in the neighborhood market has reached to $3 billion out of
2019. Hence, pharmaceutical sales of Bangladesh is a decent option for investment.
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• High Life Expectancy: Life Expectancy among individuals has essentially expanded. In
2020, Expectancy is 72.72 years though it was just 66.4 years in 2002 (Bangladesh Life
Expectancy 1950-2021). To accomplish a more extended life, individuals are counseling
with doctor consistently and taking medicine according to the prescription of doctor.
Thus, the interest of drugs & medicines is quickly expanding in Bangladesh.
• Advantages from purchasing raw materials & specialized medicine: According to the
Dhaka Chamber of Commerce and Industry sources, the pharmaceutical industry burned
through $600 million or Tk5000 crores for bringing in Active Pharmaceutical Ingredients
(API) in the 2018-19 financial year from various nations like China, India, Vietnam,
USA, Germany and so forth. Yet, as a US based MNC we can undoubtedly deal with the
raw materials which will assist with limiting our expense. Then again, particular items
like immunizations, anticancer items and chemical medications are for the most part
imported by the neighborhood organizations to fulfill the need. We can create these
particular items in Bangladesh and can sell them at a less expensive cost. This will assist
us with acquiring the portion of the overall industry of the specialized medicine.
• Less foreign rivalry: A very MNCs like Radiant, Sanofi, Novartis are working in
Bangladeshi market. In this way, it is an extraordinary chance for us to get the portion of
the overall industry by giving quality medicine with cheaper price.
• Benefits from delivering nonexclusive medications: Bangladesh pharmaceutical
companies for the most part produce nonexclusive medications which empower
Bangladesh to view as a center point for moderate and excellent conventional drugs.
Around 85% of the medications sold in Bangladesh are conventional. Deals of
conventional medications in Bangladesh is assessed to arrive at BDT 30,300 crore by
2024. Also, Bangladeshi drug organizations are trading nonexclusive medications up to
25% of the overall drug deals. In this way, by creating conventional medications can
assist us with making an enormous benefit out of it.
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Country Risk Analysis

Country risk analysis refers to the uncertainty associated with investing in a given country, and more
particularly, the extent to which such uncertainty may result in investment losses. Uncertainty can be
caused by a variety of causes, including political, economic, exchange-rate, and technological effects.
Country risk, in particular, refers to the possibility that a foreign government would default on its
obligations.

Country risk, in particular, implies the chance that a foreign government may default on its debts or other
financial commitments, therefore raising transfer risk. Country risk, in a broader context, refers to the
extent to which political and economic turmoil impact the securities of companies doing business in a
certain country.

Social Risk
• Population Growth, Human Capital and Life Expectancy
Bangladesh got a total population of 163 million. There is no doubt that Bangladesh is
overpopulated and is plagued by unskilled labour and a high dependency ratio. The population
growth rate is 1.0% (2019). This rate helps to predict about the changes the people needs like
infrastructure, resources and jobs. Although higher population indicates higher number of
consumers but in an overpopulated country the purchasing power seems to decrease due to low
per capita income. Life expectancy of Bangladesh is almost 72 years which is a good thing to
observe before investing in this country.
• Labour Force and Unemployment
Bangladesh would be one of the best countries to invest in terms of labour since the wages of
labour in this country is relatively low. Although the unemployment rate has decrease in the last
10 years from 5.3 to 4.3 but due to increase of population the company wouldn’t have to face
much problem while hiring workers.
• Health Care
Poverty, hunger, poor water quality, arsenic pollution, and the frequency of infectious illnesses
are the primary reasons of an inadequate health care system in Bangladesh. Bangladesh has
achieved considerable progress in the health sector, and the government has pursued a health
development program that assures the supply of basic services to the whole population.
Bangladesh had made significant progress in the pharmaceutical industry. Currently, local
pharmaceutical manufacturing fulfils around 97 percent of total local medication demand and 100
percent of critical drug need. The internal pharmaceutical market is valued around US$740
million per year.
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Political Risk
Bangladesh’s score in the latest Global Corruption Perception Index is 26 which is very poor and
indicates that the corruption level of our country is very high. Bangladesh is only better than Cambodia,
Afghanistan, and North Korea in the CPI's Asia-Pacific rankings, which comprise 31 nations from Asia
and the Pacific. Bribery and inappropriate use of government funds, as well as excessive lobbying,
protracted service delays, pilferage, government officials' reckless behaviour, and bureaucratic self-
indulgence, have made Bangladesh's public sector departments one of the most corrupt.

