The pharmaceutical industry in Bangladesh has grown significantly over the last three decades and now meets 97% of the country's drug demands domestically. It is one of the most technologically advanced sectors in Bangladesh, employing many professionals. While successful in developing the domestic market, the industry faces challenges in becoming a major exporter, including lack of infrastructure like an API technology park and central bioequivalence testing laboratory. Addressing issues like backward integration into API production, regulatory strengthening, and industry-academia collaboration could help Bangladesh realize the industry's export potential and economic benefits.

1. 7Long Form Friday,February13,2015DHAKATRIBUNE
nShawkat Haider
T
he pharmaceuticals indus-
try (pharma in short) in
Bangladesh has progressed
well over the last three
decades and the country is
nearly self-sufficient in pharmaceuti-
cals with 97% of its demand being met
by domestic manufacturers.
At present, this is one of the most
technologically advanced sectors
in the country employing probably
the highest number of white collar
professionals. Since the promulgation
of Drug Policy in 1982, the sector has
grown from Tk173 crore to more than
Tk12,000 crore (or $1.5 billion) today.
Thanks to the private sector for its
significant investment in building capa-
bilities – both infrastructure and people
– to bring this industry to compete in
the global marketplace.
Bangladeshi medicines are also be-
ing exported to many countries in the
world and leading players are making
forays into the most regulated markets
of Europe, US and Australia which are
known for strict regulation and highest
quality standards.
In view of its export potential,
pharma has been declared as the thrust
sector in Bangladesh with an aim to
diversify the country’s export portfo-
lio and lower its dependency on RMG
(ready-made garments).
The country is still heavily depend-
ent on RMG for its export earnings and
there is still no vibrant sector next to
it which could make it to the billion
dollar club. The export data of Bangla-
desh shows that in 1980 RMG export
was just $3mn, contributing to less
than 1% of the country’s total export
which sharply rose to $1bn in 1992.
Today this accounts for 82% with value
in excess of $25bn.
Pharma has received a lot of
attention in recent times for its huge
potential to become a major export
oriented sector. However, we need to
keep in mind that pharma as a sector
is fundamentally different from RMG.
RMG is highly labour intensive and
the competitive cost of labour plays a
major role in developing this sector.
Pharma, on the other hand, is large-
ly a knowledge-driven and technolo-
gy-intensive industry and this requires
significant investment in R&D com-
pared to other industries. A pharma
company’s success mostly depends on
its intellectual capital where special
skill-set is required to deal with every
stage of its operations.
Fortunately for Bangladesh, Drug
Policy of 1982 created an opportunity
for the local industry to flourish and
make it self-reliant whereby local
companies increased their share of
production from 30% in 1970 to almost
90% today, which translates to a tre-
mendous amount of foreign currency
savings for the country every year.
Bangladesh is the only country
among all LDC countries which has a
well-developed pharma industry that,
over the time, could successfully make
the transition from being an import
dependent to an exporting one.
Although medicine export from BD
constitutes only a small percentage of
total production, the sector has, over
the last few years, attracted overseas
buyers and it has earned good reputa-
tion as a quality drug manufacturer.
Leading pharma companies have al-
ready secured accreditations from ma-
jor drug regulatory agencies like
UKMHRA, TGA, ANVISA, Health Cana-
da etc. while two of them, Beximco and
Square, have successfully completed
US FDA audit (remarkably, without any
major observations) in January 2015
and are awaiting approval.
The country certainly has huge
potential in pharmaceutical export.
But we need to seriously evaluate how
far we have progressed in terms of in-
frastructure development and achiev-
ing competitiveness.
The industry is yet to have any
accredited bioequivalence testing
facility which is mandatory for product
registration in developed markets,
and there is increasing pressure from
even semi-regulated markets for such
compliance.
A central bioequivalence facility
in the country can largely benefit the
industry by saving foreign currency.
At the same time this will significantly
improve the quality of our medicines.
Bangladesh is always publicised
for having the advantage under TRIPS
waiver which allows the LDC country
to produce any patented drugs and
even export to other LDC countries
till December 2015, but in reality this
waiver period is almost over without
any real benefit to the industry.
This is because we could not utilise
the benefits due to lack of proper infra-
structure such as API (active pharma-
ceutical ingredient) technology park for
producing bulk drugs, central bioe-
quivalence testing lab, collaboration
between industry and university etc.
