ASSIGNMENT ON THE PHARMACEUTICAL INDUSTRY IN BANGLADESH

SUBMITTED TO:

Mrs. Taslima Rahman Lecturer, IHE, DU

SUBMITTED BY:

Tasnim Islam Tushin 101 Krishna Roy Chowdhury 18 Tahmina Nasrin Shoshi 19 Sabikunnaher Koly 45 Shampa Saha 72 Khondoker Sonia 38 Sharmin Akhter Shaki - 48

INSTITUTE OF HEALTH ECONOMICS UNIVERSITY OF DHAKA

ABSTRACT: Pharmaceutical is the core of Bangladeshs Healthcare sector, and serves as one of the most important manufacturing industry. With a history since 1950s, the industry has now turned one of the most successful pharmaceuticals manufacturing industry among the developing countries. Presently, the industry meets 97% of local demand and exports to more than 80 countries. The industry has been experiencing robust growth over the last few years. A local industry supporting drug policy and effective regulatory framework, along with TRIPS relaxations are the key reasons for success of the industry. While the industry is achieving self sufficiency, it yet procures 70% of raw materials from abroad. But developments are already taking place, with a number of firms now manufacturing raw materials locally. In addition, an API project has already been undertaken to accelerate the vertical integration within the industry. The industry has been expanding locally and internationally. Local market grew at 23% in 2010, while import reached USD 50 Million landmark. A number of firms got accreditations from USA, UK, Australia etc. developed markets, and are underway toward expansion into the developed markets. Locally, firms are preparing themselves for post 2016 scenario, when TRIPS will be implemented. Almost all the firms are upgrading their facilities and taking up precautions for post 2016 scenario, while aggressively expanding in both local and export markets. While TRIPS and import dependence on raw materials put challenges to the growing sector, prospect of the sector depends largely on the interactions among the players, regulatory bodies and the govt., whether they can meet up the requisites to continue growth of the sector while facing the challenges. The pharmaceutical market in Bangladesh is pretty small compared to the population size of the country, mainly because of the lack of spending power of the population. Pharmaceutical spending is also amongst the lowest in the world in per capita terms. Healthcare expenditures consist of only 3.35% of GDP. However, increased awareness of healthcare, increase in per capita income, emergence of private healthcare services and the governments increased expenditure in this sector, together with other factors, have caused the demand to rise in recent years. The sector is also protected from external competition as imports are completely restricted for similar drugs that are manufactured locally. This sector reports provides an overview of

the pharmaceutical sector in Bangladesh and highlights the top performers that are listed in the Dhaka Stock Exchange (DSE).

List of Acronyms
Acronym API ASEAN BAPI BMA cGMP DCO DCC DDA DTL FDI GDP GMP GSK HIV/AIDS HVAC ICDDR,B ID LDC KWH MNC MSF MVA Nafdac NDP NGO NOC PP&E R&D RS SAARC SAFTA TGA TLC TRIPS UK UKMHRA Definition Active Pharmaceutical Ingredient Association of Southeast Asian Nations Bangladesh Association of Pharmaceutical Industries Bangladesh Medical Association Current Good Manufacturing Practice Drug Control Ordinance (Bangladesh) Drug Control Council (Zimbabwe) Drug Directorate Administration (Bangladesh) Drug Testing Laboratories Foreign Direct Investment Gross Domestic Product Good Manufacturing Practice Glaxo Smith Kline Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome Heating, Ventilation and Air-Conditioning International Center for Diarrhoeal Disease Research, Bangladesh Identification Least Developed Country Kilowatt Hours Multinational Corporation Medicines Sans Frontiers Manufacturing Value Added National Agency for Food, Drug Administration and Control (Nigeria) National Drug Policy Non Governmental Organization No Objection Certificate Plant Property & Equipment Research and Development Indian Rupee South Asian Association for Regional Cooperation South Asian Free Trade Association Therapeutic Goods Administration (Australia) Thin Layer Chromatography Agreement on Trade Related Aspects of Intellectual Property Rights United Kingdom United Kingdom Medicines and Healthcare Products Regulatory Agency

UNDP UNICEF UNIDO USA USFDA WHO WIPO WTO

United Nations Development Program United Nations Childrens Fund United Nations Industrial Development Organization United States of America United States Food and Drug Administration World Health Organization World Intellectual Property Organization World Trade Organization

PREFACE:
Pharmaceuticals industry is the core of healthcare sector of Bangladesh. Being part of healthcare sector, its performance is related to demographic variables like population growth as well as economic growth and healthcare policy. In our country, with improving demographic characteristics, recent economic growth and favorable policy, the industry has seen good growth. The following table represents changes in our demographic variables, economic growth and performance of Pharmaceuticals industry
Indicator Name GDP growth (annual %)
1

Unit % % BDT Bn % $ Mn
3 4

2005

2006

2007

2008

2009

2010
4

5.96% 6.63% 6.43% 6.19% 3.21% 3.40% 3.46% 3.32% 35.42 37 40

5.74% 6.7%

Health expenditure, total (% 1 of GDP) Pharmaceuticals market 2 size Pharmaceuticals Industry Growth Pharmaceuticals Export Source - World Bank, Budget 2011-12
1 2 3

3.35% 3.21% 54.93 68

18.18

26.96

37.74

46.54

45.71

50

IMS,

WTO, National

3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

KEY:

Health expenditure, public (% of GDP) Health expenditure, private (% of GDP)

TABLE OF CONTENTS 1. STRUCTURE OF THE INDUSTRY:

1.1 Historical overview 1.2 Current Scenario of the Industry

2. REGULATORY FRAMEWORK:
2.1: Regulatory assistance 2.2: Pricing 2.3: Drug production regulations 2.4: Drug distribution, sales and storage 2.5: Recent developments

3. GROWTH AND PROSPECT OF THE INDUSTRY:

3.1: Global market 3.2: Local market 3.3: Recent sales growth 3.4: Drivers behind market growth 3.5: Drivers for future growth 3.6: Export sector of the industry 3.7: Import sector of the industry 3.8: growth projections and future prospects 4: PROBLEMS AND SUGGESTIONS; 4.1: Problems 4.2: Suggestions

5. CHALLENGES
CONCLUSION ANNEXURE

REFERENCES

1. STRUCTURE OF THE INDUSTRY

1.1: Historical Overview:
The pharmaceutical sector is one of the thrust sectors in Bangladesh. Before Liberation, there was hardly any pharmaceutical enterprise in Bangladesh (then East Pakistan). After several years of liberation, the government could not increase (in relative terms) budgetary allocations for the improvement of health sector. At that time, most of the people had little access to the essential lifesaving medicines. This sector started to improve from 1980s. The pharmaceutical industry has grown in the last two decades at a considerable rate. After the promulgation of Drug Control Ordinance-1982, the development of pharmaceuticals industry has accelerated. The skills and knowledge of the professionals and innovative ideas of the people involved in this industry are the key factors for these developments.

