BRAC BUSINESS SCHOOL

BRAC UNIVERSITY

TERM PAPER ON

Environmental Analysis of the

Pharmaceuticals Industry of Bangladesh

Submitted to:

Professor Rahim B. Talukdar

Adviser (with Dean's status),
BRAC Business School,
BRAC University

Submitted by:
Section - 04
Tasin Islam (16104064)
Prithul Nath (16304016)
Imteaz M Durjoy (16304175)

Date of Submission: November 27, 2017

LETTER OF TRANSMITTAL

November 27, 2017

Professor Rahim B. Talukdar

Adviser (with Dean's status),

BRAC Business School,

BRAC University.

Subject: Term Paper on Environmental Analysis of the Pharmaceuticals Industry of Bangladesh

Dear Sir,

In compliance with the requirements of the Business Environment course (BUS203), we are
pleased to submit the following report on ‘Environmental Analysis of the Pharmaceuticals Industry
of Bangladesh’ that you had assigned to us. Preparing this term paper has been an important
experience for us, as we have gained practical knowledge of how the real-world corporate
companies and their relevant sectors can be impacted by various external and internal forces.
Clearly, the guidelines provided by you during the class lectures together have helped us in
completing this term paper.

Please note that this report has been prepared under your supervision. No part of this report
will be shared or republished without your authorization.

Sincerely yours,

Section - 04

Tasin Islam (16104064)

Prithul Nath (16304016)

Imteaz M Durjoy (16304175)

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ACKNOWLEDGEMENT

We would like to offer our deepest gratitude to our honourable teacher Professor Rahim B.
Talukdar for giving us such a good topic to work on for our final report. His highly effective and
interesting teaching method has made it easier for us to have a sound and comprehensive idea of
the respective course materials throughout the whole semester. His constant guidance and
willingness to share his vast knowledge have given us a clearer understanding of what we needed
to do to complete the assigned tasks. Honestly, we could not have imagined a better instructor for
this course.

We would also like to thank our family members; especially our parents for providing us with
everything that we needed to come this far in our life.

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CONTENTS
Letter Of Transmittal…….…………………………………….……………………………………………..……………..…i
Acknowledgment……………………………………………………………………………..……………………..……......……………………………….ii

1 Executive Summary ................................................................................................................................................................ 1

2 Introduction ............................................................................................................................................................................. 2
2.1 Methology Of The Study ............................................................................................................................................... 2
2.2 Limitations .................................................................................................................................................................... 3
2.3 Objectives Of The Study ............................................................................................................................................... 3
3 Pharmaceutical Sector Overview ............................................................................................................................................ 4
4 The External Environment: General Environment .................................................................................................................. 5
4.1 Economic Factor............................................................................................................................................................ 5
4.2 Sociocultural.................................................................................................................................................................. 6
4.3 Global ............................................................................................................................................................................ 7
4.4 Technological ................................................................................................................................................................ 7
4.5 Political/legal ................................................................................................................................................................. 8
4.6 Demographic ................................................................................................................................................................. 9
5 Internal Analysis (porter’s five forces model) ....................................................................................................................... 11
5.1 Bargaining Power of Customer ................................................................................................................................... 11
5.2 Bargaining Power of Supplier ..................................................................................................................................... 11
5.3 Rivalry among Competitors......................................................................................................................................... 11
5.4 Threat of Substitute Products ...................................................................................................................................... 11
5.5 Threat of New Entrants ............................................................................................................................................... 11
6 Competitive Analysis ............................................................................................................................................................ 12
6.1 Future objectives of competitor ................................................................................................................................... 12
6.2 Current strategy of competitor ..................................................................................................................................... 12
6.3 Competitor’s beliefs about the industry and capabilities ............................................................................................. 12
6.4 Response to competitor ............................................................................................................................................... 13
7 SWOT Analysis .................................................................................................................................................................... 13
7.1 Strength ....................................................................................................................................................................... 13
7.2 Weakness ..................................................................................................................................................................... 14
7.3 Opportunity ................................................................................................................................................................. 15
7.4 Threat .......................................................................................................................................................................... 16
9 Reference .............................................................................................................................................................................. 18
1 EXECUTIVE SUMMARY