It’s unfortunate that the industry
has in fact gained nothing out of this
TRIPS flexibility since Doha declaration
in 2003. India and China are two major
hubs for generic drugs. India has more
than 150 US FDA-approved pharma
plants, the highest number outside the
US; and they are increasingly focused
on R&D.
India’s export sales is currently
valued at $15bn, about the same as
its domestic sales; almost 40% of its
export goes to US alone. How did they
make it? It’s interesting to note that
India took export initiatives for pharma
in the late 80s; within the next few
years Bangladesh also began exporting
medicines to overseas markets.
Since then India has worked
throughout the entire pharma value
chain with tremendous backward
integration into API and today estab-
lished itself as a major generic drug hub
whereas we are still struggling with
issues of infrastructural development.
Lack of sufficient backward linkage
remains a major challenge for our phar-
ma industry. Although we are producing
some of the old and conventional APIs on
a commercial scale, we are far from syn-
thesising the new and patented drugs,
and meeting the growing demand.
API constitutes a significant per-
centage of the total cost in medicine
production which can run up to 30-
40% and, in many cases, even more.
We must emphasize on improving our
process and synthetic chemistry skill in
order to be more competitive in global
market.
To build up the capabilities we must
start from the university, we must
improve our education system with
practice-oriented advanced courses
having adequate laboratory facilities.
There should be more industry-uni-
versity alliance and collaborative
research between universities at home
and abroad to promote research in the
fields of generic drugs, reverse engineer-
ing, and also new drug development.
If we cannot have the competence
developed in the university level, we
cannot take this industry to the next
level to compete in the global market-
place.
Although highly successful in
developing the domestic market, the
pharma sector of Bangladesh is faced
with several long standing challenges
which need to be addressed to realise
its actual export potential:
Backward integration into API: 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 in-
creasing by 55%. This delay has been a
major hurdle for the pharma 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. We must strengthen our
synthetic chemistry skills for improv-
ing API capabilities.
Central bioequivalence and drug test-
ing laboratory: Bioequivalence testing
is conducted to see if the generic
version is identical to originator brand
and this is mandatory for product
registration in any developed market.
This testing is very expensive if done
in US or Europe.
The government should support in
setting up such a centre which would
help the industry in a big way. The
country also lacks a state of the art drug
testing lab to routinely and accurately
monitor quality of drugs produced
locally.
Strengthening of Drug Regulatory
Authority: The industry needs a high-
ly credible drug regulatory authority
similar to US FDA to regulate drugs
as well as food products. Continuous
training and exchange programmes
with global regulatory bodies would
help them equip with the skills and
knowledge to perform their duties
responsibly.
Special Economic Zone (SEZ) for
Pharma: The government should for-
mulate a policy for setting up pharma
SEZ with the intention of providing
an internationally competitive and
hassle-free environment. This should
offer to the manufacturers tax and
other benefits to encourage export.
Both China and India have successful-
ly created numerous SEZs for boosting
pharma export.
Export incentives from government:
Bangladesh has the opportunity to
excel in high quality generic drug
manufacture for export. Government
incentives in various forms can help
the pharma companies to focus more
on export and improve sectoral per-
formance. These can be in the form
of excise duty exemptions, income
tax holidays, investment subsidy (on
capital investment) and interest subsi-
dies. India has created Pharmaceutical
Export Promotion Council under the
Ministry of Commerce to promote
export of pharmaceuticals.
Capacity building in IP/regulatory
and legal affairs: To be able to operate
in regulated markets such as USA,
EU or Australia, any aspiring generic
drug company must have the suf-
ficient knowledge and expertise to
deal with increasingly important legal
and regulatory issues including patent
litigations.
This is a critical area for a knowledge
based industry like pharma where our
industry is still in its early stage. Gov-
ernment grants/assistance can help es-
tablish IP Centres and the government
should also emphasise on strengthen-
ing its Patent Office in order to keep
pace with WTO/TRIPS agreements and
changing landscape of global trade.
Building biosimilar capabilities:
Valued at nearly $200 billion, Biologic
drugs have been a major segment in
global pharma market today with sev-
en of them occupying the top 10 posi-
tions. Biosimilar or generic version of
these biologic drugs are increasingly
becoming a major focus for pharma-
ceutical companies across the globe.
