Promising prospects for our pharmaceutical industry 

The pharmaceutical industry is one of the promising tech-developed sectors in Bangladesh. This sector has been transforming and evolving since the early 80s. As a technology and knowledge-based industry, climbing the ladder was difficult for a LDC country faced with enormous economic challenges. Yet, this sector has grown strength to strength over the last 5 decades and now, Bangladesh proudly stands alone as the only LDC with a well-developed pharma industry.

In 1981, Bangladesh had 166 licensed pharmaceutical factories, dominated by 8 multinational companies. These companies produced medicines locally using imported raw materials worth BDT 60 crore annually, while also importing medicines worth BDT 30 crore each year.

The drug policy in 1982 made a breakthrough by transforming the pharma sector from an import-dependent industry to a self-sufficient one serving the global market.  To support local companies, the government banned the import of unnecessary drugs and barred the MNCs without local manufacturing plants in the country. The policy fostered local production of generic drugs by shifting skilled manpower from MNCs to local firms, saving an estimated USD 600 million annually in foreign exchange. At that time, API imports were cheaper due to competition between India and China.

Square and Beximco expanded, while MNCs such as Pfizer and Imperial Chemical Industry became Renata and ACI. New companies like Incepta and Beacon also entered the market.

However, unlike before, importing APIs became challenging, hindering Bangladesh from fully capitalizing on the benefits.

In 1985, the Bangladeshi Pharma Industry was valued at USD 0.12 billion. By 2023, it grew to almost USD 3 billion (0.6% of GDP), though recent currency depreciation has impacted its value. According to the DGDA, there were 266 registered companies in 2023, with 213 operational, including importers. The industry is forecasted to reach USD 6 billion by 2025.

While neighboring countries like Singapore (80%), Malaysia (70%), the Philippines (65%), and Vietnam (60%) rely heavily on pharmaceutical imports, Bangladesh produces 97% of its drugs domestically, importing only 3%.

Bangladesh's imports steadily increased from 2004 to 2020, reaching USD 274 million in 2020. A sharp rise followed in 2021 and 2022, driven by COVID-19 vaccine imports. Key import partners included Germany, Belgium, the USA, China, and India.

Pharmaceutical products exports have seen some increase in recent years. The exports from Bangladesh were USD 175 million in FY 2023, down from almost USD 73 billion in FY 2015. The growth rate climbed by 14.3% between July and May of FY 2024 to reach USD 184.3 million, up from USD 161.2 million in the same period of FY 2023.

Despite having a negligible portion in the country's overall exports of USD 55.6 billion, pharmaceutical exports were nevertheless managed to reach 131 countries in FY 2023.

Bangladesh's inability to fully benefit from the absence of patent protection can be partially attributed to its reliance on foreign inputs. A classic example is India producing AIDS drugs in large quantities in the 1980s to generate significant revenue, whereas Bangladesh's reliance on foreign inputs limited its ability to fully capitalize on selling Remdesivir during the COVID pandemic.

The shortage of skilled labour and inadequate investment hampers the growth of Bangladesh's pharmaceutical industry and limits its R&D capabilities. This is evident from the market's heavy reliance on generic drugs, with minimal innovation in patented products.

In light of this, prompt action is required to guarantee that the sector realizes its full potential. It is obvious that the country requires domestic API manufacturing. To make API locally, the government has already set up an industrial park in Munshiganj. Additionally, the government also decided to provide tax incentives to the companies at the park. Just four companies have established factories at the estate so far, and the park is still not operational. At full operation, it is expected to produce 50% of the total API demand.

Full-scale operationalization of the API park needs to happen as soon as possible. This would help fulfil domestic demand and create opportunities for exporting these molecules in the future.

Negotiating with the WTO to extend the TRIPS transition period for pharmaceuticals is an important step as we are about to graduate from LDC in 2026.

Pharmaceutical goods from Bangladesh are already exported to various other countries. In this case, expanding exports to a select few of these countries is necessary. That can help diversify the export market. According to the ITC Export Potential Map, Bangladesh has unrealized export potential both in existing markets like the United States and the United Kingdom, and in countries with little to no previous exports, such as Russia, Belgium, and Japan. Tapping the unrealized potentials in these markets can diversify markets.

Since the export basket is heavily concentrated at the product level, diversifying the product basket will also be crucial. In this context, a locally created API would likely be beneficial. The companies should also begin complying with the relevant international standards to have a fair opportunity to compete with the major pharmaceutical companies in the international market.

In summary, this market has expanded both domestically and in terms of exports. However, there's still a lot of space for development. Thorough research of the sector and policy formulation derived from such analysis could potentially unlock the sector's full potential.
 
The writers are Master's Student, East West University