An emerging global player of the pharmaceutical industries: Challenges and prospects for Bangladesh

 

First Published on 6 Feb 2021 in the The Business Standard 

Since our independence in 1971, the pharmaceutical industry has flourished much besides the RMG sector. Registering yearly average GDP growth of 8.3 % in this sector between 2014-2018 the production of pharmaceutical fulfills 97% of the country’s local demand.

Bangladesh not only is only one of the 47 LDC countries that have achieved self-sufficiency in the medicine sector, but it also exports medicines to other countries around the world. Being the country’s largest white-collar employer the valuation of the pharmaceutical market worth $3 billion in 2019. However, this market opportunity for Bangladesh is expected to be worth $6 billion by the year 2025. [According to the 2019 report of Research and Markets, a Dublin-based Research organization]. 

There are certainly some reasons behind the upward trend of the local & export market of the Bangladesh pharma industry that has been reflected in figure-1 & 2. Due to the average 6% increase in the Gross National Income in the last 10 years, rapid urbanization (36.863% to the whole population of 2018), increase in life expectancy, increase in out of pocket expenditures are some of the reasons behind increasing local demand for medicines in Bangladesh.

Any drugs whose patent has been expired can be produced by another company without any formality or memorandum whereas, the trips weaver allows the LDC’s to produce the generic version of these patented drugs& also enables them to export those drugs to those countries where the patented drugs are not available. However, the ability to produce generic drugs at a low cost may be the sole reason behind the success of exporting medicines to other countries & it may also be the main factor that has helped it to successfully use the advantage of the trips weaver which ultimately has helped to flourish this industry.

However, it has been firmly believed the national drug policy that was taken in 1982 limited the operation of the foreign companies & also opened a new opportunity for the local companies which they used fully that resulted in the growth of a tremendous generic drug market. Bangladesh exports its pharmaceutical products to more than 120 countries all around the world among which 31 are LDC’s countries [According to the Reports of the Export Promotion Bureau data]. However, the top-5export destinations (shown in the figure-3 of the Top-10 Export Destination of Pharmaceutical Product) of Bangladesh medicines constitute 51.6% of the total exports.

Since the economies of our export destination countries are expanding & there is also an upward trend of the demand for low-cost medicines in these countries so, the export opportunity for Bangladesh has risen. According to the United Nation’s CDP policy review of the August 2020 edition Daniel Gay and Kevin Gallagher predicts Myanmar’s Market to be worth around USD 1 billion by the year 2023. It is also expected that by 2024 nearly USD 251 billion patented drugs will be going off patent. Again, we have to keep in mind that not only is the demand for cheap drugs increasing in our export destinations but the demand for cheap medicines is increasing in other regions. According to the prediction of IQVIA, a USA based research firm between 2018-2022 the Compound Annual Growth Rate (CAGR) of the ‘pharmerging markets’ (developing countries where the use of pharmaceuticals are increasing) will be around 6-9 %.

Though Bangladesh being an LDC country enjoys the trips weaver until the LDC graduation in 2024 it is also planning to make a demand to extend the preparatory period of  LDC graduation for five years (2021-2026). However hopefully, if this extension period has been granted Bangladesh will have enough time to cope up with the new normal of the COVID-19 pandemic & at the same time it will also allow the pharmaceutical industry to keep itself ahead of the tough competitors of the generic drugs like India & China.

Recently the plots under the project of API (Active Pharmaceutical Ingredient) park at Gauzaria, Munshiganjhas been handed to the local drug makers& its work is at the final stage. Although this project’s completion period was five years (project announced in 2008) it took a long time to take a shape. However, according to the reports of BAPI (Bangladesh Association of Pharmaceutical Industry), the installation of the API park will not only help to save the import cost up to 70% but also will help to raise API export income from USD 1.5 million in 2016to USD90 million in 2032. Again, the tax exemption on local API manufacturers until 2025 & the other policy like the obligation of the firms to spend 1% on research and development purpose of its annual turnover will not only help to meet the backward linkage but also will help the local manufacturers to compete with the global players by the cost advantage.

However, the successful implantation of reverse engineering along with the low cost of labor has also attracted foreign investors which have resulted in many MNC’S (Multi-National Corporation) & local pharmaceutical companies' collaboration that also has played a great role in achieving self-sufficiency in this sector. However, the government needs to think about infrastructural development in this sector which will help us to get the FDI (foreign direct investment) & also have to keep the focus on implementing & monitoring the approved policies & also need to centralize its focus to not delay in the undertaken projects. As the right way of implementing & monitoring policies & projects will not only help to be the global player in the pharmaceutical sector but also will help us to attain the position of the global player in the market but also will help us to attain the SDG-3 (Good Health & Well Being) by the year 2030.

The article was co-authored by Dr Mohammad Abdul Hannan Pradhan, Professor of the Department of Economics, SUST.