1.2: Current Scenario of the Industry

Pharmaceutical sector is technologically the most developed manufacturing industries in Bangladesh and the third largest industry in terms of contribution to governments 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 USbased market research firm, the retail market size is estimated to be around BDT 84 billion as on 2011. Due to recent development of this sector, the country is exporting medicines to global market including European countries and on the top of it, the industry has been supplying about 95 per cent of the domestic demand for medicines. Bangladesh pharmaceutical companied focus primarily on branded generic final formulations, mostly using imported APIs (Active Pharmaceuticals Ingredient). Branded generics are a category of drugs, including prescription products, that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name. About 85% of the drugs sold in Bangladesh are

generics and 15% are patented drugs - the structure differs significantly from the international market. Branded generic drugs represent about 25% on average of worldwide pharmaceuticals sales however, given the popularity in emerging markets like China, India and Latin America, branded generic drugs may well dominate the total sales within a decade.

Bangladesh manufactures about 450 generic drugs for 5,300 registered brands which have 8,300 different forms of dosages and strengths. These include a wide range of products from anti-ulcerants, flouroquinolones, anti-rheumatic non-steroid drugs, non-narcotic analgesics, antihistamines, and oral anti-diabetic drugs. Some larger firms have also started producing anti-cancer and anti-retroviral drugs. Domestic manufacturers account for 97% of the drug sales in the local market while the remaining 3% are imported. This is a complete turnaround over from two/three decades back when imports used to dominate the market. The imported drugs include essential live saving drugs and other high quality drugs. The ratio will further increase in favor of the local production as some of the big players are poised to manufacture these high quality drugs in-house in the future. There are three drug manufacturing units under control of the Government of Bangladesh, two of them are in Dhaka and the other in Bogra, named Essential Drug Company Ltd. (EDCL), which is operating as a public limited company under the Ministry of Health and Family Welfare. Essential Drug Company Limited produced medicines worth Tk. 964 million in 2000. The production rate of these companies is also increasing day by day. There are separate vaccines and large volume IV fluids production units under the Institute of Public Health (IPH) located in Dhaka. In 2000, there were 261 unani, 161 ayurvedic, 76 homeopathic and bio-chemic licensed manufacturing units in Bangladesh. The total worth of their medicines was Tk1.2 billion in 2000.

2: REGULATORY FRAMEWORK:
2.1: Regulatory Assistance
The industry is regulated by Drug regulatory authority (DRA) through the Drug Control Ordinance of 1982, and National Drug policy 2004. The Drug Act gave protection to the local manufacturers by restricting import of pharmaceutical products that are manufactured in the country. It successfully prevented the Indian manufacturers, who could serve the market at competitive price, from entering the country. Going forward there is no regulatory risk that import restriction will be removed and local companies are likely to continue on dominating the pharmaceutical market. One of the major positive impacts of Drug Control Ordinance-1982 is the rapid development of local manufacturing capability. In recent years, the country has achieved large volume of parental products, by which the country becomes self sufficient; huge volume of these products are also exported to other countries. The development of local manufacturing companies helped to reduce the dependence on the import of raw materials of pharmaceutical products and finished pharmaceutical products.

2.2 Pricing:
Under the present regulatory structure, government fixes the maximum retail prices (MRP) of 209 essential drug chemical substances. This price determination is only for the local producer companies and still now the multinational organizations are determining their price by their own way. For imported finished products, Government determines the fixed percentage of markup, but the (governmental) drug administration could not fix up the MRP in Bangladeshi market. It is interesting to note that, even with withdrawal of price control from many products, prices have not shot up; healthy competition has been keeping the prices within affordable levels.

2.3 Drug Production regulations:

Firms are required to upgrade their productive facilities to ensure cGMP is followed. Foreign and MNCs are allowed to manufacture drugs in Bangladesh only if at least three of their original research drug products are registered in at least two of the following countries: USA, UK, Switzerland, Germany, France, Japan, and Australia. Drugs not in BP, USP, IP, INN or BPC will not be allowed to manufacture. Foreign firms can produce drugs in Bangladesh under licensing agreement following certain conditions. For export purpose only, any drug can be produced in Bangladesh

2.4: Drug distribution, storage and sale:

Only registered drugs are allowed for sale. Other than OTC drugs, no drugs should be sold without prescriptions. Direct Marketing is prohibited (Advertisements are not allowed).

