The Bangladesh pharmaceutical market is growing rapidly and has almost doubled over the last five years. Bangladesh pharmaceutical industry is dominated by the local pharma companies and they hold the major market share. The local manufacturers are mainly involved in the production of generic drugs, thus the generic drugs rule the Bangladesh pharma market. Bangladesh is emerging as a potential pharma hub as the pharma companies are investing in developing their new state of art manufacturing facilities for producing quality drugs for exporting to the developed nations. This article will discuss about the booming potential, strength & weakness, regulations, export strength and position of MNCs in Bangladesh pharmaceutical market.
The Bangladesh pharma industry contributes to 1% of GDP and it is the third largest tax paying industry in the country. The main focus of pharmaceutical firms is on branded generic final formulations using imported APIs. The pharmaceutical market in Bangladesh is insignificant when compared to the population size as they lack spending power. The total healthcare expenditures accounts to just 3.4% of GDP (6%). The pharmaceutical industry has made significant progress after the enactment of the National Drug Policy in 1982. Ever year pharmaceutical export is increasing at a higher pace, contributing prominently to the GDP of the country. Pharma sector is the second largest potential sector in terms of foreign currency for Bangladesh.
POTENTIAL OF BANGLADESH PHARMA SECTOR
There are about 191 registered pharmaceutical companies currently operating in Bangladesh. The products manufactured by these companies are meeting 97% of the domestic requirement. Certain vaccines, anticancer products, hematological products, biotech products are imported. Bangladesh pharmaceutical industry is dominated by the local pharma companies and they hold 87% of the market share. The domestic market is highly concentrated and competitive and the top 15 companies hold about 77% of the market share.
The pharma companies are now entering into the highly regulated markets like USA and Europe. Many pharma companies have invested huge amounts in developing their new state of art manufacturing facilities. The primary focus of the Bangladesh local manufacturers is on branded generic final formulations using imported APIs. About 85% of the drugs sold in Bangladesh are generics and 15% are patented drugs. Bangladesh manufactures about 450 generic drugs for 5300 registered brands which have 8,300 different forms of dosages and strengths. These include anti-ulcerants, anti-rheumatic non-steroid drugs, nonnarcotic analgesics, antihistamines, oral anti-diabetic drugs.etc. Some big firms (Ex: Beacon Pharma) also started to produce anti-cancer and anti-retroviral drugs.
SOURCING OF APIS, RAW MATERIALS AND MACHINERY
Bangladesh API capacity is insignificant, pharmaceutical companies import approximately 80% of their APIs. Approximately 75-80% of the imported APIs are generic and 20-25% is patented. Bangladesh’s pharmaceutical manufacturing is not backwardintegrated, hence most APIs have to be imported, and even if the API is manufactured in Bangladesh, the raw materials need to be imported. This results in high production costs, especially in cases where the provider of the API is a competitor in selling the finished product. Building up backwards-integration for all relevant APIs is not feasible due to the scale disadvantages and infrastructure constraints in the early stages of the value chain.
The machinery for manufacturing the pharma products also need to be imported. The leading manufacturers import most of their equipment from Europe or Japan, other manufacturers import machinery from China and India. This creates a cost disadvantage when compared with their competitors (Indian manufacturers) who can source the machinery nationally.
BANGLADESH PHARMA EXPORT
Bangladesh is exporting medicines to 87 countries including the US and a few European nations and it has already received global recognition from the UK, MHRA, EMEA, TGA and GCC. A number of companies have already obtained or in the process of obtaining UKMHRA, EU, TGA, AUSTRALIA and GCC certifications. Bangladesh is also a global hub for the cheapest source of world class generic medicine and contact manufacturing. The pharmaceutical sector has also been making its mark in the field of export. In Fiscal year 2013-14, the country had fetched more than USD 74 million through export of medicines. Bangladesh pharma market holds huge potential for export of low cost generic drugs, which is yet to be unleashed. At present the exports contribute to just 4-5% of the total revenue of pharma products. The improvement in infrastructure, quality and regulations will help in increasing the export.
REGULATIONS FAVORING LOCAL MANUFACTURERS
The Directorate of Drug Administration (DDA), the national drug regulative authority, regulates drug manufacturing, import and quality control of drugs in Bangladesh.
According to the Doha declaration in WTO / TRIPS Agreement, nations belonging to the least developed countries (LDC) category have the option to manufacture patented pharma products until 2016. This provides a huge advantage for Bangladesh local manufacturers to legally reverseengineer patented products for selling in their market and also export to other LDCs. This also provides Bangladesh with a huge export opportunity because among all 50 LDCs, Bangladesh has a strong Pharma manufacturing base. Besides export opportunity this also provides huge opportunity to Bangladesh CMOs for contract manufacturing and compulsory Licensing. Since Bangladesh is a market of cheap labour, MNCs are interested for contract manufacturing and strategic alliance.
POSITION OF BIG PHARMA COMPANIES IN BANGLADESH PHARMA MARKET
Foreign brands are not allowed to be manufactured under license in Bangladesh if similar products are being manufactured in the country. The Drug Control Ordinance (DCO) prohibits foreign firms from selling products in Bangladesh unless they have a manufacturing presence in the country. Thus, Bangladesh pharma companies can only contract manufacture for domestic distribution with MNCs that already have a manufacturing facility in Bangladesh. For example: Beximco contract manufactures Ventolin, which is an inhaler for GlaxoSmithKline.
Price Control: Currently there are 209 drugs on the essential drugs list. For these drugs, prices are fixed for the finished drugs as well as for their corresponding raw materials. So, manufacturers cannot set maximum retail prices for these drugs beyond that limit. For drugs that do not fall into this “Controlled Category”, the manufacturer can set their own price but it must be approved by the Drug Control Committee. This resulted in withdrawal of many foreign companies from the market. The MNCs that ruled the Bangladesh pharma market in 1970 with 70% share had now dwindled down to 13% (2013). This enabled a strong growth in local production and also created a boon for local pharmaceutical manufacturers.
Bangladesh’s pharmaceutical market is significantly growing at a fast pace of 17% CAGR. This growth is mainly driven by the production of import-substituting drugs at a low cost, increase in healthcare expenditure, favourable regulatory authority for domestic manufacturers and cheap labour. The local manufacturers have started manufacturing the generic versions of the imported patented drugs and some larger firms (Beacon Pharma) have started to produce anti-cancer and anti-retroviral drugs. The products manufactured by the local manufacturers are meeting 97% of the domestic requirement. The MNCs that ruled the Bangladesh pharma market in 1970 with 70% share had dwindled down to 13% in 2013. If the MNCs don’t have a manufacturing facility in Bangladesh, they cannot sell their products in Bangladesh. The pricing control of drugs, TRIPS agreement and marketing regulations are unfavourable for the MNCs to penetrate the market in a successful manner. The regulation and government policies helped the local manufacturers to develop significantly and produced an enhanced growth in local production. The local manufacturers have made huge investments in developing their new state of art manufacturing facilities and had already received global recognition from the UK, MHRA, EMEA, TGA and GCC for export. Thus, the future holds good for the local manufacturers as Bangladesh’s pharma market is becoming a potential hub for generics.