Bangladesh also received 4 index points in 2019 in the Medium/long-term political risk indicator (1=low,
7=high). The medium/long-term political risk categorization assesses the possibility of a risk induced by
political and social events associated with cross-border transactions with a risk horizon more than one
year. As a result, the political risk in Bangladesh might be classified as moderate to high.

Bangladesh's government encourages foreign direct investment and wants to create a special economic
zone to improve the efficiency of the investment process. The World Bank recently identified regulatory
uncertainty as a barrier to attracting FDI, which accounts for less than 1% of GDP. Bangladesh also has a
poor record of contract enforcement, ranking 189th out of 190 nations according to the World Bank.

It is really important to go through the political risk therefore they can take moderate actions before
investing in this country. Taking insurance can be a proper help as they might help recover the losses they
might face if they experience any political risk exposure.

Financial Risk
According to the World Bank's newest assessment, the ongoing pandemic has worsened Bangladesh's
financial stability concerns due to high levels of non-performing loans, insufficient capital buffers, poor
bank governance, and risk management.

Despite the uncertainties caused by Covid-19, the economy of Bangladesh is expected to grow. Much of
the recovery time will be determined by how quickly mass vaccinations can be implemented. The
countrywide shutdown enforced to control domestic transmission from March to May 2020 caused
serious supply-side disruptions in all areas of the economy. GDP growth slowed dramatically in FY20,
with an estimated 2.4 percent. With a significant drop in medical industrial production, industrial
development stalled. Inflation is expected to be close to the Bangladesh Bank's target of 5.5 percent,
while the budget deficit will remain around 6% of GDP.
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Although as the number of debt defaults rises, a tightening of financial conditions might send the
economy into a downward cycle. Foreign direct investment (FDI) remains low, at less than 1% of GDP,
according to the World Bank's Bangladesh Update. The public debt to GDP ratio reflects a country's
ability to borrow from the market and counter-cyclically respond during a crisis. In the run-up to a crisis,
any nation with a high debt-to-GDP ratio may implement fewer countercyclical fiscal measures. To deal
with the economic consequences of the Covid-19 crisis, Bangladesh has handled its state finances
cautiously. Bangladesh has had a low debt-to-GDP ratio of approximately 34% of GDP on average during
the previous few years, compared to other South Asian nations save Afghanistan and Nepal,
demonstrating Bangladesh's public financial management competence in dealing with the economic
repercussions from the Covid-19.

Except for India, Bangladesh maintained a tax-to-GDP ratio of approximately 10%, which is lower than
any other south Asian countries. Bangladesh's budget deficit as a percentage of GDP has been below 5%
over the past decade. Bangladesh has prudently maintained its governmental debt-to-GDP ratio, allowing
the country to borrow more to confront the economic consequences of the Covid-19 epidemic. Since the
previous several years, Bangladesh has had a low debt-to-GDP ratio of approximately 34% of GDP.
Bangladesh likewise has a low probability of sensitive debt sustainability, according to debt statistics.

Bangladesh is not immune to the consequences of the world's tightening financial circumstances. With
global equity markets dropping and credit spreads widening, indicating decreased optimism, the country's
ability to attract FDI may be further hampered.
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Elaborate Discussion on Exchange Rate Analysis

Historical Analysis:
Here, we can see an exchange rate of USD/BDT of 5 years. From 2016-17 the exchange rate
fluctuated the most. The average exchange rate value is 82.0803. In October 2016 the exchange
rate was 76.7246 which was the lowest from these 5 years and in 2018 august exchange rate was
84.2160 which was at the peak. From 2019 we don’t see noticeable changes in the exchange rate.
The exchange rate fluctuations are low till now.

