BRAC UNIVERSITY

Export Prospect of Pharmaceuticals Sector in Bangladesh

Marshal Richard
ID# 10364057
Section: 1

22 December 2011

Export Prospect of Pharmaceuticals Sector in Bangladesh

Abstract
Pharmaceuticals industry is one of the largest growing sectors in Bangladesh. This sector fulfills our 97% total demand of medicine and its growth gate is near about 34%. Pharmaceuticals have lots of export prospect. It is the second biggest foreign currency earner sector in Bangladesh. This report mainly focuses on the export prospect on Bangladesh pharmaceuticals industry. This report aims to find out the overall export prospect, its whole pharma scenario, total foreign markets, export scenario, barriers etc on the basis of Bangladesh pharmaceuticals industry.

Introduction
Bangladesh's pharmaceutical industry has tremendous potential to grow and compete in the international market. Most companies follow the good manufacturing practice (GMP) standards, set by the UN World Health Organization (WHO). Bangladesh can compete with countries like India, China, Brazil and Turkey in the international export market due to its quality compliance. Bangladesh can continue to produce patented products until 2016 as per trade related intellectual property rights (TRIPS).The industry is legally permitted to reverse engineer, manufacture and sell generic versions of on-patent pharmaceutical products for domestic consumption as well as for export to other LDCs. It created a big opportunity to make Bangladesh a new chemical entity. Bangladesh imports 80 per cent of its pharmaceutical raw materials. A good number of skilled professionals from home and abroad are expected to join the industry to enrich its human resources pool.

Overview of Pharmaceuticals Industry of Bangladesh

Pharmaceuticals sector is one of the fastest growing sectors in Bangladesh. With satisfactory annual growth rate of 34%, this sector is also fulfilling 97% of the total medicine requirement of the local market. Now more than 200 registered pharmaceutical manufacturers in Bangladesh. It is the largest employment sector in Bangladesh. Around 35,000 people work in the industry i.e. 50% are pharmacists, chemists, biochemists and microbiologists. Government organization i.e. Directorate of Drug Administration and semi government Pharmacy Council of Bangladesh, control pharmacy practice in Bangladesh. The Bangladesh Pharmaceutical Society is associated with international organizations i.e. International Pharmaceutical Federation and Commonwealth Pharmaceutical Association. According to Bangladesh Pharmaceuticals and Healthcare Report 2011, Bangladesh medicine sales reached Tk. 7,000 crore in 2010. Business Monitor International in its latest report said Bangladesh hold the 14th position in 17 regional markets surveyed in BMIs Pharmaceutical & Healthcare Business Environment Ratings for the Asia region. Bangladesh's pharmaceutical rating is 40.2 out of 100; this figure has changed marginally from the previous quarter but still remains lower

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Export Prospect of Pharmaceuticals Sector in Bangladesh

than the regional average of 53.1. Globally, Bangladesh occupies 67th position in BMIs 83 market-strong pharmaceutical universe. The experts forecast the growth trend would take the sales volume to Tk. 10,000 crore in 2011. At present Bangladesh is exporting more than 67 different countries of the world. There are about 450 generics/substances registered in Bangladesh. Out of these 450 generics, 209 are in the controlled category (i.e. in the essential drug list). The remaining 333 generics are in the decontrolled category. The total number of brands/items that are registered in Bangladesh is currently estimated to be 5,300 while the total number of dosage forms and strengths are 8,300, about 12,500 plus brands. The top 10 domestic manufacturers having a market share of about 85%, while the other manufacturers contribute about 20% of the total pharmaceutical market of Bangladesh.

Top Twenty Manufacturers

Based on market share and growth top 20 pharmaceuticals companies are 1) Square 2) Incepta 3) Beximco 4) Acme 5) Opsonin 6) Eskayef 7) Reneta 8) Aci 9) Aristo pharma 10) Drug International 11) Sanofi Aventis 12) GlaxoSmithKline 13) Orion Pharma Ltd. 14) Novo Nordisk 15) Healthcare Pharma 16) General 17) Sandoz 18) Popular Pharma 19) Novartis 20) Ibn Sina.