The study is focused towards the environmental analysis of different barriers and prospects of
pharmaceutical industries in Bangladesh. Pharmaceutical industry is one of the most promising
sectors in Bangladesh. After the promulgation of local industry friendly Drug (Control) Ordinance
in 1982 the scenario of pharmaceutical industries changed considerably. Now, after fulfilling the
local demand Bangladesh is exporting pharmaceutical products to over 100 countries of the world.
There are still lots of space for Bangladesh to flourish in this sector.
In this study, we have looked at both internal and external environmental factors to analyze the
overall state of the Pharmaceutical industry of Bangladesh. We have also used analysis models
SWOT and Porter’s to get the best possible hypothesis regarding this industry,

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2 INTRODUCTION
The pharmaceutical sector is one of the trusty sectors in Bangladesh. Before Liberation War, there
was hardly any pharmaceutical enterprise in Bangladesh (then East Pakistan). After several years
of liberation, the government could not increase (in relative terms) budgetary allocations for the
improvement of health sector. At that time, most of the people had little access to the essential
lifesaving medicines. This sector started to improve from 1980s. The pharmaceutical industry has
grown in the last two decades at a considerable rate. After the promulgation of Drug Control
Ordinance-1982, the development of pharmaceuticals industry has accelerated. The skills and
knowledge of the professionals and innovative ideas of the people involved in this industry are the
key factors for these developments. Due to recent development of this sector, the country is
exporting medicines to global market including European countries and on the top of it; the
industry has been supplying about 95 per cent of the domestic demand for medicines. There are
three drug-manufacturing units under control of the Government of Bangladesh. Two of them are
in Dhaka and another one is in Bogra. The name of these units is Essential Drug Company Ltd.
(EDCL), which is operating as a public limited company under the Ministry of Health, Family
Welfare In 2000, there were 261 Unani, 161 Ayurvedic, 76 Homeopathic, and Bio-chemic licensed
manufacturing units in Bangladesh. The total worth of their medicines was Tk 1.2 billion in 2000.

2.1 METHOLOGY OF THE STUDY

This article is mainly based on secondary data collected from several reliable sources. For
secondary data collection, Pharmaceutical Industries annual reports, exiting files and documents,
manuals and publications were collected and analyzed. An intensive study on the relevant field
was conducted through browsing internet.

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2.2 LIMITATIONS

It was not possible to study all the relevant literatures.

 Limited timeframe was the major constraint to carry out the research smoothly.
 Insufficient previous research works in this field is one of the major limitations of the study.

2.3 OBJECTIVES OF THE STUDY

The study is aimed to fulfill the following specific objectives-

 To key out the major factors of impact for the Pharmaceutical Industry of Bangladesh.
 To critically analyze the SWOT analysis of the Pharmaceutical Industry of Bangladesh.

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3 PHARMACEUTICAL SECTOR OVERVIEW
Pharmaceutical Industry is rising at a very amaging
rate and contributing to the national economy. The
Current industry size with prospective global
standards & can emerge as major revenue
generating sector of the country. Bangladesh is
self-sufficient in meeting local pharmaceutical
product demand and Bangladesh earned $82.11 mn
by exporting pharmaceutical product. This is a
great sign of improvement.

Bangladesh domestic market of Pharmaceutical

products is increasing over the past few years and
currently the market stood at BDT 142 billion. The demand for good-quality medicine increasing
and it is expecting that local market will reach BDT 160 billion by 2018. (Pharmaceutical Sector
Overview, EBL securities LDT.).

Bangladeshi pharmaceutical companies provide generic product and able to charge premium for
its products. Top 10 companies hold approximately 70% market share. It is highly complicated to
enter into this industry because of huge investment requirement. Square Pharmaceutical is the
market leader having 21.15% market share followed Incepta, Beximco, Opsonin and Renata.
(Pharmaceutical Sector Overview, EBL securities LDT.).

Bangladeshi pharmaceutical companies exports is increasing over the time and according to some
reports, current export of pharmaceutical product is $ 82.11 mn which is 13.04% higher than
previous period. Bangladesh export pharmaceutical products to 105 countries. Myanmar imports
the highest quantity of medicines worth $13.60 million followed by Sri Lanka with $13.38 million,
the Philippines with $6.10 million, Vietnam $5.32 million, Kenya $4.60 million, Afghanistan
$4.18 million and Slovenia $3.38 million. Bangladesh pharmaceutical export will cross $ 1 billion
landmark within 2018. (Pharmaceutical Sector Overview, EBL securities LDT.).