2.5: Recent Developments:

In the recent budget 2011-12, Pharmaceuticals industry has seen some positive moves, like Withdrawal and Reduction in Taxes of certain inputs, as in Anticancer producers will have lower input cost; and Extension of Tax Holiday Benefit reducing tax expense of producers. The government has planned to set up the API Park (Pharma Ingredient project with an estimated cost of BDT 235 Crore) by 2012 to facilitate API production and lower reliance on API import. The Projected impact of this project is to save 90% of pharma ingredient (API) import. In the last budget, also, government provided various incentives to lower the import cost of the pharmaceutical manufacturers. In this coming budget for FY 2013, it is expected that the government is going to provide incentive to export - in particular easing up the documentation procedures and removing bottleneck for exporting goods. Besides, in 2001, under the trade-related aspects of intellectual property rights (TRIPS), the World Trade Organization allowed developing and poor nations to produce generic drugs without compulsory licenses or paying the patent holders for a certain time frame. For Least developed countries, including Bangladesh, the time line was up to 2016. Within this timeframe, pharmaceutical industries are legally allowed to reverse engineer, manufacture and sell generic versions of on-patent pharmaceutical products for domestic consumption as well as for export

to other LDCs. Hence, due to TRIPS relaxation, LDCs can produce drugs without patent or license cost up to 2016. This opened a wide export opportunity for Bangladesh, since it is the only country among the 49 LDCs having a strong manufacturing base in Pharmaceuticals. And since then, Bangladeshi firms has been experiencing a surge in exports. Recently, the least developed countries have sought an extension of the deadline from 2016 to 2021, as most of them have not yet enjoying the benefits of TRIPS relaxation. In addition, WTO still could not finalize the list of patented products. If such an extension is provided, Bangladeshi pharmaceutical industry is most likely to enjoy a good growth from exports to LDCs.

3: GROWTH AND PROSPECT OF THE INDUSTRY

3.1: Global Market
Globally, Bangladesh market has demonstrated the highest growth among all countries in 2010. Whereas Global market and Afro-Asian market is growing at a rate of 6.70% and 15.70% only, our country is demonstrating an annualized growth of 24.58%. As a result of such significant growth along with a consistent economic growth of around 6%, recently Bangladesh was included on the Goldman Sachs "Next Eleven" list as well as the JP Morgan "Frontier Five". As per their observation, Bangladesh represents significant potentials to become an important global manufacturer of pharmaceuticals, joining China, India, Brazil and Russia. (Source: IMS)

3.2: Local Market

The size of the retail market reached BDT 84.0 billion as on 2011 based on IMS report. The report further stated that, retail sales in the domestic market achieved 23.6% growth in 2011 following 23.8% and 16.8% growth in 2010 and 2009 respectively. High growth in the last three years (78.8% cumulative and 21.4% CAGR) meant that the Bangladesh Pharmaceutical market doubled in just over four years. The retail market also crossed USD 1.0 billion in size in 2011. It is one of the fastest growing sectors in the country with an annual average growth rate of 17.2% over the last five years and 13.1% over the last decade.

However, considering that IMS does not include rural market in their survey, the actual size of the market will vary slightly (5%-10%). It is estimated that the retail market represent 90% of the total market; in that respect the total market size (including the rural market) is expected to be over BDT 90.0 billion at present. \

3.3: Recent Sales Growth:

Four pharmaceutical companies out of top Ten Bangladeshi Companies achieved double-digit growth in sales during the January-March period of this year, according to the global pharmaceutical market intelligence agency IMS in its first quarter report. The report published recently said the fifth largest pharmaceutical company in the country Eskayef posted the best 21.12 percent growth followed by Renata 16.19 percent, ACI 16.17 percent and Drug International 13.79 percent. However, according to the Bangladesh Association of Pharmaceutical Industries (BAPI), the improvement in overall quality of medicine will help grab the international market swiftly besides expanding local market.

3.4: Drivers behind Market Growth

Table 1: Retail Market Size & Growth Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Size (BDT b) 84.0 68.0 54.9 47.0 44.0 38.0 36.5 31.1 28.6 27.0 Growth 23.6% 23.8% 16.8% 6.9% 15.8% 4.1% 17.5% 8.6% 5.9% 10.2%

Table 2: Selected Health Indicators for Bangladesh Health Indicators 2009 2008 2005 2000

Life Expectancy Government % in total health exp. Health exp. as % of GDP 2001 24.5 GDP per Capita (Current US$) Health exp. per capital (Current US$) Median Age (2011 estimate) Poverty Level Source: World Bank Source: Square Pharmaceuticals Annual Reports & IMS Report

68.3

68

66.9

64.7

31.7% 31.4% 34.9% 39.0% 3.35% 3.32% 3.21% 2.82% 607.8 18.4 23.3 31.5% 546.9 16.5 428.8 363.6 12.1 9.1

NA 40.0% 48.9%

The table above shows some selected health indicators for Bangladesh. Most of the indicators improved over the last decades which are among some of the factors that contributed to the growth of the sector. Increased life expectancy, increased medical coverage of population, emergence of private healthcare services, growing income base of population and popularization of wellness drug are some of the factors contributing to high industry growth in recent times.

3.5: Drivers for Future Growth

Table 4 compares the indicators with other regions of the world and shows that Bangladesh is way behind other countries. Government spending proportion is much lower than that in other regions - it is one possible area where future growth may come from. Moreover, the total health expenditure to GDP ratio and health expenditure per capita of Bangladesh (both of which gradually increased from 2000) is very low in comparison to developed and developing countries. Since the base is still very low, we expect the recent growth in the local retail market to continue in the current decade. Some other factors that will also boost the industry growth include: Increase in number of modern hospitals Increase in health consciousness of the people Growing income level of the people

 Export of pharmaceutical products

Region USA World UK Japan Afghanistan Nigeria Nepal Thailand India Sri Lanka

2009 10.03% 9.34% 8.35% 7.36% 5.82% 5.81% 4.31% 4.17% 3.96%

2005

2000

Table 4: Comparison of health indicators (2009) with other regions Health Indicators Life Expectancy Government % in total health exp. Health exp. as % of GDP Health exp. per capital (Current US$) Source: World Bank Bangladesh World 68.3 31.7% 69.4 60.8% South Asia 65 32.9% EU 79.4 USA 78.1

16.21% 14.72% 13.41% 9.73% 9.23% 8.25% 7.04% 8.16% 7.69% 8.76% 8.29% 6.60% 4.56% 5.91% 5.06% 3.55% 3.40% 4.03% 4.61% 4.04% 3.72% 3.21% 2.82% 2.78% 3.02%

76.1% 48.6%

3.35% 10.03% 18.4 863.6

3.99% 10.31% 16.21% 40.2 3,370.7 7,410.2

Bangladesh 3.35% Pakistan 2.62% Source: World Bank

Table 3: Healthcare exp as % of GDP

3.6: Export Sector of the Industry;