Foreign Markets
Bangladesh has exported basic chemicals to many countries like Hong Kong, South Korea, Malaysia and so on. After being successful in exporting basic chemicals, a few leading companies also started registering and exporting their finished formulation in sixty seven other countries, i.e. Australia, Brazil, Canada, Japan, etc. Overall pharma companies have export activities in about 72 countries.

International Privilege
Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement permits Bangladesh to reverse-engineer patented generic pharmaceutical products to sell locally and export to markets around the world. The 1994 WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) requires signatories to implement patent protection for almost all products, including pharmaceuticals. However, article 66 provides LDCs with a breathing space before introducing full product patent protection. Bangladesh is therefore exempt until 2016 from the requirement to observe patent protection on reverse-engineered generic products destined for the local market and also enjoys a range of privileges with regard to exporting such products.

Where the industry is right now

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Export Prospect of Pharmaceuticals Sector in Bangladesh

Since the Doha declaration in WTO / TRIPS Agreement declaration in 2001, our govt. has just allocated land for the proposed central API (active pharma ingredient) facility. Expert said that if you don't have the backward-integrated API or raw material industry, you cannot be competitive in export markets. India is competitive in world market because it has vibrant, world class API manufacturing capabilities. APIs occupy a significant portion of cost of pharma products, and cheap labor cost is not a huge advantage as it is always publicized by many. Sad but true- we are nowhere near India in terms of skilled manpower or process capabilities, and there is no noticeable progress to develop the skill set or manpower. Again, the industry is yet to have any bioequivalence testing facility which is mandatory for product registration in developed markets, and there is mounting pressure from even semi regulated markets for such compliance. The global generic drug market is now $130 billion, and US is the market leader with more than $45 billion whereas India's presence is strong with $9 billion and ours only $45 million. Bangladesh is now exporting a wide range of pharmaceutical products covering all major therapeutic classes and dosage forms. Beside our regular brands, we are also exporting high-tech specialized products like inhalers, Suppositories, Nasal Sprays, Injectables and infusions. Apart from our overseas retail customers, we are even supplying to world-renowned hospitals and institutions like Raffles Hospital of Singapore, Jinnah Hospital of Pakistan, MEDs of Kenya, SPC of Sri Lanka and KK Women & Children Hospital of Singapore. The product quality, packaging and presentation of our products have been highly appreciated in all the countries we are exporting.

Export Scenario
As said before pharmaceuticals sector is the 2nd foreign currency earner sector in Bangladesh. Last five years it earns at least $30 million. Last seven years margin are given below Export of Bangladesh Pharmaceutical Sector (Million in $)

Year
2010 2009 2008 2007 2006 2005 2004

Earnings
41 36 43 38 31 22 13

Globally Bangladeshi pharmaceuticals companies were doing a much better business in 2010. Top ten companies have almost reached their expected sales target. According to a June 2010 Business Monitor International (BMI) report, Bangladesh had a domestic pharma market worth

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Export Prospect of Pharmaceuticals Sector in Bangladesh

Tk. 7,000 crore in 2010 and export worth $40.69 million; expert says it could be reached domestic worth Tk. 1000 crore export worth $45 million in 2011 and domestic worth Tk.1200 export worth $48 million in 2012. Top ten Bangladeshi pharmaceuticals companies total overseas sales in 2010 given below
Export Sales (2010) $ Mn. 63.57 54.87 48.17 36.20 29.70 Export Sales (2010) $ Mn. 22.10 14.53 13.30 10.70 08.36

