INTRODUCTION

Introduction

The pharmaceuticals sector is one of the fastest growing sectors in Bangladesh. Before liberation,
there was hardly and pharmaceuticals enterprise in Bangladesh. After several years of liberation,
the govt. could not increase budgetary allocations for the improvement of health sector. After the
promulgation of drug control ordinance-1982, the development of pharmaceuticals industry has
accelerated. Due to recent development of this sector, the country is exporting medicines to global
market including European countries.

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.

From the year of 2003 BAPI has been organized ASIA PHARMA EXPO which attracting most
of the largest stakeholders of Pharma & associated industry of Asia & Europe.

The economy of Bangladesh is rapidly developing market based economy. The economy has
grown at the rate of 6-7% per annum over the past few years. Pharmaceuticals sector has definitely
contribution this growing. The Bangladesh govt. continuous to court foreign investment,
something it has done fairly successfully in pharmaceutical sectors. The sector consistently creates
job opportunities, especially for highly qualified people. Like other industries pharmaceutical
industry also believes that the human resources are most valuable asset for the organization.
Pharmaceuticals industry is making considerable investments in attracting and developing
competent professional human resources.

The country can continue produce patented products until 2016 as per trade related intellectual
property rights (TRIPS). Bangladesh can share its long years of experience in pharmaceuticals
formulation and marketing with the LDCs, and developing ones, who need it. Among the 50 LDCs,
Bangladesh has the strongest base to manufacture pharmaceuticals products.

Two organizations, one governmental the Directorate General of Drug Administration (DGDA),
Under the Ministry of Health and family welfare. DGDA regulates all activities related import
and export of raw-materials and finished products, packaging materials, production, sale, pricing,
license, registration etc. of all kinds of medicine including those of Ayurvedic, Unnan, Herbal and
Homeopathic system and one semi-Government. The Pharmacy Council of Bangladesh (PCB),
regulates the practice of Pharmacy throughout Bangladesh, control pharmacy practice in
Bangladesh.

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 2.1 PHARMACEUTICAL INDUSTRY

Pharmaceutical is the core of Bangladesh’s 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 2014,
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.

2.2 INDUSTRY OVERVIEW 2

The pharmaceutical industry is one of the most technologically advanced sectors currently in
existence in Bangladesh. It has grown in the last two decades at a considerable rate. The skills
and knowledge of the professionals and innovative ideas of the people involved in this industry
are the key factors for these developments. 20 years ago, 75% of the drugs needed to be imported.
Now, only 2% of the drugs are imported, the remaining 98% come from local companies. Since
the promulgation of Drug Policy in 1982, the sector has grown from BDT 1730 mn to more than
BDT 113 bn ($1.5 bn). In 2000, there were 210 licensed allopathic drug- manufacturing units in
the country, out of which only 173 were in active production; others were either closed down on
their own or suspended by the licensing authority for drugs due to non-compliance to good
manufacturing practices or drug laws. About 300 pharmaceutical companies are operating at the
moment. The industry manufactured about 5,600 brands of medicines in different dosage forms.
There were, however, 1,495 wholesale drug license holders and about 37,700 retail drug license
holders in Bangladesh. According to IMS report of 2014, the total size of the pharmaceutical
market of Bangladesh is estimated to be approximate Tk. 113 bn. With an annual growth rate of
about 11.37 %, Bangladesh Pharmaceutical Industry is now self-sufficient in meeting the local
demand. Bangladesh pharmaceutical industry is a contributor to the national exchequer, and it is
the largest white-collar intensive employment sector of the country employing around 115,000
workers.

LOCAL SALES: EXPORT:

Source: IMF 4th quarter report

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The figure above shows the Local Sales of Pharmaceutical Products. Pharmaceutical Sales rose
by 11.37% in 2014 to BDT 113 bn due to increased medical coverage of the population & easy
access to Health Care Services because of strong distribution network. According to IMS Health,
Annual Pharmaceutical Sales in the Local Market are likely to hit BDT 160 bn by 2018. Sales
of Square (the market leader) in 2014 was BDT 21 bn followed by Incepta with Sales amounting
BDT 12 bn & Beximco with Sales of BDT 10 bn.
Bangladesh Pharmaceutical Industry exports a wide range of products covering all major
therapeutic classes and dosage forms to 92 countries. The major destinations for Bangladeshi
medicines are now Myanmar, Sri Lanka and Kenya while nearly 50 countries import
Bangladeshi Pharmacy products regularly. Beside regular forms like; Tablets, Capsules &
Syrups, Bangladesh is also exporting high-tech specialized products like HFA Inhalers, CFC
Inhalers, Suppositories, Nasal Sprays, Injectable, IV Infusions, etc. and have been well accepted
by the Medical Practitioners, Chemists, Patients and the Regulatory Bodies of all the importing
nations. The packaging and the presentation of the products of Bangladesh are equivalent to any
international standard and have been accepted by them. While drug exports posted double-digit
growth from 2010 fiscal through 2014, overseas sales began to decline in the last few months.
The sector made $41.17 million worth of shipments, registering a 2.8% decline compared to that
of FY'14 mark worth $42.4 million in the first seven months (July-January) of the current
financial year (FY'15) (EPB).

COMPETITIVE SCENARIO/ MARKET PLAYERS:

Figure: Production of Top 10 companies Figure: Market Share of the Top 10 companies

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 Market Market
Size Share
Company Growth
(BDT (%) (%)
SQUARE 21.15
bn) 18.7 7.3
INCEPTA 11.78 10.4 15.6
BEXIMCO
PHARMA 9.56 8.5 7.6
OPSONIN 6.35 5.6 19.8
PHARMA
RENATA 5.74 5.1 13.5
ESKAYEF 5.09 4.5 12.0
ARISTOPHARMA 5.07 4.5 15.7
A.C.I. 4.69 4.1 9.9
ACME 4.51 4.0 14.1

Figure: Most Popular Brands in 2014

According to IMS-Health, the top 10 players took 68.1% of the market. Companies ranked 11th
to 20th took 17.50% of the market; the next 11 companies took 8.60% while the remaining 222
companies shared 5.8% among them. Square Pharmaceuticals led the industry with a market
share of 18.70%. Incepta and Beximco took 2nd and 3rd positions with market shares of 10.4%
and 8.5% respectively. Interestingly except for Square, Beximco, Renata and ACI, none of the
other leading 6 companies in the top 10 are listed in the Dhaka Stock Exchange (DSE) or
Chittagong Stock Exchange (CSE). Growth of Healthcare Pharma was highest in 2014 while
Square had the least growth.

2.3 REGULATORY REGIME

 The Directorate General of Drug Administration (DGDA): DGDA is the drug regulatory
authority of Bangladesh, which is under the Ministry of Health and Family Welfare. DGDA
regulates all activities related to import and export of raw materials, packaging materials,
production, sale, pricing, licensing, registration, etc. of all kinds of medicine including those
of Ayurvedic, Unani, and Herbal and Homoeopathic systems.
 The Pharmacy Council of Bangladesh (PCB): PCB was established under the Pharmacy
Ordinance in 1976 to control pharmacy practice in Bangladesh.
 The Bangladesh Pharmaceutical Society is affiliated with international organizations
International Pharmaceutical Federation and Commonwealth Pharmaceutical Association.
The National Drug Policy (2005) states that the WHO’s current Good Manufacturing

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 Practices (GMP) should be strictly followed and that manufacturing units will be regularly
inspected by the DDA. Other key features of regulation are restrictions on imported drugs; a
ban on the production in Bangladesh of around 1,700 drugs which are considered non-
essential or harmful; and strict price controls, affecting some 117 principal medicines.

2.4 GOVERNMENT INCENTIVES

This sector has been considered as a thrust sector in the export policy since 2006. Customs duty
on 40 basic raw materials used in medicine manufacturing were reduced to 5% from 10%-25%
rate. Customs duty on 14 items used in anti-cancer medicines have been withdrawn. (Budget
2014-15). Government has been facilitating this industry through reducing customs duty on raw
materials. The government recently gave 200 acres of land for the API Park in Munshiganj. It
is also planning to give 10% cash incentives to boost the pharmaceutical sector. (Source: The
Independent, 9th January 2015)