As the number of patent expiry
is rising every year in this category,
which offers greater opportunities for
generic manufacturers, we should also
enhance biosimilar capabilities with
appropriate regulatory guidelines in
place.
Industry and academia collabora-
tion: To build and strengthen pharma
capabilities in different areas namely
developing specialised drug delivery
systems, biosimilars and vaccines,
drug research, patent due diligence,
etc, there must be strong collaboration
between industry and university.
Specialised pharmaceutical research
institutes can be established to promote
research and develop human resources
for the industry. The government of
India has established the National Insti-
tute of Pharmaceutical Education and
Research (NIPER). There are seven such
institutes and ten more are being estab-
lished at a cost of $500 million. These
provide post graduate and PhD level
education and contribute to thousands
of Masters and PhDs per year.
Incentive for promoting R&D activi-
ties: Reverse engineering is the key to
success for any generic drug company
and it requires significant investment
in building capabilities to create strong
differentiation. This is a continuous pro-
cess and to encourage R&D there should
be incentives from the government. For
example Indian pharma industry enjoys
increased weighted deduction of up to
200% on in-house research and devel-
opment (R&D) expenses.
Export promotion scheme: A govern-
ment scheme may support activities
for the pharma sector by promoting
seminars, conferences, exhibitions,
sending delegations to and from the
country for promotion of exports as
well as investments, conducting stud-
ies/consultancies.
Venture capital fund: The idea of
the VC fund will be to offer financial
incentives to companies focussing on
research, for example, in the areas of
biosimilar, NDDS or early-stage drug
development. This would promote
entrepreneurship in the sector and
support the development of a self-sus-
taining environment for R&D in the
country. India has set up a venture
capital fund of $370mn to promote
R&D in the pharma sector.
Infrastructure for exporting high-end
pharmaceuticals: Creating a dedicated
cargo storage and handling zone ex-
clusively for sensitive pharmaceutical
products such as biologics, insulins,
vaccines, etc which require cold chain
system. India already has Pharma
Zone for such products.
Contract manufacturing: The industry
also needs to find new opportunities
of growth in contract manufacturing
and research, clinical research and
custom synthesis. Pharmaceutical
contract manufacturing is already a
55-60 billion dollar business and in-
creasing number of MNCs are looking
for outsourcing their production from
cost effective destinations like India
or China.
Having considerable cost advantag-
es in manufacturing, Bangladesh is in
a position to offer this service to global
clients as the country has a sound track
record of partnerships with a number
of major multinational companies.
The opportunities in generic drugs
are increasing day by day with increas-
ing government pressure around the
world to cut healthcare costs. The
country has tremendous opportuni-
ties for pharma export, particularly
for value added generics in regulated
markets.
In 2015 alone, patented drugs worth
$60bn are going off patent which opens
up opportunities for generic manufac-
turers around the world. Bangladesh
could be ideally positioned to gain from
generic drug opportunities with its cost
advantages and skilled manpower, but
we need to address those key challeng-
es faced by the industry in order to gain
further competitive advantages and
build presence in the global generics. l
Shawkat Haider, PhD is an industry expert and
general manager at Beximco Pharmaceuticals.
Thepharmaceuticalindustry
At a glance
• Pharmaceutical remains one of the
most technologically advanced sec-
tors in the country.
• Availability of skilled manpower at
a competitive cost helps produce
quality medicines which are affordable
• Leading companies have been already
accredited by major global regulatory
authorities
• As an increasing number of originator
brand products goes off patent every
year, this creates opportunities for
Bangladeshi generic drug companies
to supply generic versions of those
drugs to the developed and regulated
markets.
• Pharma is the 3rd largest tax paying
industry in the country employing
over 100000 people
• The sector has maintained a steady
double digit growth over the last few
years and currently domestic market
is valued at $1.5 billion while export
sales stands at only $70 million.
• According to industry experts the
country can achieve exponential
growth in medicine export fetching
billions of dollars in export within
a short span of time, if adequate
support in infrastructure development
and other areas are provided without
any more delay
A prescription for growth
Prospects and challenges for the Bangladesh pharmaceutical industry
BIGSTOCK
Bangladesh is the only country among all
LDC countries which has a well-developed
pharmaceutical industry that, over the time, could
successfully make the transition from being an
import dependent to an exporting one
Lack of sufficient
backward linkage
remains a major
challenge for our
pharmaceutical
industry