::Netherlandsembassy::Economic Affairs: Trade and Investment

Government plans to declare “Pharmaceuticals” as the product of the year (2008) in a bid to boost its export further. Such a move is the first in the country and pharmaceuticals has been singled out considering its tremendous prospect in the global market and diversification of export basket as well. Bangladesh pharmaceuticals industry is the largest among the LDCs and growing with 50% annually. Pharmaceuticals export rose to USD 17.64 million in the first five months of FY07-08 while it was USD 11.86 million during the same period of FY06-07

With an annual turnover of about USD 500 million, Bangladesh pharmaceuticals industry is one of the fast growing sectors in Bangladesh. Thanks goes to the private sector which efficiently utilized all available resources from government initiatives. Among the 49 LDCs, Bangladesh is the only country that is nearly self-sufficient in pharmaceuticals. This industry now caters 96% of the country’s pharmaceuticals needs.

The industry has experienced a growth rate of about 20% over the last two years. Historically high growth rates were driven by the introduction of new generic products. Lately, however, price increases – forced by rising costs of essential imports (APIs, packing materials and excipients) due to the devaluation of the Taka – have contributed significantly to market growth in Taka terms. While the per capita GDP is about US$ 450, growing at over 6% a year, the per capita expenditure on medicine is only about US$ 4 per year. This is one of the lowest not only in the world but also in the sub continent. This is an indicator of the significant growth potential of the pharmaceutical sector in Bangladesh for some years to come.

There are more than 250 pharmaceutical companies in Bangladesh. Out of this some 150 companies are thought to be active. The top 20 companies however account for 80% of the total market. Since the Drug (Control) Ordinance 1982, which favored local pharma companies, most multinational pharmaceutical companies have actually either left or sold out their interests in Bangladesh (i.e. Organon). At present only 4 multinational companies are operating in this sector. Bangladesh has been exempted from TRIPS by WTO until 2016. As such, there is no protection for patented products against local manufacturers. About a third of the Bangladesh market comprises anti-infective while anti-ulcer ants and vitamins account for another third.

Affordability of medicine to a substantial portion of the population - these has reduced major health hazards in Bangladesh. Average life expectancy is 61 years which is at the top end in South Asia
Strong footing of the local industry and local entrepreneur – cater 80% of the total market, continuing their expansion and upgrade facilities to international level.
Export of pharmaceuticals: Pharmaceuticals from Bangladesh now being exported to 68 countries in Asia, Africa and Europe.
Quality assurance : All major companies are complied with WHO GMP guidelines and capable to face competition from developing countries in exports due to strict quality compliance.

Pharma market is a generic market; the potential for patented products is very limited
A few companies have already put in place pharmaceutical manufacturing facilities to comply with US FDA and UK MHRA standards.
Opportunities for contract manufacturing with international client.
Bangladesh is best suited to high volume low cost low priced products.
With the gradual withdrawal of government funding in family planning products and reduction of subsidies by USAID to the Social Marketing segment, the scope for the private sector in the contraception segment is brighter now than at any time in the past.

The Bangladesh market is a highly competitive market. Product differentiation is difficult. Niche marketing is rare. Fierce price competition can compromises profitability.
The regulatory authorities are not properly equipped to monitor and control the activities of pharmaceutical companies. Enforcement of rules and regulations is weak.
There is no intellectual property protection in Bangladesh. Only those products which are technically too complex to manufacture in Bangladesh would survive.
There is no reimbursement system in the healthcare sector and practically no health insurance.
Unethical practices by some pharma companies to influence doctors skew the playing field..

Take advantage of TRIPS exemption by WTO (until 2016) for the manufacture and export of otherwise globally patented products to other LDCs.
Set up plants in Bangladesh to manufacture and locally market generic products which are technically complex to manufacture.
Appoint licensed agents or distributors to import into Bangladesh products which are difficult to copy.
Invest in API plants since virtually all APIs currently have to be imported.