1

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.

INTRODUCTION

2

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.

2.1 PHARMACEUTICAL INDUSTRY

3

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

2.2 INDUSTRY OVERVIEW

4

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

5

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.

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

2.3 REGULATORY REGIME

Company

Market

Size

(BDT

Market

Share

(%)

Growth

(%)SQUARE 21.15 18.7 7.3INCEPTA

PHARMA

11.78 10.4 15.6

BEXIMCO 9.56 8.5 7.6

OPSONIN

PHARMA6.35 5.6 19.8

RENATA 5.74 5.1 13.5

ESKAYEF 5.09 4.5 12.0ARISTOPHARMA 5.07 4.5 15.7

A.C.I. 4.69 4.1 9.9

ACME 4.51 4.0 14.1

6

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.

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)

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.

2.4 GOVERNMENT INCENTIVES

2.5 RAW AMTERIALS AND API SECTOR

3.1 RISE OF PHARMACEUTICAL INDUSTRY OF BANGLADESH

7

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.

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 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

3.2 CURRENT MARKET SCENARIO

8

To get the better understanding we analyzed the sector through Porter’s five forces model.

Details are given here –

The threat of new entrants in the industry

Increasing market size, sustainable product demand and economic profit opportunity will

certainly fascinate new players. However, significant capital requirement, economies of scale of

production, brand identity and access to distribution channels creates discouragement.

Therefore, the threat of new entrants in the industry is moderately low.

The threat of substitute products

3.3 COMPETITIVE STRUCTURE

9

Switching cost of the product is low. However, in our country people are not aware of substitute

of medicine like, balanced nutrition, workout, meditation etc. Therefore buyers’ propensity to

substitute the medicine is less likely. Consequently, the threat of substitute products is low.

The bargaining power of buyers

For pharmaceuticals industry, substantial portion of the market is dominated by retail customers

indicating buyers are not concentrated. Sometimes customer shows price insensitivity due to

brand image. These features results low bargaining power of buyers.

The bargaining power of suppliers

Most of the companies import raw materials mainly from China and India. Switching cost from

these countries to Europe is also high. Therefore supplier concentration and high switching cost

imply that the bargaining power of suppliers is quite high.

The degree of rivalry among existing competitors

Population growth and export opportunity create enough room for everyone to expand operation

in the industry. Although several companies are listed in the sector yet substantial chunk of

market shares are controlled by few large companies. As a result, the degree of rivalry among

existing competitors is moderately high.

3.4 GROWTH POTENTIAL OF THE DOMESTIC DRUG MARKET

10

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.

2010 2011 2012 2013 20140.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

6.70%7.50%

8.40%9.30%

10.10%

AVERAGE GDP GROWTH RATE

Source: BB, WHO

2010 2011 2012 2013 20143.20%

3.40%

3.60%

3.80%

4.00%

4.20%

4.40%

3.60%

3.80%

4.00%

4.20%4.30%

HEALTH EXPENDITURE

Source: Bangladesh Bank

(% o

f GDP

)

Year Pharma Sector Growth Rate

2009 16.83%

2010 23.80%

2011 22.30%

2012 11.91%

2013 8.12%

2014 11.36%

11

2009 2010 2011 2012 2013 2014

16.83%

23.80%22.30%

11.91%

8.12%

11.36%

P harma Sector Growth Rate

12

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 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.

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

3.6 MAJOR PLAYERS

3.5 MARKET PLAYER

13

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 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

14

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.

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

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,

3.7 PRODUCTS OF THE PHARMACEUTICAL INDUSTRY

15

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.

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

16

Pre-filled Syringe Injection: The advanced potential technology.

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.

4.1 EXPORT

17

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.

2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

4144.3

48.3

59.8

69.272.6

Pharma Products Export (in USD million)

Source: Export Promotion Bureau

4.2 GLOBAL EXPORT MARKET

18

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.

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.

4.3 INDIRECT BENEFITS OF EXPORT

4.4 TRIPS

19

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

20

TRIPS flexibilities while maintaining good relations with MNCs, which often use domestic

firms for outsourcing or manufacturing.

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.

The pharmaceuticals sector represents 12.5% of total market capitalization in Dhaka Stock

Exchange (DSE). 27 pharmaceuticals companies are currently listed to the country’s prime

bourse.

Stock Listed in the DSE’s Pharmaceutical Sector

Ticker Product Type

ACI Pharmaceuticals, consumer brands,agribusinesses

ACIFORMULA Consumer brands, agribusinesses

ACTIVEFINE APIs, laboratory reagents

AFCAGRO Bio-pharmaceuticals, biochemical

AMBEEPHA Tablet, capsule, liquid syrup, tube, injection

BEACONPHAR Biotech

BXPHARMA Pharmaceuticals formulation Products

BXSYNTH Partial Oriented Yarn (POY), DrawTexturized Filament Yarn (DTFY)

CENTRALPHL Tablets

FARCHEM Textile chemicals

GHCLCaustic Soda, Hydrochloric Acid, Bleaching Powder, Chlorine, Sodium Hypochlorite & Chlorinated Paraffin Wax (CPW)