Exchange Rate Fluctuations:

Short Run: BDT is depreciating against the USD, so Amgen will face difficulties if they needed
to import something from abroad. They mostly have source its raw materials or any other thing
from BD and for this they will need more BDT.

Long Run: As Amgen is USA based company, after making the revenue amgen needs to convert
the BDT into USD. Because of BDT depreciation, amgen will get less money to take in USD.
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Exchange Rate Forecasting

Exchange rate forecasting is one of the crucial things in business. The forecast has to be done in
a correct way in order to hedge, speculate.

The exchange rate can be forecasted by Purchase Power Parity (PPP). It is the most common
measure to forecast the exchange rate. This will help Amgen to minimize the risk and maximize
profits. BDT should depreciate against the USD.

Now,

Exchange rate in Sep, 2021= 0.0114

Inflation rate in Bangladesh(2021) = 5.54% [Foreign Country]

Inflation rate in USA(2021) = 5.4% [Home Country]

According to PPP, BDT should depreciate.

Ef = (1.054/1.0554)-1 = -0.133%

Forward rate = $0.0115* (1-0.133%) = $0.0114

Here, we can see the forecasted exchange rate for 2022 is slightly changed. The bdt is
depreciating a little bit.

Derivatives For Hedging Technique:

Amgen is exposed to foreign currency exchange rate and interest rate risk in terms of its business
operations. To reduce the risks associated with such exposures, amgen will use derivative
instruments such as foreign currency forward, foreign currency option and cross-currency swap.
Amgen will not use derivatives for speculative trading.

● Forward: According to the trend analysis, we expect the taka to depreciate, which will
result in the USD appreciating in terms of BDT. Because Amgen is investing in
Bangladesh, this will result in a cash outflow for the company. As a result, they should
purchase the forward contract to protect themselves. They will not be required to pay a
premium for the forward contract, which is a significant advantage for them. It is possible
for them to hedge future payables or loans by purchasing a currency forward contract for
the currency in question. We assuming that in the next few years taka will depreciate
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against the USD. As taka is losing its value it gives amgen a favorable situation to invest
in BDT. For receivable Amgen doesn’t need hedging as the currency will depreciate.
● Option: Amgen should purchase a call option for the currency option. It has the benefit
that in the future if Amgen does not want to exercise the option, they will have the
opportunity to do so by simply paying the premium amount. If the strike price is lower
than the market price, Amgen will exercise the option; if the strike rate is higher than the
market rate, Amgen will not exercise the option and will instead acquire BDT straight
from the market. So, Amgen will just have to pay the premium for purchasing the call
option.
● Cross-currency swap: Amgen will enter into cross-currency swap contracts to hedge its's
exposure to foreign currency exchange rate risk associated with some of its long-term
loans denominated in foreign currencies. Under the terms of such contracts, we will pay
taka and receive US dollars for the notional amounts at the outset of the contracts, and
Amgen will interchange interest payments at specified rates over the life of the contracts
by paying US dollars and getting Bangladeshi taka. Furthermore, at the maturities of the
contracts, Amgen will pay US dollars to and receive taka from the counterparties for the
same notional amounts. The conditions of these contracts correspond to the terms of the
underlying hedged debt, essentially changing interest payments and principal repayment
from Taka to US dollars. These cross-currency swap contracts will be considered to as
cash flow hedges by Amgen.

Exposure to unfavorable exchange rates movements

Exchange rate risk is relevant and MNC is involved heavily. There are different exposure to
exchange rate fluctuations.