2.5 RAW AMTERIALS AND API SECTOR

While the industry is achieving self-sufficiency, it yet procures 90% of raw materials from 98
indenters around the world as only one company (Active Fine Chemicals) produces raw
materials independently. There are 3000 valid sources of raw materials including countries like
China, India, Korea & Italy. API consists a significant percent of total cost in medicine which
can run up to 30-40%. At present, only a few companies – Square, Beximco, Ganasastha
Pharmaceuticals, Globe and Active Fine – are manufacturing raw materials for drugs like
paracetamol, amoxicillin, flucloxacillin, ampicillin and metformin, on a limited scale.
Ganashastha Pharmaceuticals Limited (GPL) alone accounts for about 60% of the raw materials
manufactured in Bangladesh. Bangladesh is trying to establish an industrial park for
pharmaceutical production. One such park in Munshiganj near Dhaka is nearing completion and
it might result in a big jump in the income from pharmaceutical exports. A National Control
Laboratory Project is taken by the govt. for facilitating the pharmaceutical sector. The proposed
API technology Park in Munshiganj, which was scheduled to be completed by July 2012, is
delayed with the cost of the project now increasing by 55%. This delay has been a major hurdle
for the pharmaceutical industry to gain better control over the inputs and improve operational
efficiencies. India, the major generic drug player, has more than 3500 Drug Master File (DMF)
approval for APIs whereas we have none.

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3.1 RISE OF PHARMACEUTICAL INDUSTRY OF BANGLADESH

In Bangladesh Pharmaceutical sector is one of the most developed hi-tech sector which is
contributing in the country's economy. After the promulgation of Drug Control Ordinance - 1982,
the development of this sector was accelerated. The professional knowledge, thoughts and
innovative ideas of the pharmacists working in this sector are the key factors for this development.
Due to recent development of this sector we are exporting medicines to global market including
European market. This sector is also providing 95% of the total medicine requirement of the local
market. Leading Pharmaceutical Companies are expanding their business with the aim to expand
export market. Recently few new industries have been established with hi-tech equipments and
professionals which will enhance the strength of this sector.

Bangladesh Association of Pharmaceutical Industries (BAPI), the stalwart association of

pharmaceutical manufacturers of the country was instituted in 1972, since then BAPI playing a
pivotal role in shaping up the industry. Association's member include large, medium, small,
national and foreign companies who together are responsible for manufacturing 96% of the
country's pharmaceutical production. This indeed proves the success of BAPI as a responsible and
acceptable body.

2013 2014 2002

2003
2012 2004

20111 2005
20010 2006
2009 2008 2007

Pharmaceuticals Sector growth rate

3.2 CURRENT MARKET SCENARIO

Bangladeshi pharmaceutical companies are not allowed to do any direct promotion of their
products since the regulatory policies prohibit it. The policy frame work for promotion of
pharmaceutical products is guided by the Directorate of Drug Administration (DDA). DDA has

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a detailed Code of Pharmaceutical Marketing Practices (CRMP) regulates the promotion of
pharmaceutical products and this excludes any form of direct marketing through media tools. To
illustrate this, the pharmaceutical companies cannot promote their products or their company
through the Television, Radio, Newspapers or any other form of printed media. The primary
means of promotion for the pharmaceuticals is through personal selling and trade marketing. The
companies try to identify the Key Opinion Leaders namely the reputed doctors and convincing
them to prescribe and promote the companies’ products.

Currently there are 245 registered pharmaceutical companies in Bangladesh out of which 200 are
still in operation. These 245 companies together have 5300 registered brands. The market is
largely dominated by local companies and there are only 5 multi-national companies currently
operating. The table below lists the top ten pharmaceutical companies in Bangladesh in terms of
sales value and market share

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 3.3 GROWTH POTENTIAL OF THE DOMESTIC DRUG MARKET

In order to get a sense of what might potentially be the size of the drug market let us consider a
simple model. Here we assume that the economy will have an average GDP growth of 6%. The
economy will witness an uptrend in healthcare expenditure because of the growing health
consciousness and the increased demand for “wellness’ drugs as well as government expenditure.
This means that drug and non-drug healthcare expenditure will increase at about the same pace.
So, we also assume that the percentage spent on drug as part of total healthcare expenditure will
remain similar current level, which is about 28%. These simple assumptions present in impressive
growth upside of 83.6% by 2015 with a 6 year CAGR of 10.7%. Recent growth figures have
provided to be better than the projection, which demonstrates that the growth figures have proved
to the better that the projection, which demonstrates that the growth prospect of the sector is
justified 15.