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4 THE EXTERNAL ENVIRONMENT: GENERAL ENVIRONMENT

4.1 ECONOMIC FACTOR

The economic factor in the country affects the development of pharmaceuticals industry.
Pharmaceutical industry of Bangladesh is growing fast and the country’s economic condition is
contributing more on this. Inflation rate of Bangladesh currently is 5.57%, which results interest
rate 6.5% (Bangladesh Bank). If the inflation rate increases more than that, the value of money
will decrease. It means that the value of money is decreasing and people will have to spend more
on medicine, which is difficult for people. If the money losses its power then industry growth will
be decrease because firm interest rate also increase. Economic conditions also affect the countries
expenditure pattern. If there is economic, crisis in the country or crisis in the world, people will
try to spend less in their healthcare. Then the government will try to regulate the price and
pharmaceutical companies will lose their premium income. If the crisis is global than the countries
net export will decrease which will be a great barrier to reach the export goal of Bangladesh.

As the total expenditure per person decreases, the people tend to consume cheaper foods, which
cause health problems. Even so, they are reluctant to take expensive medicine which is why the
health condition and the average lifespan of the people are decreasing rapidly, on the other hand,
due to global economic unrest, the price of the raw materials required to make the medicine is
getting higher causing the medicine to be expensive than before.

The impact of interest rates and exchange rates on this sector: An interest rate is the rate at
which interest is paid by a borrower for the use of money that they borrow from a lender. Persistent
loan defaults have become an order of the day in developing countries. There have been hardly
any bank or development financial institutions (DFI) in developing which has not experienced
persistent loan default. This is evidenced by the under capitalization and illiquidity of 160 DFIs in
33 developing countries. Bangladesh Bank governor Atiur Rahman has asked the commercial
banks to reduce their interest rates to accelerate industrialization, alleged that many banks were
imposing 14%-15% interest on industrial loan after the withdrawal of the ceiling, and that some
service charges are being realized at much higher rates

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Inflation rate: Inflation is a sustained increase in the average price of all goods and services
produced in an economy. Money loses purchasing power during inflationary periods since each
unit of currency buys progressively fewer goods.

Bangladesh has had an inflation of 5.9% during the last fiscal year (2015-2016). Price Inflation
greatly effects time value of money (TVM). It is a major component of interest rates, which are at
the heart of all TVM calculations.

Actual or anticipated changes in the inflation rate cause corresponding changes in interest rates.
Lenders know that inflation will erode the value of their money over the term of the loan so they
increase the interest rate to compensate for that loss.

In simpler words, inflation rate directly affects the interest rate. A practical example shows that
currently in Bangladesh the interest on deposit has decreased to 7% on average and a highest
interest rate of 14% on loan. This environment is very unfriendly for the growth of pharmaceutical
industries

4.2 SOCIOCULTURAL
The sociocultural factor is very important in the context of Bangladesh. The most of the
Bangladeshi population is young and their immune system is much better than the older
population, which is influencing the growth of pharmaceutical industry. We have social and
cultural factors like poverty, malnutrition that are an alarming rate right now. Therefore, the
pharmaceutical industries need to have a great concern to address the new trend of problems.
Pharmaceutical industry can do a great deal of work in the healthcare. Pharmaceutical industry can
reduce the unemployment rate specially the women in Bangladesh. Education is shaping the
pharmaceutical industry by providing quality employees. As the people of this country getting
health conscious, it will pressure the pharmaceutical companies to provide quality product and
invest in research and development.

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4.3 GLOBAL
Pharmaceutical industry is always influenced by global competition. Countries with better global
reach have advantage to succeed in the business. Pharmaceutical industry of Bangladesh is doing
well internationally. Bangladesh exported pharmaceutical products to 105 countries. Myanmar
imports the highest quantity of medicines worth $13.60 million followed by Sri Lanka with $13.38
million, the Philippines with $6.10 million. Bangladesh set a target to explore 30 new destinations
and grab larger market share. Bangladesh pharmaceutical export will cross $ 1 billion landmark
within 2018 (Pharmaceutical Sector Overview, EBL securities LDT.). International law changes
the pharmaceutical industry. For example, Bangladesh will enjoy patent free production until 2032.
Hence, we do not need to spend our money and it will reduce production cost. What Bangladesh
needs is that maintain the growth. To maintain the expected growth rate pharmaceutical companies
needs to improve the quality of their product. To improve their quality companies needs to invest
in research and development to compete globally. Bangladesh has tariff free export advantage in
some and industry needs to capitalize the advantage.