● Transaction exposure: The volatility of the exchange rate is not very high. Both
currencies are stable for a long period of time. So, the transaction exposure of Amgen
will be lower. The risk is less than the portfolio value will decline. For the unfavorable
scenario, they can use forward and option contracts.
● Translation exposure: Amgen can use currency swaps to deal with translation exposure.
● Economic exposure: For Amgen, economic exposure will be difficult to measure and it
will be challenging for Amgen to hedge.
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Operational Plan:
The retail medicines customer frequently shifts from one brand to another. There are several
brands of single medication that can be substituted. If a customer cannot find a certain brand,
they will rapidly switch to another. As a result, the risk of a replacement product is quite
significant. As a result, Amgen's operating strategy must be robust. They have the ability to split
the plan into two halves.

• Begin by creating a strategy plan: The strategic strategy should include prioritize research in
the areas of cardiometabolic, inflammatory, and cancer therapeutics. They may extend the scope
and variety of our human genetic platform as quickly as possible. They may utilize their Global
Medical organization and its external network of research collaborators to get insight into the
evidence that our drug development teams will need to promote access and usage. They also can
invest in biomarkers, diagnostics, and other technologies that can improve the value of our
medications and support Amgen's goal to empowering clinicians to treat patients in a more
precise, customized fashion than the old "one size fits all" approach. The strategic plan should
focus on obtaining sufficient raw resources. Leading firms must import raw materials from
nations such as India, Australia, and Japan, but Amgen must ensure that they do not need to
import so that they can capitalize on this as a key strength and lower the price of their drug than
their competitors.

Amgen's strategy will remain focused on breakthroughs that address substantial unmet needs for
people with severe diseases, but it will be guided by four strategic priorities:

1) Demonstrating the benefit of our medications;

2) Taking a "biology first" strategy;

3) Using human genetics to identify and validate targets; and

4) Improving operational efficiency.

• Concentrate on their objectives: In the fields of research, process development,

manufacturing, transportation and distribution, sourcing, and goods and packaging, they should
use sustainable methods. They should have quality control procedures in place, as well as quick
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product delivery. It should be more widely distributed throughout Bangladesh, from rural to
urban areas.

When organizations combine their strategic and operational strategies and approach them as a
one-two punch, they get the best outcomes. Their objectives should be clear and unambiguous.
All activities must be carried out, and resources must be effectively handled.

Furthermore, strict surveillance should be maintained. Amgen Mylan will concentrate on long-
term objectives and will keep a close eye on them to ensure that they are met. They plan to
establish research and development facilities in Bangladesh and send their technical specialists
here. This will be expensive at first, but it will save them a lot of money in the long term since
import costs will drop. They will leave a premium impression on their thoughts after they have
established brand loyalty among clients.

Marketing Plan:
The four Ps are depicted in the diagram below:

• Increase Amgen's market share - Marketing activities may be utilized to boost market
share by increasing sales to new customers or increasing sales to current consumers.
• Bring in new consumers for Amgen - This might entail releasing a product that appeals
to a new section of the market or expanding into new markets.
• Introduce a new Amgen product or service – This is a classic marketing mix function:
introducing a new product and conveying its benefits, superior value proposition, and
distinctiveness.
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• Amgen's branding should be more established – One of the most important marketing
objectives is brand recognition and positioning, and many companies spend a
considerable portion of their marketing budget on this.
• Boost Amgen sales - The objective of marketing activities is to boost sales of current
goods. It might entail identifying a new target market or repositioning an existing product
to appeal to a new market.
• Getting Amgen's existing consumers to buy more — This usually entails selling
accessories with existing items or increasing the utilization rate of existing products.
Even with a war chest of massive marketing resources, increasing utilization rate is a
challenging challenge.
• Improve Amgen client loyalty — By arranging events and offering post-purchase
information and services, marketing activities may be utilized to improve customer
loyalty among current consumers.

They may also raise brand awareness through seminars that discuss the benefits, drawbacks,
and conflicts of their drug.

As a result, this may be a straightforward marketing strategy for Amgen in Bangladesh.