HEALTH EXPENDITURE AVERAGE GDP GROWTH RATE

4.40% 4.30% 12.00%
4.20% 10.10%
4.20% 10.00% 9.30%
4.00% 8.40%
7.50%
(% of GDP)

4.00% 8.00% 6.70%

3.80%
3.80% 6.00%
3.60%
3.60% 4.00%
3.40% 2.00%
3.20% 0.00%
2010 2011 2012 2013 2014 2010 2011 2012 2013 2014
Source: Bangladesh Bank Source: BB, WHO

3.4 MARKET PLAYER

Domestically, Bangladeshi companies including the locally based MNCs produce 95%-97% of
the drugs and the rest are imported. Although about 250 pharmaceutical companies are registered
in Bangladesh, less than 100 are actively producing drugs.

The domestic market is highly concentrated and competitive. However, the local manufacturers
dominate the industry as they enjoy approximately 87% of market share, while multinationals
hold a 13% share. Another notable feature of this sector is the concentration of sales among a very
small number of top companies. The top 10 players control around two-third of the market share
while the top 15 companies cover 77% of the market. In comparison, the top ten Japanese firms

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generated approximately 45% of the domestic industry revenue, while the top ten UK firms
generated approximately 50%, and the top ten German firms generated approximately 60%.

Square Pharmaceuticals is the stand out market leader with a market share of 19.3% which posted
domestic revenue of BDT

11.2 billion in the last four quarters. Their nearest competitors are Incepta Pharmaceuticals and
Beximco Pharmaceuticals with market shares of 8.5% and 7.6% respectively. Incepta
and Beximco had BDT 4.9 billion and BDT 4.4 billion in domestic sales for the last four quarters.
Although a number of MNCs are operational in Bangladesh market, no MNCs are in the top ten
in terms of domestic sales.

Because Bangladesh API capacity is insignificant, pharmaceutical companies import

approximately 80% of their APIs. Fifteen to twenty Bangladeshi firms are involved in the
manufacture of about twenty APIs, but they usually run the relatively easier final chemical
synthesis stage with API intermediaries, instead of the complete chemical synthesis. The other
1,000 required APIs are imported. Approximately 75-80% of the imported APIs are generic.

3.5 MAJOR PLAYERS

ACI

ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East
Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the
24th of January 1973 as ICI Bangladesh Manufacturers Limited and also as Public Limited
Company. This Company also obtained listing with Dhaka Stock Exchange on 28 December,
1976 and its first trading of shares took place on 9 March, 1994. Later on 5 May, 1992, ICI plc
divested 70% of its shareholding to local management. Subsequently the company was registered
in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock Exchange
was made on 22 October 1995.

Beximco

Beximco Pharma started operations in 1980, manufacturing products under the licenses of Bayer
AG of Germany and Upjohn Inc. of USA. It has now grown to become a leading pharmaceutical
company in Bangladesh, and it supplies more than 10% of country's total medicinal needs. Today
Beximco Pharma manufactures and markets its own branded generics for several diseases

10
including AIDS, cancer, asthma, hypertension, and diabetes for both national and international
markets.

Square

The company was founded in 1958 by Samson H. Chowdhury along with three of his friends as
a private firm. It went public in 1991 and is currently listed on the Dhaka Stock Exchange. Square
Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the
pharmaceutical industry of Bangladesh since 1985 and it has been continuously in the 1st position
among all national and multinational companies since 1985. Square Pharmaceuticals Ltd. is now
on its way to becoming a high performance global player.

Renata

Renata Limited (formerly Pfizer Laboratories (Bangladesh) Limited), also known as Renata, is
one of the top ten (in terms of revenue) pharmaceutical manufacturers in Bangladesh. Renata is
engaged in the manufacture and marketing of human pharmaceutical and animal health products.
The company also manufactures animal therapeutics and nutrition products. Renata currently
employs about 2300 people in its head office in Mirpur, Dhaka and its two production facilities
in Mirpur, Dhaka and Rajendrapur, Dhaka.

