The country’s pharmaceutical industry is well positioned for a significant take-off to triple to an annual size of Tk1 trillion (1 lakh crore) in a decade, industry experts and analysts say.
A supportive policy adopted four decades ago, along with the aspiration and talents of local entrepreneurs, has created a pharmaceutical industry of over Tk 27,000 crore in Bangladesh, which meets almost all of the domestic demand. while exporting to more than 100 countries.
In its research report titled “UCB Asset Pharma Outlook in The Fresh Decade”, UCB Asset Management recently stated that the industry will reach the Tk1 lakh crore mark, mainly due to growing demand from the local market.
Along with a boom in the local market, the country’s pharmaceutical sector is expected to garner more than $ 1.5 billion, or about Tk 13,000 crore per year, by 2030, nearly nine times more than $ 169 million. dollars earned in fiscal 21.
Planned annual exports will leave room for the local market to contribute about 87% of the industry’s annual revenue in 2030.
The industry’s annual growth rate could reach 15-16% this decade, compared to 12.1% over the past five years.
The pandemic helped the industry achieve a staggering 18.56% growth in fiscal year 2020-21.
Dr Firoj Ahmed, professor and chairman of the department of pharmacy at Dhaka University, said that due to urbanization and pollution, people are increasingly facing various health issues as well as to an increase in income. As a result, per capita spending in the health sector is also on the rise.
âDemographics and increased ability to spend drives sales of any product. Our pharmaceutical industry is also online and the potential for growth in the sector is enormous,â he said.
The local market boom
“We are predicting a significant demographic change that will increase drug sales. For the first 40 years of your life, the food industry is trying to make you fat. For the next 40 years, the pharmaceutical industry treats you for everything.” , said Md Risalat Huda, co-author of the report.
Rising healthcare spending, demographic change, as well as changing perceptions of modern medicine will together lead to the growth of the local market, its report said.
âMedicine cures doubts as well as illnesses,â Huda said of the evolution of people’s perception of modern medicines, as more and more people prefer modern medicines now.
According to the World Bank, among regional peers, Bangladeshis spend the smallest part of their income on health care – only 2.4% behind Pakistan, Indonesia, India, Philippines, Thailand, Myanmar , Nepal and, of course, Vietnam where the ratio is highest in the region, 6.4%.
By 2030, people over the age of 50 will make up 22.4% of the local population, which is around 17% currently, analysts said, adding due to lifestyle, eating habits, l adulteration and pollution, health problems such as stomach and heart disease. , respiratory problems, neurological problems and cancer are on the increase here.
As the population group relies more on drugs and people here are more positive about modern drugs, analysts expect Bangladesh to follow Vietnam’s lead in increasing health spending.
Medicines for the alimentary tract and metabolism, cardiovascular, respiratory, neurological and oncology are seeing their sales increase and are expected to contribute the most to the market boom to come.
Strong growth in exports
âBangladesh’s pharmaceutical exports have tripled to $ 169 million over the past decade. But the real story of growth has yet to be written, âsaid Masum Alvi Chowdhury, another co-author of the UCB Asset report.
“We forecast annual exports to reach $ 1.5 billion by 2030, ensuring a compound annual average growth of 24%,” he said.
Drugs made by Bangladeshi companies have already entered all developed markets, including the US, UK, Europe and Australia, which have strict regulations and companies are busy registering more than drugs to be exported there.
Some of the country’s leading pharmaceutical companies, such as Square, Beximco and Renata, have made their way into developed markets.
New export players, including DBL Pharma and ACI, are also investing for high revenues in developed markets.
Currently, many existing policies, intermediaries and generics from competing countries are reducing the profit margin of Bangladeshi pharmaceutical exporters.
As Bangladeshi companies focus more on moderately regulated and unregulated markets, Southeast Asia and Africa are currently their largest markets. But the good thing is that they are gaining the trust of consumers in developed markets.
Companies are establishing supply chain networks abroad.
Masum Alvi said: âDeveloped markets are the next logical step in our pharmaceutical growth train. Pharmaceuticals have a long way to go to become a major player in exports.
Renata, the descendant of Pfizer Bangladesh, opened a subsidiary in Ireland after Brexit.
ACI opened a US subsidiary to facilitate their export, and the listing of Beximco’s shares on the London OTC market made it the only Bangladeshi share to be traded overseas.
Square Pharmaceuticals, the market leader, has built a plant in Kenya to compete with East Africa’s $ 300 billion market. The overseas plant will also help Square alleviate any patent issues after current waivers end by 2032.
The vaccination facility of Incepta, the second largest pharmaceutical player in the country, has been well praised by experts while Orion and a few others are also investing in such facilities now targeting local production of Covid-19 vaccines. .
Beacon Pharmaceuticals has built its image as a leading manufacturer of oncology drugs in the country.
Four companies, including Square Pharmaceuticals, have registered their drug molecules in North American and UK jurisdictions.
For a higher profit margin versus higher investments to comply with strict regulations such as US FDA, UK MHRA, companies focus more on prescription drugs than over the counter drugs.
The Middle East markets are also increasingly attractive and Beximco has entered the Gulf market with several products launched in Kuwait.
Mr. Shafiuzzaman, secretary of the Bangladesh Pharmaceutical Industries Association, said local companies export their products to 151 countries around the world, which could be a benchmark for many more.
“A few companies have already left giant footprints in the US and UK markets and are expanding their reach every day as around 1,000 products are going to be registered in the international market for further export, which will unlock huge potential.”
TRIPS membership may not massively affect the industry
The World Trade Organization’s waiver of the TRIPS Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) as a least developed country has been the most important aspect of the industry’s growth Bangladesh pharmaceutical and facility will expire after 2032 as the country upgrades its economic status to the top.
Bangladeshi drugmakers will be allowed to develop generic versions of patented drugs until 2033 and even after that, accession to the TRIPS Agreement is unlikely to affect the industry massively as more than 85% of Generic drugs currently produced by industry are off-patent, requiring no royalty payments to patent-holding companies.
The slowdown in drug patent registration globally is not expected to drastically change the scenario, especially for consumer drugs, according to the UCB Asset Management report.
“Even being TRIPS compatible after 2032, the availability and price of generic drugs could remain unchanged,” he added.
The share of patented medicines will face soaring prices and in these circumstances Bangladesh can use some of the TRIPS flexibilities by incorporating appropriate legislation into national laws.
Parallel importation of patented medicines which allows imports without the consent of the patent holder, compulsory licensing of companies by a local authority to produce the generic version of patented medicines and meet local demand in certain understandable situations, and the use of the patented drug formula as soon as the patent expires are the flexibilities within TRIPS that the industry could benefit from after 2032.
The pharmaceutical industry in Bangladesh currently uses 97% of its raw material called Active Pharmaceutical Ingredients (APIs).
API Munshiganj Industrial Park is expected to start production next year to reduce import dependency to 80% by 2032.
It is not certain that the 27 companies securing plots there can deliver according to plans.
However, the 80% dependence on imported API will constitute an external supply shock for the pharmaceutical industry.
If drug makers produce APIs on their own, they could achieve a decent gross profit margin in various business contexts.
“Bangladesh is not a country that allows the pharmaceutical industry to charge for exactly what the market will bear. Our drug regulators always put consumers before manufacturers,” said Masum Alvi Chowdhury, stressing the need for a cost control by companies.