4.4 TECHNOLOGICAL
Technological factor have always influenced the pharmaceutical industry. Pharmaceutical
technologies changes frequently so it is important to use up to date technologies. In pharmaceutical
industry new technologies or new information creates new opportunities for companies. New
technologies change the way companies communicate with their customer. The use of new
technology in the preparation of the drug is becoming most important and carries out different
development work that help the industry for improvement of medicines Customers

The access to technology, research funding and its impact on this sector: The pharmaceutical
industry in Bangladesh may be the largest in the least-developed countries, but it does not have
the research capacity to invent new pharmaceutical products, nor does it have the imitative capacity
to reverse engineer patented drugs in order to develop competing generic products. Instead, the
principal activity of the domestic industry is the final production of generic products using
imported generic active ingredients. These products are sold primarily to the domestic market.
Under TRIPS (Agreement On Trade-related Aspects of Intellectual Property Right) rules, the
supply of generic active ingredients may be cut off because of TRIPS requirement that the
developing countries in which most of the generic producers reside grant full patent protection by

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January 1, 2019. Bangladesh does not currently permit the patenting of pharmaceutical products.
Patents on drugs would essentially preclude the production of generic competing products in
Bangladesh. By 2019, Bangladesh must meet the challenge of developing a patent law which best
reflects its interests while complying with the mandates of the TRIPS Agreement.

Bangladesh also lacks behind in terms of capital investment in to state of the art technology in
terms of tools, equipments, and machineries. Already established firms are reluctant to invest in
newer technology because of their high cost, and because many such equipments will require
expansion of facilities or changes in structure that the firms deem too costly to pursue. Some older
establishments are also prevented from going in to automation, due to their agreements with trade
unions, which prevents them from firing the workers who will become redundant once the
machines arrive. Hence, it can be concluded the access to technology is low for most firms due to
their lack of resources.

4.5 POLITICAL/LEGAL
Government always tries to control the manufacturing of medicines and drugs to protect people
from illegal activities. Government tax rate affects the pharmaceutical industry. For example if the
government increase the tax on raw material then pharmaceutical companies will have to charge
more money from the customer. This will create dissatisfaction in the customers. If the government
put restriction on foreign medicine than local pharmaceuticals can grow. Government can fixed
the retail price of all medicine in the pharmaceutical industry. If will affect the profitability of the
company. For example if the government set the maximum retail for medicine then the company
will earn less. Most of the companies are publicly listed so the company will not able to give
dividend to their stockholder and invest in research and development. Ultimately fall of production
quality. Therefore, the political and legal environment plays essential role in shaping
pharmaceutical industry.

The Labor Law of Bangladesh and its effects: The labor law of Bangladesh is an update of the
law created during the colonial period. The labor law amendment bill was last passed on June 28,
2010. The main objective of the bill was to remove inconsistency from the retirement age of
laborers working in the corporations under different ministries. The retirement age was reinstated
to 60, which were reduced by three years last time. Other changes include the increase of wage in
the labor law but it is only effective for the RMG (Ready-Made Garments) sector. The laws were

8
adopted for enforcement of law in the field of employment and particularly relating to wages,
benefits, compensation for injuries and weekly holidays, working hours, maternity benefit for
women workers, legal provision made for trade union activities, workers participation fund,
fixation of minimum wages in informal sectors and the like. Laws were set for ensuring social
justice, equitable distribution of profits and safeguard against health and safety problems. Beyond
local conditions, laws were also to meet obligations under international norms and conditions
adopted by International Labor Organization [ILO] and other United Nations [UN] agencies.
Respondents from all firms agree that the labor laws of Bangladesh are supportive of business and
industry as well as the economy as a whole. As a member of the ILO, it is very serious and
respectful to the ILO’s decent work environment guidelines although the minimum wage of the
RMG sector is clearly mentioned, but the pharmaceutical sector is still not addressed properly. A
minimum wage is the lowest hourly, daily or monthly remuneration that employers

4.6 DEMOGRAPHIC
Bangladeshi pharmaceutical companies produce all kinds of drugs. Some manufacturers are
producing world class quality drugs. Others are trying to reach their target. Peoples demand for
drugs is increasing and quality improving. Pharmaceutical industry is influenced by Demographic
factors like population size, age structure, geographic distribution, ethnic mix, income distribution.
For example if the population is very old or very young the pharmaceutical industry will shape
differently. Bangladesh has different kind of people and people are working in the same factory
that changes the work environment and production quality.