Incepta

Incepta Pharmaceuticals was established in 1999 and produced its first product, ranitidine, in
December of that year. The company's manufacturing facility is located 35 miles from Dhaka in
Savar, where they produce various types of drug dosage forms such as tablets, capsules, oral
liquids, injections, and nasal sprays. The company’s specialties include sustained-release tablets,
quick-dissolving oral tablets, and barrier-coated delayed-release tablets. Incepta also conducts
research and development on advanced dosage forms for various drugs and devices including
poorly-soluble drugs, dry powder inhalers, coated pellets, modified-release products, and taste-
masked preparations. The company sells its products in Bangladesh and plans to begin exporting
to both developed and developing countries around the world.

3.6 PRODUCTS OF THE PHARMACEUTICAL INDUSTRY

UNANI: The Directorate of Drugs Administration under the Ministry of Health & Family
Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This Directorate
supervises and implements all prevailing Drug Regulations in the country and regulates all

11
activities related to import and procurement of raw and packing materials, production and import
of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of Ayurvedic,
Unani and Homoeopathic systems. At present, there are 295 Unani companies operating in
Bangladesh.

AYURVEDIC: The Directorate of Drugs Administration under the Ministry of Health & Family
Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This Directorate
supervises and implements all prevailing Drug Regulations in the country and regulates all
activities related to import and procurement of raw and packing materials, production and import
of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of Ayurvedic,
Unani and Homoeopathic systems. At present, there are 201 Ayurvedic companies operating in
Bangladesh.

HERBAL: The Directorate General of Drug Administration under the Ministry of Health &
Family Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This
Directorate supervises and implements all prevailing Drug Regulations in the country and
regulates all activities related to import and procurement of raw and packing materials, production
and import of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of
Ayurvedic, Unani, Homoeopathic and Herbal systems. At present, there are 15 Herbal companies
operating in Bangladesh.

HOMEOPATHIC: The Directorate of Drugs Administration under the Ministry of Health &
Family Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This
Directorate supervises and implements all prevailing Drug Regulations in the country and
regulates all activities related to import and procurement of raw and packing materials, production
and import of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of
Ayurvedic, Unani and Homoeopathic systems. At present, there are 79 Homeopathic companies
operating in Bangladesh.

ALLOPATHIC: The Directorate General of Drug Administration under the Ministry of Health
& Family Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This
Directorate supervises and implements all prevailing Drug Regulations in the country and
regulates all activities related to import and procurement of raw and packing materials, production
and import of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of
Ayurvedic, Unani and Homoeopathic systems. At present, there are 258 Allopathic companies
operating in Bangladesh.

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Tablets: Non-Coated (plain, chewable, dispersible, vaginal)
Coated (sugar coated, film coated, enteric coated)
Sustained/Extended Released (coated, non – coated)

Capsules: Granulated Material filled

Pellets Filled

Suppositories: Suppository based

Injections: Vials containing Dry Powder for Injections

Small Volume Liquid Potentials

Liquids: Oral Syrups (Sugar based, Non-Sugar based)

Oral Suspensions
Topical Liquids

Spray, Drops, Ointment, Cream and Powder: Small Volume Sterile Eye & Ear Drops
Small Volume Nasal Drops & Sprays
Topical Ointments & Creams
Topical Antibiotic Powder

Oral Dry Powders: Dry Suspensions (Antibiotic & Anti Infective)

Dry Syrups (Antibiotics)

Dry Powder Inhalers: Partial Filled (Premix) Capsules for Respiratory Tract Application with a
Device

Metered Dose Inhalers: Pressurized Canisters for Oral use with an Actuator

Pre-filled Syringe Injection: The advanced potential technology.

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4.1 EXPORT

The export market has shown significant growth over the years. Since 2004, Exports have
increased multifold, with export destinations rising from 37 in 2004 to 84 in 2011.

API

Due to the relaxations provided by TRIPS up to 2016, APIs can bring huge opportunities from
exports. This is because for API (also known as Bulk Drugs), there is no stringent registration
requirement and the operational as well as promotional costs are also nominal. The only decisive
factor in this regard is the cost competitiveness. API can be exported to several countries if cost
effectiveness is ensured.

But being confined to synthesis stage only, Bangladesh has to rely on import of core compound,
solvent and other intermediates. Thus cost effectiveness of local production can be a bit dependent
on import costs. Alongside, these productions often also entail effluent treatment plans, requiring
a high investment. Further, economy of scale is yet to be achieved, and high investment
requirement has troubled achieving entrepreneurs’ attention.