Top Ten Company Square Incepta Beximco Acme Opsonin

Top Ten Company Eskayef Renata ACI Aristo pharma Drug International

Barriers
1. High cost of registration for their export items and restriction on transfer of funds for promotional activities. 2. The fixed mark-up system of pricing helped keep the prices of pharmaceutical products low; this made it difficult to cover costs of marketing and distribution. 3. In order to export a drug to a regulated market and to some moderately regulated market, it is mandatory to provide bioequivalence data. At present there is no bioequivalence laboratories exist in Bangladesh and we have to conduct this experiment abroad at a high price. 4. Weaknesses in government policy on pharmaceuticals. 5. Bangladesh is also being deprived of the technology transfer where the major strength of the multinationals lie. 6. Pharmacies are not adequately supervised to ensure the quality of drugs sold there. Sometimes pharmacies are not supervised at all by the DDA because of the inadequate strength of the drug administration.

Opportunities
APIs (Active Pharmaceutical Ingredients): There are massive Scope in the overseas markets. There is no strict registration requirement and promotional costs are also low for API. If we maintain cost effectively in this particular matter; it will be a huge opportunity for us for exporting our raw materials in foreign markets. Bulk drugs: Bangladesh Pharmaceutical Society is planning to set-up a Reference Laboratory for appeal, biopharmaceuticals and pharmaco kinetic analysis and research. They are also seeking foreign participation in developing this laboratory. Opportunities have been created in Bangladesh for bioequivalence study, validation report, clinical trials and manufacturing plant

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Export Prospect of Pharmaceuticals Sector in Bangladesh

audit mechanism. These sub-sectors would need more investment in future. The industry created opportunities for foreign direct investment. Some of the pharmaceutical manufacturers of Bangladesh have made multimillion-dollar investments on new plant and facilities conforming to USFDA and UK-MHRA Standards. They have sufficient production capacity for contract (Toll) manufacturing including an abundant and cheap labour force.

Support needs to buster export

1. 2. 3. 4. 5. 6. 7. 8. Removal of export barriers. Strengthening of drug administration. Development of independent drug testing laboratory DTL. Development of clinical testing / Bioequivalence centers. Establish API Industry Park. Introduce CGMP (Current Good Manufacturing Practice) training. Dedicated pharma zone ( Temperature control area) at sea / Airports Suggested changes in patent law to make use of TRIPS Agreement.

Conclusion
Amongst the LDCs countries Bangladesh is doing much better business in pharmaceuticals sector. Every year its total export amount is increasing marginally. So far we seen that its export value has reached $41million but compare to India we are way behind them. According to BMIs Pharmaceutical & Healthcare Business Environment Ratings our position is 40 out 100 and still we couldnt reach the regional avg. which is 53.1. Most importantly our exemption period of patent protection is until 2016 which is close to expiration. So it is high time to think about after 2016. Therefore step should be taken to move forward and make long term plan so that we can sustain in global market.

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Export Prospect of Pharmaceuticals Sector in Bangladesh

References
Hassan, Nazmul MP (2010) Pharmaceutical Export: Past and Present Journal of Bangladesh Association of Pharmaceutical Industries, November 2010. Muktadir, Abdul, Barriers to pharma export Editorial Of The Financial Express, VOL 18 NO -155
REGD NO DA 1589 , Dhaka, Wednesday April 13 2011.

Yusuf, Mohammad (2006) WTO TRIPS AND BANGLADESH PHARMACEUTICAL INDUSTRY:

STATUS, PROSPECTS AND CHALLENGES AIUB Journal of Business and Economics, Volume 5, Number 2, ISSN 1683-8742, August 2006: pp. 23 40.

Qaiser, Beenish, Pharma sector forcing off the pace Bangladesh Economic News and The Independent, 24 November 2010, http://www.theindependentbd.com/business/others/20318pharma-sector-forcing-off-the-pace.html www.acmeglobal.com/laboratories.htm www.beximco-pharma.com www.inceptapharma.com www.opsonin.com www.renata.com www.square-bd.com/pharma.html www.aristopharma.com http://medibd.blogspot.com/2011/07/top-pharmaceutical-company-of.html

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