Table 7: Pharma Export (USD m)

The export market has shown significant growth over Q1 the years. Since 2004, Exports have increased Q2 multifold, with export destinations rising from 37 in Q3 2004 to 84 in 2011. Bangladeshs overall export Q4 earnings from pharmaceuticals reached USD 46.0 Total Source: Export Promotion billion for the calendar year 2011, recording a Bureau growth of 16.1% over USD 39.6 billion in calendar year 2010. Exports earnings in Q12012 were USD 10.9 billion, 5.7% up from the same period previous year. Table 6 shows the quarter wise export earnings for the last three years while Chart 5 shows the total export over the last eight fiscal years*. Pharmaceutical export from Bangladesh recorded 25.5% growth annually over the last seven years. However, the growth was not steady across all the years in fact in FY2009 pharmaceutical export dropped 1.8% following the global financial crisis. In FY2011 also, the growth was only 1.0% because of sovereign debt crisis in Europe. Apart from these two years where trade slowed down significantly worldwide, pharmaceutical export was robust in all other years.
2011 10.4 12.4 12.3 10.9 46.0 2010 9.4 8.7 10.1 11.4 39.6 2009 8.8 8.5 10.2 12.7 40.1

Chart 5: Pharmaceutical Export and Growth (BDT m)

2,800.0 2,400.0 2,000.0 1,600.0 1,200.0 800.0 400.0 0.0
2004 2005 2006 2007 2008 2009 2010 2011

120 % 100 % 80% 60% 40% 20% 0% -20%

Pharmaceuticals (LHS) Growth (RHS)

_________________________

Source: Bangladesh Bank and Export Promotion Bureau

In the export market, growth (presently 9.4%) is expected to stay at an average of 10% upto 2016, as TRIPS relaxation prevails, and present effort towards improving international reach continues. Further, if the present expectations materialize, the API industry can provide another growth opportunity in the

export market. Exports presently amount to 5.93% of total size (local + Export) of pharmaceutical market on average. However, exports may contribute more in industry growth in coming periods.

3.7: Import Sector of the Industry;

500.0 400.0 300.0 200.0 100.0 0.0

2003 2004 2005 2006 2007 2008 2009 2010 Source: Bangladesh Bank Pharmaceuticals Organic chemicals

2011

Chart 6 shows the import data for pharmaceutical products and organic chemicals. Over the last eight years, import of pharmaceutical products grew at 12.9% annually while organic chemical grew at 15.8%. Unlike export data, pharmaceutical and chemical imports have been steady over the last four years as the domestic market has been bullish is the same period.

3.8: Growth Projections and Future Prospects

Alongside, due to growth factors such as low manufacturing labour cost, availability of relevant manufacturing technology and entrepreneurial assertiveness, the domestic market is to become a major emerging market. Change in affordability, strength of continuous investment, rapid spread of urbanization and education will result in high growth of the industry in the coming years. Being a part of healthcare sector, growth of pharmaceuticals industry is related to several economic variables. And at present, Bangladesh has a quite good outlook on its demographics. Bangladesh has been achieving around 6% GDP growth rate over the last decade. The current government has set target to achieve even higher growth rate in this decade, with a vision to achieve double-digit growth within 2018. As such, it is likely that the actual growth in GDP in the next five years will be greater than the projected 6.5% - in that case the growth in healthcare expenditure is likely to be more than our simple estimated value of ~15%. At present, the retail pharmaceutical market size is about 1% of GDP and health

expenditure is about 3.35% of GDP. Therefore, the pharmaceutical sector revenue accounts for ~30% of the healthcare expenditure. If we assume that the ratio will remain constant over the years, pharmaceutical revenue will also grow at par - at 15.4% annually over the next five years. Overall, a growth of 14.8% can be expected from our pharmaceuticals industry up to 2016. After 2016, growth pace would depend on whether TRIPS relaxation is extended or not. If extended, the industry can expect another period of good growth, with more growth coming from exports. However, total growth will be lower than 2011-2016, due to industry size effect, saturation in many product classes locally and rising competition. Therefore, assuming a GDP growth of 5%, alignment of private expenditure on healthcare with GDP, and a stable life expectancy level, 10.1% growth can be expected. And If not extended, export growth would certainly fall (assumed growth to be 2%), while domestic industry would reach saturation and will depend on demographic variables. In that case, a growth rate of 8.5% can be expected. Growth Scenario 2011-2016 Local Market = 15% Export Market = 10% Overall Growth = 14.8% Growth Scenario 2016-2021 If TRIPS benefit is extended, Expected Growth = 10.1% If TRIPS benefit is not extended, Expected Growth = 8.5% Recent Trend in Pricing: The price of most of the drugs increased in recent times owing to higher manufacturing cost. Since the companies have already shifted the import source of the raw materials to low cost producers (China and India), further relocation is not feasible. As such, adverse movement in exchange rate (following steep depreciation of BDT again USD in 2011) is likely to increase the raw material cost for most of the manufacturers. Moreover, there have been multiple hikes in electricity and fuel prices in the last one year which has also pushed the cost of operating business in the country. As a result the price increased for most of the non-essential drugs in the last one/two quarters. It is likely that the price increase will impact the financial statements in this year and drive the growth of the industry (in nominal terms).

4. PROBLEMS AND SUGGESTIONS

4.1: PROBLEMS:
Problems of Marketing: Because of having no sufficient incentives in comparison with their effort, the turnover rate of medical representatives is very high. Most of the time costs of marketing hardly affect the price of the medicine. Professionalism in marketing is not achieved yet in Bangladesh like other developing countries. Lack of proper governmental laws and this implementation the law by the drug administration. Unstable political situation and different types of violence. Effect of globalization that has increased the competition. Smuggled production counterfeit, thats coming from the neighbor countries.

Problems of Foreign Competition: Foreign competitors have more equipment, technology and plant facilities than that of locally owned firms. Foreign competitors have their own local market so that they can absorb some losses here. Foreign competitors get government help in some cases.

Problems of Export: Unstable political situation is one of the vital reasons for not achieving the expectation in export. Problems of port (both sea and air) hinder the timely export. Irresponsibility of customs officers is a regular phenomenon which results in increase on the price and cost of medicine.