Formulation

Finished formulations (finished products) have a global market with varying rules and regulations.
In terms of regulatory structure, overseas markets can be categorized in three ways.

First one is the Highly Regulated Markets like USA, UK etc. that require various certifications
like USEDA, UKMCA etc. and need huge investment in facilities and documentation.

Second one is the Moderately Regulated Markets like Russia, Singapore etc. which usually ask
for Bioavailability, Bioequivalence, and Clinical Trials etc.

Third category is the Less Regulated Markets like Myanmar, Sri Lanka, Nepal, Kenya, Yemen
etc.

Bangladesh have already entered less regulated markets. And entry in moderately regulated
markets are already taking place. To continue future growth in exports, Bangladesh will have to
enter the highly regulated markets soon. In this regard, some of the major companies have already
made million dollar investment in their manufacturing and R&D facilities, and are going for
certification in the highly regulated markets.

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4.2 GLOBAL EXPORT MARKET

Due to cost pressures, MNCs increasingly seeking to manufacturer pharmaceuticals in developing

countries. Pharmaceutical contract manufacturing and research services is a large and growing
business. With a predicted average annual growth rate of 10.8%, revenues are estimated to reach
$168 billion by 2016. Pharmaceutical firms in Bangladesh exported approximately $45.67 million
(approximately 0.03% of the estimated global pharmaceutical market revenue) in products to 73
countries.

The exporter of Drug Products Beximco Pharma Ltd., Novertis, Incepta, Square, Techno Drug,
Reneta, ACME, Skayef, Aristopharma, Jayson, Global Cap., Opsonin, ACI, General, Popular,
Biopoharma, Glaxo Smith Klile, Orion, Navana, Glob, Health care, Sanofi aventies, Delta, Drugs
Int. Beacon, IBN Sina, Remon Drug, Medicon, Novo, Somatec, Ziska, Radiant, Alco, Popular,
Modern, Amico pharmaceutical Ltd. etc.

Novatics has already received EU Certification and has started exporting to Europe. Square, SKF
and Renata have already obtain the UK, MHRA certifications. Other market leader like Beximco
is in the process of securing US-FDA, UK-MCA (MHRA) certification.

Pharmaceuticals exports Raw-materials and finished goods Iran, Hongkong, South Korea,
Malaysia, Thaiwan, Veelnam, Thailand, Nepal, UAE, USA, Indonesia, Jarman, Japan, Myanmer,
Kenia, Srilanka etc. and others countries.

Pharmaceutical Exports
80 73.72
67.42
70
56.62
60
(in USD million)

51.68
46.79
50 41.93
40.21
40 32.68 30.39
30
20
10
0
2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: Board of Investment

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4.3 INDIRECT BENEFITS OF EXPORT
4.3
Bangladeshi firms that export are slightly more productive than non-exporting firms. Some
possible reasons for this advantage may be due to:

1. Technological lessons learned from foreign buyers.

2. Exporters improved their own technological capabilities to exploit profitable opportunities in

export markets. For example, exporters need to adopt stringent technical standards to satisfy
more sophisticated consumers, and/or they are under more pressure to fill orders in a timely
fashion and to ensure product quality for export markets which are more competitive than
domestic market.

3. Better firms self-selected to enter export markets for the prestige rather than the effects of
exporting necessarily improving the firms.

The pharmaceutical industry in Bangladesh has been aggressively investing in infrastructure.

Most of the companies invested heavily in the 1990s and the late 2000s most likely to upgrade
their facilities to obtain international export certifications. The top ten firms accounted for most
of the investments.

MNCs can operate in a country in multiple ways, including foreign direct investment
(FDI), contract manufacturing, joint ventures and strategic partnerships or licensing. Each
arrangement varies in terms of which partner contributes more resources and technical
knowledge, which partner assumes more risk, and which partner accrues more benefits and
profits.

4.4 TRIPS

The WTO’s Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
requires all signatories to legislate twenty-year patent protection for pharmaceutical products into
their domestic law. TRIPS is not a uniform international law, but a framework for intellectual
property protection with minimum agreed standards. While signatory countries must meet its
requirements through legislation, TRIPS provides significant flexibility.

Until 2016, TRIPS provides Bangladesh with domestic, patent-free production rights and limited
exporting advantages. Bangladesh imports approximately 80% of its APIs for domestic
production, 20-25% of which are patented. These API costs will most likely rise as TRIPS phases
in.