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Financial Plan:
To forecast Amgen's total financial situation in Bangladesh, a pro forma balance sheet and
income statement for the years 2020, 2021, and 2022 were prepared. Amgen's initial financial
structure consisted of a bank loan, as well as money from the parent business and institutional
investors.

Assumptions:
Some assumptions have been made based on market behavior and national economic conditions
in order to prepare Amgen's pro-forma financial statements.

Balance Sheet:
1. All asset, equity, and liability numbers are calculated based on the present state of
Bangladesh's pharmaceutical sector, the parent company's situation, and several
macroeconomic considerations.

(1) Total Asset financed through equity 60%

(2) Total Asset financed through liability 40%
(3) Share capital: Parent company's investment 80%
(4) Share capital: institutional investment 20%
(5) Short term borrowings out of total liability 70%
(6) Long term borrowings out of total liability 30%

(7) Initially for the first three years the whole net profit will be
contribute to retained earnings
(8) Growth rate 12%
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Income Statement

1. The overall net sales are anticipated based on the market

demand, competitive advantage of the company and target
consumers
2. Cost of goods sold is 40% of the total sales
3. Average rate of interest on deposit and advances is 4%

4. Average rate of interest on borrowing is 9%

5. Tax on profit 35%
6. Growth rate 12%
7. Spot rate (Ask price) of the date August, 2021 83.4477
taka/ euro
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Pro-forma Financial Statements

For making Pro-forma financial statements, we have made some assumptions as we don’t have
any historical data to predict the future financial position.
Assumptions for Pro-Forma Financial Statements:
• The total value of domestic market of Pharmaceutical products in 2020 was around $3
billion USD. And with the CAGR formula, we can see that the industry is growing around 12%
every year. We are going to take this industry growth rate as the growth rate of our
pharmaceutical company because this industry growth is not going to slow down anytime
soon. Also, this industry has doubled over the past 5 years and the demand and exports of
pharmaceutical products are also increasing over the years. So, it seems justified to take
industry growth rate as our company growth rate and we can expect our company to grow
at 12% annually after setting up our subsidiary.
• The competition in pharmaceutical industry in Bangladesh is very intense and local
producers are the leaders in the market. And also, they are protected by the laws of
government against foreign competition. Each major company holds almost more than
10% of the total market share. So, if our company has to survive in this competitive
industry, we have to make sure that during the first year of our company, we have capture
at least 1 percent of the market share by intense marketing and promotions strategies. Then
we would be able to grow and make profit eventually.
• For cost of goods sold, we have taken the 40% of our sales. We have observed from the
industry leaders such as Beximco, Square, Incepta and etc. that their cost of goods sold is
on average 38% of their net revenue. So, we have taken this percentage to calculate our
company’s cost of goods sold.
• For operating expenses such administrative expense, marketing expense and etc. we have
assumed figures on the basis of industry competitors.
• For financing costs, which is only interest payments to our creditors, we assume that for
next 4 years we will pay interest BDT 18,360,000 in each year.
• Non-public Pharmaceutical company need to pay 35% tax on their Profit Before Tax
amount.
 P a g e | 21

Pro-forma Income statement

2021 2022 2023

Revenue ৳ ৳ 28,47,48,80,000 ৳ 31,89,18,65,600

25,42,40,00,00
0

Cost of good sold ৳ ৳ 11,38,99,52,000 ৳ 12,75,67,46,240

10,16,96,00,00
0

Gross profit ৳ ৳ 17,08,49,28,000 ৳ 19,13,51,19,360

15,25,44,00,00
0

Operating expenses ৳ 9,85,20,00,000 ৳ 8,70,00,00,000 ৳ 9,54,00,00,000

Administrative Expenses ৳ 2,50,00,00,000 ৳ 2,50,00,00,000 ৳ 2,50,00,00,000

Selling, Marketing, and Distribution ৳ 3,00,00,00,000 ৳ 1,00,00,00,000 ৳ 1,00,00,00,000