GLAXOSMITH Pharmaceuticals, vaccines and consumer healthcare

IBNSINA Syrup, tablet, injection, capsule, eye drops

IMAMBUTTON Logo, horn, fancy, chalk and pearl buttons

JMISMDL Syringes and medical devices

4.5 PHARMACEUTICAL SECTOR IN CAPITAL MARKET

21

KEYACOSMET Personal hygiene and detergent products

KOHINOOR Personal hygiene and cleaning products

LIBRAINFU Intravenous fluids

MARICO Coconut oil and hair products

ORIONINFU Fluids

ORIONPHARM Tablets and injections

PHARMAID Neutral Glass Ampoules

RECKITTBEN Hygiene and healthcare

RENATA Pharmaceuticals, animal health and consumer goods

SALVOCHEM Chemicals/Acids

SQURPHARMA Pharmaceuticals, herbal and agrochemical

WATACHEM Fluids

Source: DSE Website, Companies’ Website

Pharmaceutical Sector in the DSE (as on 30 Sep 2015)

No. of Listed Firms 27

Sector’s Market Capitalization 421,131

Sector’s Market weight (based on Market Capitalization) 15.1%

3 Months Average Turnover 919

3 Months Return 11.7%

Sector’s forward P/E 18.6Source: DSE

Website

The pharmaceutical sector possesses significant importance in the capital market of Bangladesh

not only because it represents a considerably large segment of DSE but also because it is one of

the major economic sectors of the country. With the ever increasing population of the country

and the continuous development within this industry, the pharmaceutical companies can expect

to grow in the years to come.

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

4.6 BANGLADESH PHARMACEUTICAL INDUSTRY ENVIRONMENT

22

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.

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.

23

CHALLENGES:

Pharmaceutical industry of Bangladesh has obtained many achievements. However, compared

to pharma sector of other neighboring countries like India and China, Bangladesh pharma sector

has long way to go. As a knowledge-driven and technology-intensive industry, success

prescription is quite different from other labor intensive industry like RMG. Experts identified

several issues that need to be addressed to attain the sector’s sustainable growth. Some of these

issues are described below –

Import dependent backward linkage

Active Pharmaceutical Ingredients (APIs) are the prime raw material for the sector. So far the

sector is mostly dependent on import. To ensure sustainable growth the country’s pharma sector

needs its own raw materials sources. An API Park in Munshiganj is under progress. The

Government should take immediate steps to complete the project at quickest possible time.

Absence of central bioequivalence and drug testing laboratory

Bioequivalence testing is conducted to see if the generic version of the drug is identical to its

originator brand. Currently, Bangladesh does not have any such facilities for drug testing and

biochemical studies. Establishing a central bioequivalence and drug testing laboratory would be

a big leap for the country’s pharma sector.

Nonexistence of Special Economic Zone (SEZ)

The Country’s pharma sector has immense untapped export opportunity. Yet, there is no Special

Economic Zone for the sector. Establishing a Special Economic Zone (SEZ) for particularly

pharma industry could assist to seize the prospect. Both China and India have successfully

established several SEZ’s.

Underdeveloped biosimilar capabilities

A biosimilar is a biologic medicine designed with the intent to treat a patient in the same way as

an existing biologic therapy. Biosimilar made by different manufacturers will differ from the

reference product and from each other, making each biosimilar a unique therapeutic option for

patients. Several products have been expired every year in this category. This is a huge

4.7 FUTURE OF THE INDUSTRY

24

opportunity for generic manufacturers. The major players of the Country’s pharma sector should

concentrate to build biosimilar capabilities with appropriate regulatory guidelines.

Feeble effort on R&D activities and weak collaboration with universities

The sector players failed to put required effort on R&D activities. At the same time, the

knowledge sharing link between different universities with the pharma companies is also weak.

Lack of proper regulatory environment

The sector suffered setback of weak regulatory environment. There is so much scope to work on

this issue.

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.

In the report, we wanted to find out the impact of pharmaceutical industry. The report we

prepared was harder than what we thought before. We had a real life experience about the topic

CONCLUSION

25

which was a great and hard experience for us. But due to tremendous efforts of the team

members and the team spirit made it a boneless fish for us.

We had the best of our experience preparing the report. Our sincere thanks to our course teacher

Tahmina Rita Anika, Lecturer, Department of Management Studies, Jagannath University, for

such a wonderful thought. We had a chance to prove and judge ourselves where we stand.

As Business Faculty students, we will have more such reports in future. We hope that our

further reports will also be as interesting as this.

All the information provided in this report is to the best of our knowledge. Though we prepared

this report with full attention and accuracy, any mistakes in this report is apologized.

All the information given in this report has been collected from relevant and dependable

sources. The information given in this report is to the best of our knowledge. We collected the

BIBLIOGRAPHY AND REFERENCE

26

information from various known sites government and international agencies and the monthly

reports of some financial institutions. The description of our information sources are as under:

REFRENCES:

EBL Securities Report on Pharmaceutical Industry

BRAC EPL Investments Report on Pharmaceutical Industry

World Bank Database

ILCL-ILSL Monthly Economy and Market Review – September 2015

Bangladesh Bank (www.bb.org.bd )

Board of Investment (www.boi.gov.bd )

Export Promotion Bureau (www.epb.gov.bd)

31

32