Sometimes competition tends to follow unfair promotional activities. Still now, the products of the pharmaceuticals industries of Bangladesh are not world class.

Problems of Customer Choices: One main problem is in producing rare drugs foreign companies are ahead of us in terms of quality, experience and market share. Most of the time, to purchase the medicinal products is not depending on the customer choice. Customers buy their product according to the prescription of doctors.

Problems of Power Development: Like other industries, there is a crucial problem faced by the pharmaceutical industries that is power generation problem. They are not getting power according to their demand. Red-Tapism of govt. offices hinders the development of power generation sector, where the government is not taking effective actions. Lack of opportunity to supply the emergency power to smooth continuation of production in pharmaceutical sector.

4.2: SUGGESTIONS:
The proposed suggestions may help the pharmaceutical industries to reduce the problems in different areas. These are as follows: The medical representatives turnover is not adequate and equitable. So, the organizations can take measures to increase the salary for the medical representatives. Advertising cost should be reduced and this is necessary to make the marketing people aware of their profession.

 The local pharmaceutical companies should produce quality product by using the updated equipment and raw materials, which can help them to acquire the market share. Pharmaceutical companies should produce world class medicine which may increase the demand for Bangladeshi drug in the world market. Industry should make the people aware of the local products and with that they should ensure the quality medicine to earn confidence. Pharmaceutical companies may take the initiative to generate the power for continuous supply of electricity. The pharmaceutical companies should not violate the law imposed by the government, which can hamper the trust of the people of the country. Organizations should produce their product in a hygienic environment and maintain the highest standard. Government should take measures or formulate some clearcut rules to restrict the foreign pharmaceutical organizations to practice the concept of dumping in this country

5. CHALLENGES

1. Primary role is to discover, develop and successfully market innovative products to cure diseases, to ease suffering and to enhance the quality of life. 2. To ensure that humanity pharmaceutical innovation. continues to benefit from

3. To define an equitable way for sharing the economic burden of Pharmaceutical development among the various segments of society.

4. To ensure that research, development and applications of pharmaceuticals are conducted in harmony with societys ethical and cultural standards. 5. Other key challenges include the issues of marketing practices, animal used in research and development, and accountability for suppliers and contractors.

CONCLUSION
The Pharmaceutical industry is highly complex. The technology leading to drug discovery and development are at the limits of human knowledge. The huge size of the companies and the complexities of their processes and technologies presents many organizational and management challenges. The development and management of the distribution system is highly costly. However while excellence in managing all these aspects of the industry is a necessary condition for the survival of the global pharmaceutical companies, the uncertainty of the discovery process and the potentially huge returns from the discovery of a single drug means success in the industry depends on a high measure of luck. Pharmaceutical sector has the potential to emerge as second largest export sector after readymade garments sector (RMG). To get the maximum benefit of this potentiality, Government should attract foreign investors in establishing world class manufacturing facilities and also needs to make the domestic companies to perform bioequivalence tests after establishing a test center in the country. Consideration should be taken of the claim of pharmaceutical sector for cash incentives where companies can be given the facilities to produce their products at reasonable costs. Whole- hearted support from all stakeholders for growth of a potential sector like pharmaceutical can bring great benefit for the countrys economy.

ANNEXURE
Bangladesh Pharmaceutical Industry wont be ready to implement TRIPS by 2016
The Fourth WTO Ministerial Conference 2001, named as Doha Declaration, announced a declaration on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which arranged the minimum standards for the protection of intellectual property, including patents for pharmaceuticals. TRIPS increase the level of protection of the investment of the patent holders in the pharmaceutical sector but it restricts the access to medicine. The implementation of TRIPS has an upward effect on drug prices due to increased investment on research and development, commercialization of drugs expenditure etc. The TRIPS agreement was the inspiration of an industrial coalition of developed nations including the United States of America (USA), the European Union (EU) and Japan. The main stimulus for the agreement came from the multinational pharmaceutical corporations and the Intellectual Property Rights Committee (IPC). The TRIPS agreement allowed flexibility to LDCs (Least Developed Countries) in implementing laws and regulations. The objective was to enable them to create a feasible and effectual technological base. The transition period for LDCs for implementation of the TRIPS agreement extended from 2006 to 2016. However, this extension is related only to patents and marketing rights, data protection for pharmaceutical products. Thus, LDCs are still required to implement the rest of the agreements under the TRIPS as of the 5th Ministerial Conference 2005, held in Hong Kong. For LDCs, the extension of the transition period has a significant importance. The importance is that all LDCs take on the necessary steps to use the opportunity of 2016 transition period in relation to pharmaceutical patents and data protection. According to the United Nations, 48 countries are classified as LDCs, of which 31 are members of the WTO. Out of 31 LDCs, only Bangladesh has adequate pharmaceutical manufacturing capability and it is nearly self-sufficient. According to Bangladesh Pharmaceuticals and Healthcare Report Q1 2012, Bangladesh is in the 15th position of the 18 markets in the Asia-Pacific region. Bangladesh's pharmaceutical rating is 41.3 out of 100, which is substantially lower than the average of 53.7 of the region. Bangladesh is now below Pakistan and above Sri Lanka in matrix ratings. According to Bangladesh