16
Bangladesh enjoys some export advantages from TRIPS. But these advantages are somewhat
offset by the pace and competitiveness of the Indian and Chinese generic markets. In both markets,
companies can produce drugs at highly competitive pricing—even with higher costs associated
with buying patented APIs or paying royalties.

Bangladesh will have to rely on the standard business practices of producing the highest quality
product at the lowest price to compete on the international market. Until 2016, however,
Bangladesh has the following export advantages under TRIPS:

1. Export to any country if the drug is not under patent. Any firm in any country can benefit from
this stipulation. For example, most drugs on WHO’s Model List of Essential Drugs are not
patented, as affordability is one of the criteria used in designating medicines as “essential.”

2. Export to another LDC or non-WTO country that has not implemented product patent
protection. It seems that most LDCs have instituted patent protection. Only two African LDCs
have not provided for TRIPS- compliant intellectual property protection, one of which was not
yet a WTO member, according to a 2001 Intellectual Property Rights (IPR) Commission study.
In Asia, Myanmar, which is engaged in the WTO accession process, is perhaps the only country
that has not yet put in place a patent protection regime. TRIPS states that any country using the
transitional flexibility period shall not change its laws to result in a lesser degree of consistency
with TRIPS. However, Bangladeshi firms are exporting generic versions of patented drugs to
many LDCs without a problem.

3. Export to a country where the patent holder has not filed for patent protection for the drug.
Companies do not file drug patents in all countries, particularly where sales and profit prospects
are low or there is no meaningful judicial patent protection. These gaps in patent coverage can
be exploited.

4. Export to a country that has issued a compulsory drug license and awarded the production
contract to Bangladesh. TRIPS grants governments the right to issue a compulsory license for
public health purposes, which occurs when a government overrides a patent and grants another
entity the right to produce the patented product. Although Canada, Japan, the United States and
the United Kingdom have all issued domestic compulsory pharmaceutical licenses, very few
developing countries have done so. The expense and time of litigation with developed countries
can act as a deterrent. Governments must also balance fully exploiting TRIPS flexibilities while
maintaining good relations with MNCs, which often use domestic firms for outsourcing or
manufacturing.

17
Before 2005, many countries could fulfill a compulsory license importation request because many
were manufacturing patented drugs off patent. As of 2005, Bangladesh patented drugs off patent
whereas India and China, the world’s largest suppliers of generic drugs, will no longer be able to
engage in this practice for any drug patented after 2005. Because firms require two to three years
to reverse engineer and start producing a specific drug of quality, if any country issues an import
request for a compulsory license for any drug patented after 2005, Bangladesh will have an
advantage if it is already manufacturing the drug domestically. However, TRIPS has clearly stated
that export for compulsory licensing is intended for health policy not industrial policy.

4.5 BANGLADESH PHARMACEUTICAL INDUSTRY ENVIRONMENT

 Bangladesh pharmaceutical industry is the largest (in volume) among the LDCs with a market
size of USD 600 million and an average annual growth rate of 12%.

 The industry is primarily a generic one. There are about 8,000 different brands which meet
97% of the domestic demand. The local companies have 86% share of the market. Out of 245
registered companies the top ten companies account for almost 70% of the total market.

 The LDCs are exempted from “Patent Protection” according to the WTO TRIPS policy. This
agreement allows legal reverse engineering and sale of patented product until 2016.This gives
the local pharmaceutical industry an advantage over India and China who do not come under
the exemption agreement.

 After entering the global market Bangladesh pharmaceutical industry has made great progress
in export. Between 2003 and 2006 pharmaceutical exports increased to about 61 countries
from 51 and quadrupled in value from USD 7.9 million to USD 36.5 million.

 Many Bangladeshi companies have acquired international certifications like USFDA,

UKMHRA and TGA, This allows them to penetrate regulated and unregulated markets.

 Bangladesh is in a position to emerge as one of the regional R&D centers for Pharmaceutical
Research as reverse engineering has ended in China and India. There is an opportunity to
emulate the Contract Research and Manufacturing Services (CRAMS) model of India.

 Currently 80% of the APIs are imported from abroad. But with the establishment of adequate
reverse engineering and API manufacturing facilities the local demand for raw materials can
be met without import.