Operating Profit / EBIT ৳ (9,76,00,000) ৳ 4,88,49,28,000 ৳ 6,09,51,19,360

Financial cost ৳ 18,36,00,000 ৳ 18,36,00,000 ৳ 18,36,00,000

Profit Before Tax / EBT ৳ (28,12,00,000) ৳ 4,70,13,28,000 ৳ 5,91,15,19,360

Tax Expenses ৳ 0 ৳ (1,64,54,64,800) ৳ (2,06,90,31,776)

Net Income ৳ (28,12,00,000) ৳ 3,05,58,63,200 ৳ 3,84,24,87,584

We have calculated the pro-forma income statement from 2021 to 2023. In the 1st year of our
operation, we might make loss due to higher fixed cost against our revenue, but from 2nd year
we will start to generate profit and gradually growing over the years.
 P a g e | 22
Cash flow

Discount rate 12%

Year 0 Year 1 Year 2 Year 3

Cash Flow ৳ ৳ ৳ ৳
(10,20,00,0 (11,80,11,9 11,50,00,00 25,00,00,00
0,000) 04) 0 0

Exchange rate/tk US$ US$ US$ US$

0.01179000 0.01129114 0.01081339 0.01035585
0 1 0 3
Converted CF in US$ US$ US$ (13,32,489) US$ 12,43,540 US$ 25,88,963
(12,02,58,0
00)

Discounted CF US$ (11,89,722) US$ 9,91,342 US$ 18,42,773

NPV US$ 16,44,393

Cash Flow and NPV:

We are going to use constant Discounting rate (WACC) of 12% to calculate the NPV. The
average US company now use 10%-12% discount rate for domestic cash flow, so for our
company we are going to do the same.
As shown above, we have a positive NPV from our projected cash flows, so we can invest
money as FDI to start our operation in Bangladesh
 P a g e | 23

Conclusion

For a long time, Amgen has been has made huge contribitions in saving the lives of a lot of
people, presenting dmedicines and vaccines for a significant number of the world's most difficult
infections in quest for saving and further developing lives. Amgen's market presence can be
described by state of the art advancements in innovative work, ability in assembling, and solid
client nearness. Investing into Bangladesh can be an extraordinary chance for them., since
Bangladesh's pharmaceutical industry has the limit of arising as a world forerunner in delivering
generic nonexclusive medications and not just that, the pharmaceutical of Bangladesh is relied
upon to outperform $6 billion by 2025 with a flat out development of 114% from its 2019 levels.
Around 160 million individuals, a young and modest workforce and vital situation among India
and China - the two biggest motors of worldwide financial development somewhat recently -
Bangladesh supports solid potential for expanded monetary development. Bangladesh's economy
has been shown to be a promising business center point for Amgen in our investigation. Despite
the fact that Bangladesh involves high to direct measure of country risk yet it was a considerable
amount of good conditions for Amgen. According to the exchange rate risk factor, after various
computation and investigation we have concocted different ways Amgen can fence such
diversifiable dangers. The amount of FDI we have taken is 120m, which will be generally self-
financed, as Amgen has their own reciprocal resource and needs full power over the business.
We have likewise spread out some Marketing techniques as needs be, which will assist Amgen
with boosting their deals and achieve their objective piece of the pie. According to our
calculations, it very well may be seen that Amgen can begin procuring from the second year of
business (Year 2023) if everything goes as arranged, which is an amazing possibility for the
business. And after dissecting the strengths and weaknesses of this task, we can say that the
qualities by a long shot offsets the strengths and weaknesses makes the task very appealing for
Amgen. For the previously mentioned reasons, we can infer that pharmaceutical area is without
question rewarding to make an investment in Bangladesh and there are high possibilities of
making enormous benefit by putting resources into this industry. Along these lines, we trust
Amgen will actually want to snatch the portion of the overall industry of this area by following
the strategies we have spread out in our venture.
 P a g e | 24

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