Pharmaceuticals and Healthcare Report Q1 2011, Bangladesh medicine sales reached Tk 70 billion in 2010, the growth trend would take the sales to Tk 90 billion in 2011 and globally Bangladesh would hold the 67th in Business Monitor International's (BMI) 83 marketstrong pharmaceutical world. Bangladesh pharmaceutical industry provided 96 per cent of the local pharmaceutical needs. Bangladesh pharmaceutical industry exported worth of 3813.50 taka pharmaceutical products to 83 countries including Europe and America in 2010. There are 245 registered pharmaceutical manufacturing companies in Bangladesh. Note that, pharmaceutical market in Bangladesh is dominated by top 10 pharmaceutical companies. Top 10 pharmaceutical companies represent about 65 per cent and top 20 pharmaceutical companies represent about 83 per cent of total pharmaceutical market. Bangladesh pharmaceutical companies export tablets, capsules, syrups, specialized products like inhalers, suppositories, steroids, nasal sprays, injections, anti-cancer drugs, anti-retroviral drugs for HIV/AIDS and anti-bird flu drugs. Some persons thought Bangladesh's sales of pharmaceutical products would decline from 2005. Because the pharmaceutical industry then met 96 per cent of the local demand but local drug market produced only 5-7 per cent of the total Active Pharmaceutical Ingredients (APIs) and imported rest of the APIs. Bangladesh imports therapeutic ingredients (raw materials) from developing countries like India and China which provided full patent protection after January 2005. As a result APIs exports to Bangladesh were obstructed. But Bangladesh pharmaceutical industry overcame this obstacle by increasing the production of APIs and importing raw materials at a higher price. Although the sale of Bangladesh's pharmaceutical products did not decline, the price of pharmaceutical products increased. The ultimate solution lies in the production of APIs domestically. Note that, a US $30 billion API industrial park is under construction at Gajaria upazila in Munshiganj and it is expected that Bangladesh can save at least 70 per cent of cost of raw materials when the industrial park goes into production. Bangladesh is a country of 155 million. Although the country has made a good progress in the socio-economic field - increasing the literacy rate, improving life expectation, increasing food production, decreasing infant mortality and total fertility - poverty reduction progress is very slow. Macro-economic growth could not help reducing poverty and income inequality. According to the World Bank, less than $2 per day income is considered as absolute poverty and in Bangladesh; the percentage of the population living on less than $2 is 76.5 per cent (World Bank, 2010). Bangladesh's HDI index is 0.50 which indicates the position of 146 out of 187 countries. According to preliminary report on HIES 2010, poverty estimated at 31.5 per cent (based on upper poverty line), 17.6 per cent (based on lower poverty line), the Gini co-efficient of income is 0.458 and Gini co-efficient of consumption expenditure is 0.321. The per day income of 76.5 per cent people of the country is below $2 and it is difficult to ensure their access to medicines at higher prices. Moreover, the medicines of diseases such as HIV/AIDS, avian flu, Hepatitis C, Aplastic anemia, cancer, heart diseases are very expensive. TRIPS can affect the access to medicine in multiple ways. The most expected affect is direct because implementing patent rights increases the price of all types of medicines. There are basically two types of patent rights: 1) those that protect methods of manufacture (process patent) and 2) those that protect pharmaceutical products (product patent). In both cases, pharmaceutical farms are bound to pay a heavy portion to the patent holder when TRIPS is fully implemented. As a result, their production cost rise and they will recover their increased production cost by increasing the medicine price.

It is apparent that present research and development infrastructure and the technology of Bangladesh pharmaceutical industry are not as developed as in developed country. Moreover, the opportunity and fund for research is inadequate. There is hardly any possibility that the country's pharmaceutical sector would be able to increase fund, develop R&D facilities and research opportunities to the world standard by January 2016 in compliance with the TRIPS agreement. The present situation is not suitable for Bangladesh to implement the TRIPS agreement as scheduled. The writer is Research Associate, Economic Research Group (ERG). The views expressed in the article are of the writer and do not necessarily reflect those of ERG.

Bangladeshs growing Pharmaceutical sector

Published: Monday August 17 2009 The export value of pharmaceuticals is growing at a reasonable rate every year. Exports increased from $8.2 million in 2004 to $28.3 million in 2007 and posted further gains last year. Export destinations are also increasing in number. Beginning in the 1950s, when a few multinationals and local entrepreneurs set up manufacturing facilities in the then East Pakistan, now over 200 companies produce now medicines in Bangladesh. The pharmaceutical industry in Bangladesh has otherwise the potential to grow and enjoy a number of competitive advantages. Quality assurance has put the industry on a solid base. Almost all companies follow the World Health Organization (WHO) Good Manufacturing Practice (GMP) standards. Bangladesh's strict quality compliance gives pharmaceuticals an advantage to compete with producers in India, China, Brazil and Turkey in the overseas export markets. The capability of the industry has helped it achieve excellence as per the general international standards. A good number of local pharmaceutical companies have won accreditation from the overseas regulatory authorities including some of those in the developed countries. Two such local companies have been accredited by EMEA (Austria) and the Therapeutic Goods Administration (TGA-Australia). The accreditation facilitates their entry into the lucrative market as reputed players. Bangladesh's national drug policy requires strict standards compliance from the pharmaceutical manufacturers. The Current Good Manufacturing Practice (cGMP) is recognized worldwide for its holistic approach for the control and management of manufacturing and quality control testing of food and pharmaceutical products. Bangladeshi pharmaceutical industries are expanding their exportable items. The country is now exporting a reasonably wide range of pharmaceutical products covering therapeutic classes and dosage forms like tablets, capsules and syrups.

Bangladesh also exports some high-tech specialized products like, HFA, inhalers, suppositories, hormones, steroids, oncology, immunosuppressant products, nasal sprays, injectibles and IV infusions. The sector stands on a sound footing due to the growing demand of medicines for the country's 150 million people. The industry, producing quality medicines at an affordable price for millions of people, has made Bangladesh almost self-reliant in pharmaceutical products. It meets the major part of local demand for medicines. Mortality from major epidemics, malaria, dengue, cholera and typhoid, has also been reduced substantially over the years in Bangladesh. Increased affordability and availability of medicines have contributed to this achievement. Bangladesh's average life expectancy of about 63 years is otherwise at a high level in South Asia though its per capita consumption of medicines is at one of the lowest levels in the region. A good number of new factories that have come up in recent years, have aggressive sales and promotion strategies. A sizeable number of them have their own manufacturing facilities of which five are multinationals. The sector is active in API (active pharmaceutical ingredients). Many companies now locally manufacture a good number of APIs. However, compared to large local demand, more API industries are needed to be set up. Pharmaceutical industries' potential has multiplied with the recently approved API industrial park in Munshigonj. The API can save at least 70 per cent of the cost of import of pharmaceutical raw materials from aboard. Skilled professionals at home and abroad are joining the industry's human resources pool every year. Currently, bio-equivalency tests are conducted in Singapore, Malaysia and in European countries, resulting in some hefty operational expenditure on the part of pharmaceutical industries. More investments in these sub-sectors would be needed in future. Foreign investors can take advantage of the flourishing industry. It is estimated that over $250 million have been invested in this sector over the recent years for facility modernization and setting up of new facilities. All of these investments were for developing full GMP compliant facilities to meet the stringent regulatory requirement of any country of the world. The investment has already started paying off as most of the companies have either already received certification or are about to get the approval from more regulatory authorities at abroad. This has opened up wider opportunities for the Bangladeshi companies to claim a bigger share in the large global pharmaceutical market.