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 Bangladesh can provide a strong platform for off-shoring/outsourcing generic bulk and
formulation drugs due to a cheap labor force and established infrastructure. With more and
more western companies looking to cut cost in their manufacture of bulk drugs as they focus
more on the high-cost patented drugs, Bangladesh can present itself as an attractive destination
for off-shoring.

 With the establishment of modern technical facilities, the industry can emerge as a regional
hub for pre-clinical testing and clinical trials. The Contract Research Organization (CRO)
model success of India can act as a template to emulate as subject cost will be very low in
Bangladesh compared to that of Western countries.

 There is an opportunity for substituting import of vaccines and injectable through

manufacturing it locally.

 Many local entrepreneurs are now looking to expand their operations beyond the country
borders. Some are looking to emulate the buying of distressed companies in the west to gain
immediate market access exemplified by the success of Indian powerhouses like Ranbaxy
and. Some are also venturing into newer horizons like biotechnological drugs.

4.6 FUTURE OF THE INDUSTRY

CHALLENGES:

• Lack of API Support: API/Raw Material Production Plant: The major advancement of
Bangladesh pharmaceutical sector has been occurred only in the production of finished
products. Manufacturing of pharmaceutical products are vastly dependent on imported raw
materials, as almost 90% of raw materials are now being imported. This dependency on
imported raw materials is resulting in increased production cost of the finished products.
Ultimately the competition to offer export prize is becoming tougher, which is one of the major
challenges of pharmaceutical sector of Bangladesh. Setting up of a standardized Active
Pharmaceutical Ingredient (API) plant is very essential. Local production of raw materials will
greatly contribute to pharmaceutical export to extend export volume, and also can potentially
contribute to the country’s economy.

• Bioequivalence Test Facility: Bioequivalence study of a product is a must for the registration of
that product in many of the moderately regulated and regulated countries of the world. There is
no standard facility for bioequivalence study in Bangladesh. In order to register a product, a
pharmaceutical company has to carry out this test in foreign country by spending of a huge

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 charge. For this reason, many pharmaceutical manufacturers don’t show interest to register their
products in foreign countries that require Bioequivalence study. It is relevant here to mention
that BAPI and pharmaceutical exporters first felt the necessity of having Bioequivalence test
facility in our country and they proposed and demanded to set up a modern Bioequivalence test
center to the govt. for the promotion of pharmaceutical export.

• Modern Drug Testing Laboratory: A major limitation of drug control authority of Bangladesh
that also affects pharmaceutical export is unavailability of a modern, well equipped drug testing
laboratory (DTL) with the engagement of sufficient and skilled pharmaceutical scientists. Due
to lack of this, our drug control authority cannot monitor the quality of drugs manufactured by
different pharmaceutical companies in Bangladesh. Moreover, foreign buyers and regulatory
authorities raise question about the status of our drug testing laboratory, the central quality
monitoring facilities of drug authority of Bangladesh.

• Regulated Markets: To register pharmaceutical products in regulated markets it requires highly

standardized documents. There are regulations directed by the regulatory authorities of United
States of America, European Union, Australia and Japan along with other highly regulated and
semi regulated countries. To meet all their requirements sophisticated and accredited
manufacturing plant, standardized manufacturing process, proper quality control and above all
highly skilled professionals are required. It is tough to meet all the requirements by small
pharmaceutical companies of Bangladesh.

MEASURES:

• Backward integration into API is also very important to reduce import cost.

• Providing cash incentive by the govt. to the medicine exporters, like RMG may encourage
pharmaceutical exporters.

• International fair arrangement by Export Promotion Bureau (EPB) is a very effective way to
search buyers and to establish business in a new country. A lot of initiative have been taken by
BAPI (Bangladesh Association of Pharmaceutical Industries) in different times, such as, high
level pharmaceuticals delegation team visited foreign countries to explore export initiated by
BAPI. This organization also upheld the demand and urged to the government and other
concerning authorities for API Park, Bioequivalence test laboratory, Central drug testing
laboratory, cash incentives, problems in remit transfer and sample sending etc. But many issues
are yet to resolve.

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REFRENCES:

 EBL Securities Report on Pharmaceutical Industry

 BRAC EPL Investments Report on Pharmaceutical Industry
 World Bank Database
 www.bb.org.bd
 www.boi.gov.bd


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