Pharma industry: The journey ahead

Published: Thursday, 25 October 2012 Forecasts on prospects of the country's pharmaceutical sector have been doing the rounds for quite some time, and truly for deserving reasons. Given the strictly regulated global pharmaceutical regime coupled with the highly capital-intensive nature of the industry, its expansion is dependent on factors a good deal of which is beyond the capacity of individual entrepreneurs. This is particularly so when it comes to accessing overseas markets, especially those in the developed countries. As for catering to the domestic market, it has been learnt that medicines produced locally - generic drugs of brand medicines - are presently in a position to meet 97 per cent of consumer demand. Despite the problems, this sector has been fraught with, much of its successes today should be traced to the Drug Control Ordinance-1982 which played the catalytic role to not only facilitate entrepreneurship but equally importantly bring together the knowledge and innovative drive critically required to face the challenges so integrally associated with the flourishing of the industry. The country's pharma industry today produces medicines almost to the extent of self-sufficiency, and the growth it has registered over the years is monumental. The current annual growth of the sector is estimated to be more than 24 per cent. It has been learnt that domestic sales of medicine rose from Tk 40 billion in 2007 to Tk 90 billion in 2011. Presently, there are around 240 plus registered pharmaceutical manufacturing companies in the country, and a good number of these companies are engaged in manufacturing active pharmaceutical ingredients (APIs) and a wide range of formulations covering all major therapeutic categories. Development of healthcare infrastructure in the country, increased marketing penetration in rural areas and increased health awareness of the ordinary people, coupled with rising purchasing power and modern diagnostic facilities are the major supportive factors that have contributed to this growth. In addition to meeting domestic demand, this sector is also fast emerging as a prospective source of value-added export. Bangladesh hauled in more than US$50 million in 2012 fiscal (FY) year by exporting drugs to nearly 100 countries, according to the Export Promotion Bureau (EPB) data. The industry today exports, besides a large spectrum of generic drugs, high-tech specialized products like HFA inhalers, suppositories, nasal sprays, IV infusions, etc., to more than 80 countries. However, it remains to be said that in view of the highly

regulated markets of the advanced countries most of the exports are confined to the less regulated markets in the developing world. In a seminar held recently in the capital on the Working Group on Industrial Cooperation of the D-8 alliance, prospects of the pharmaceutical industry featured prominently. Secretary General of the Bangladesh Association of Pharmaceutical Industries (Aushad Shilpa Samity) Abdul Muktadir echoed the promises that suggest strong potentials inherent in the sector capable of making Bangladesh a regional pharma hub in the years to come. "Bangladesh is capable of producing high-quality products as the industry employs stateof-the-art manufacturing facilities, sophisticated quality control equipment and highlyskilled human resources," said the secretary general. The statement is well complemented by the excess capacity and heavy investment by local companies in the past years. Over the last three years, it has been learnt that approximately $250 million was invested in the sector and preparations are reportedly afoot to raise the investment to $ 1.0 billion in as many years to come. During deliberations in the aforementioned seminar, it further transpired that around 80 per cent of the global population consumes generic drugs and the major suppliers are China and India. The global generic market for medicine currently stands at $180 billion. Given the present standing of Bangladesh's pharma industry and its growth potential, industry experts opine that aiming to capture 10 per cent of the global market is not too ambitious a project. One of the major deterrents to the desired expansion of the industry is believed to be the lack of accredited laboratories. Industry insiders are of the view that medicine exports from the Bangladesh, given its potentials, could have increased manifold had there been accredited labs in the country to conduct proper bio-equivalence and bio-availability tests of the generic drugs produced by the pharmaceutical companies. Although at present Bangladesh exports generic medicines to a good number of low-end markets in the Asian, Middle Eastern, Latin and African regions where markets are less regulated, the real opportunity for the country's pharmaceutical sector to grow with attendant challenges lies in penetrating the high-end advanced markets. In the absence of the facility, local manufacturers are forced to send their products abroad for the required tests and compliance certification which by all means are very expensive and render the exported products less competitive. There is another challenge for the country's pharma sector in the years beyond 2016, when the waiver that Bangladesh currently enjoys as a least developed country (LDC) in producing generic drugs will be withdrawn. As per the waiver - a special and differential clause applicable only to the LDCs under the WTO TRIPS (trade related intellectual property rights) agreement - Bangladesh is allowed to reverse engineer patented products to sell in the domestic market as well as export to other countries. With the deadline not very far, the need for qualitative improvement and compliance to internationally set standards for producing and marketing medicines abroad is crucial. Keeping in view the potentials and prospects of future growth of the industry as well as the challenges, all concerned should be focused on the needs towards desired improvement of the sector which, given the state of things, does not at all seem an illusion. Eskayef Bangladesh limited: GATT & TRIPS: AN ALARM TO BANGLADESH PHARMACEUTICALS INDUSTRY Out of the inter war experience came the conviction that liberal world trade required a set of rules and binding commitments based on non-discriminatory principles while there was not enough agreement to create an international trade organization, at least a General Agreement on Tariffs & Trade (GATT) was signed by 23 Large countries in 1947. The GATT provided not only a set of multilateral rules & disciplines, but also a forum to negotiate tariff reductions and rule changes plus a mechanism to help settle trade disputes.

Eight so-called rounds of negotiations took place in the subsequent 46 years. The last one (the Uruguay Round) culminating in the interim GATT Secretariat being converted into the World Trade Organization (WTO) in January 1995. The GATT and WTO contribute to globalization in several ways. The WTO has four key objectives: a) to set & enforce rules for international trade b) to provide a forum to negotiate & monitor trade liberalization c) to improve policy transparency & d) to resolve trade disputes WTO is much more comprehensive than that the GATT, For example, GATTs product coverage in practice was confined mainly to manufacturers (effectively not including textiles & clothing), whereas the WTO encompasses all goods (including farm products), services, capital to some extent & ideas (intellectual property). The major changes that will occur due to the implementation of GATT-TRIPS-WTO on Bangladesh Pharmaceuticals Market from 2005 are: a) Withdrawal of protection for local manufacturer. b) The implementation of Patent laws (TRIPS) which will allow the foreign research company to manufacture the Patent product exclusively at any price for the patented period (12-20 years) c) Price determination & control by Drug Administration of Bangladesh will no more viable. d) The Drug (Control) Ordinance to be obsolete. e) Bangladesh Pharma Market should be opened to any manufacturer of the world. Imposing tax & tariffs cannot restrict any foreign company.

These changes have deep influences on economy, social & overall health service. From the economic point of view the adverse effects will be: a) The local companies will face fierce & even unfair competitions to the giant MNCs (presently operating & many new). b) Small & medium scale manufacturers will face severe competition & obstacles while selling their products even in home. c) Local manufacturer will face financial disaster and their operation may have to cease or decrease resulting down sizing the employees eventually, which will lead to unemployment of professionals. d) In absence of price control, MNCs will charge high prices for their products & people have to buy those leading to increased cost for medicine & health care. Ultimately, Health for All will be hampered. e) Especially in case of patent drugs, the premier pricing will be much more prominent. f) Many products unnecessary and with abuse potential (like Phencidil, Viagra, alcohol based tonics etc) will be available easily to derail the young generation of the country. g) Foreign investors will not be encouraged to invest in local companies, rather they will be encouraged to invest in foreign enterprises. h) New investment in pharmaceutical manufacturing will be discouraged due to free import of drugs. i) Technology transfer will be decreased due to the same reason.

DOHA DECLARATION: OPPORTUNITY

FORTUNE

FOR

BANGLADESH

&

IMMENSE

In the 4th special Ministerial discussion on the trips agreement on 9-13 November 2001 in Doha, Qatar, Bangladesh has turned to a son of fortune. In the Ministerial declarations, the least developed countries (LDCs) got some concession from implementing GATT-TRIPSWTO regulations which are1. TRIPS Agreement shall not prevent Members from taking measures to protect public health. 2. TRIPS Agreement shall not prevent Members from establishing or maintaining marketing approval procedures for generic medicines and other healthcare products. 3. TRIPS Agreement shall not prevent Members from disclosing or using information held by its authorities or the patent holder where it is so required for reasons of public interest. 4. Members may, among others, authorize the production and export of medicines by persons other than holders of patents on those medicines to address public health needs in importing Members. 5. Each Member shall, within or beyond the framework of the WTO, refrain from imposing or threatening to impose sanctions and refrain from employing the grant of incentives or other benefits in a manner which could curtail the ability of developing and least-developed country Members to avail themselves of every possible policy option to protect and promote public health. 6. In view of the special needs and requirements of LDC Members, their economic, financial and administrative constraints, and their need for flexibility to create a viable technological base, the transition period of the TRIPS Agreement shall be extended. And for this the time period is extended from 2005 to 2015 for LDCs. Bangladesh not a developing country is a fortunate member of LDCs has got the enormous opportunity in the Pharmaceutical sector. Because in the list of LDCs, Bangladesh is the only country that produce world class Pharma products, equipped with technologies & professionals. Within the period of 2015, Bangladesh has to develop itself to compete in the Free market in 2015, and Bangladesh can achieve that with the help of each levels- entrepreneurs, investors, manufacturers, professional & Government all together. From January 1, 2005 and onwards there will be enormous export opportunities. As a member of LDCs, According to TRIPS/WTO agreement, countries like China & India will have to implement Patent Laws in their countries. As a result, export of non-patent drugs from these countries will come to zero level form January 1, 2005. On the other hand, Bangladesh has already got the exemption of patent laws upto 2016, which is going to open the door to Enormous Export Opportunities for Bangladesh Pharma Sector. But these opportunities can only be availed provided we are ready to accept it, especially the Government. Government has to be proactive rather than reactive in this regard. The Pharma sector should get priority of Government and should take initiatives to encourage the Pharma sectora) Providing a dedicated cell for Pharmaceutical Export b) Taking initiatives for R&D facilities c) More investment in Bulk drugs d) Introducing Cash export incentive for pharmaceutical export. e) Ensuring the best Co-ordination in Governmental levels

Last of all, Government should have to change the present mindset and believe that Bangladesh Pharma Sector can exploit & avail the export opportunities in best possible ways, if we really want to.

REFERENCES
POLICY NOTE on, IMPROVING

THE COMPETITIVENESS OF THE PHARMACEUTICAL SECTOR IN BANGLADESH WORLD BANK, APRIL 2007.

Research Report : Pharmaceutical Industry of Bangladesh, Dated : 28 June 2011 (IDLC Resource Center) Business Analysis of Pharmaceutical Firms in Bangladesh: Problems and Prospects VolumeVI, Number01, January-June, 2011 ( Journal 62 of Business and Technology) An Overview of the Pharmaceutical Sector in Bangladesh, May 2012 ( BRAC EPL RESOURCE CENTER) Analysis of Pharmaceutical Industry of Bangladesh, Volume:5, Issue:2,page 142156, March-April 2011 ( Bangladesh research publications journal) THE POTENTIAL IMPACT OF FREE TRADE AGREEMENTS ON PUBLIC HEALTH, UNDP, UNAIDS ISSUE BRIEF | 2012

WEBSITES:
www.bapibd.com

www.positivebangladesh.wordpress.com www.bddrugs.com www.siteresources.worldbank.org www.skfbd.com www.cpd.org.bd www.unaids.org