Population trends in Bangladesh, which can be traced from the beginning of this century due to
the availability of population censuses conducted by the British, show that at present, Bangladesh
is well into the third phase of demographic transition, having shifted from a high mortality-high
fertility regime to a low mortality-low fertility one.

Recently, stagnating fertility levels have very succinctly brought to light several challenges facing
population policy in particular, but that have considerable human and development consequences
as well. A direct consequence of demographic transition is the effect on the age composition of
the population. The base of the population pyramid has begun to shrink because of the rapid decline
in the birth rate, which is welcome, while the proportion of persons above age 60 is on the rise and
the mean age is increasing with the gradual increase in life expectancy. Even though there is

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decrease in fertility rate, the proportion of women in the childbearing age’s remains large who
desire small families, but because the number of women in this bracket is large, the population of
Bangladesh is predicted to grow steadily for the next two decades

Even in education, there is tremendous progress faced with the challenge of reaching large, poor,
and inaccessible rural populations, Bangladesh has made remarkable progress in increasing access
to primary school and closing the attendance gap during the 1990s. In 1985, the primary net
enrollment rate was 56%; it had increased to 97% by 2012. Bangladesh achieved these
significantly improvements in the net attendance rates by targeting programs to children in rural
areas, and in particular, girls: Over the same time, the female net enrollment rate rose from 47%
to 95%.

All these are favorable for the pharmaceutical sector. A growing population signifies a growing
need for medicines. The desire to keep families small spells out high demand for contraceptive
methods, such as pills, injections etc. Improvements or rather increase in education will decrease
the dependency of the less educated rural population on alternative sources of medicines such as
faith healing, which will also lead to increased sales of medicines.

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5 INTERNAL ANALYSIS (PORTER’S FIVE FORCES MODEL)

5.1 Bargaining Power of Customer

Bargaining power of customer for pharmaceuticals industry is low in Bangladesh, as customers do
not have any choice but to buy what their doctor prescribe for them. Most of the retailer are
scattered and they buy drugs from those producers who are being loyal to them. NPPA (National
Pharmaceuticals Pricing Authority) tries to control the price of all drugs but they cannot do it in
that much effective way as the market is very competitive.

5.2 BARGAINING POWER OF SUPPLIER

Bargaining power of supplier is low for our pharmaceuticals industry. Pharmaceuticals industry is
fully depend on organic chemicals and chemical industry is very competitive in Bangladesh. So
any producer can shift any time to another supplier to collect their required chemicals.

5.3 RIVALRY AMONG COMPETITORS

Rivalry among competitors is very intense and the number of firms in the industry is very high
compared to other industries in Bangladesh. Most of the firms are same in case of their firm size.
Some firms use differentiation strategy to modify their product with general competitors’ product
and some use cost leadership strategy to reach with their product in mass population.

5.4 THREAT OF SUBSTITUTE PRODUCTS

Threat of substitute products is very low for the industry, as nothing can be a substitute for
medicines. Biotechnology firms can be a threat for pharmaceuticals industry but most of the
pharmaceuticals producers are collaborating their business with biotechnology firms. This creates
the industry to have almost zero threat of substitute products.

5.5 THREAT OF NEW ENTRANTS

Threat of new entrants is very high as anyone can invest in this business with very least amount of
capital compared to other production related businesses. Creating a strong distribution network is
very easy if the producer knows his regional customers or retailer very well.

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6 COMPETITIVE ANALYSIS

Competitive analysis focuses on predicting the dynamics of competitors’ actions, responses and
intentions. Pharmaceutical industry of Bangladesh the market is captured by some major
pharmaceutical companies. In Bangladesh top ten companies hold approximately 70% of the total
market share. So the market is controlled by few companies only and that is why the entry barrier
is higher. To enter into the pharmaceutical industry firm needs large amount of capital investment
and expertise. According to report by EBL Security LDT Square Pharmaceutical is the market
leader having 18.8% market share and others are Incepta, Beximco, Opsonin and Renata. We will
focus on the future objective of the competitor in the industry and how to response to competitor.

6.1 FUTURE OBJECTIVES OF COMPETITOR

The major pharmaceuticals companies have a great advantage in the industry. They have a huge
variety of product portfolio and they are expending their product range. By increasing the product
range of product they are trying to maintain their market position. The major pharmaceutical firms
like Incepta, Beximco, Opsonin knows that there is a huge market possibility in the internationally.
So they are trying to expend their reach and go globally. It will help them to invest more in quality
product.

6.2 CURRENT STRATEGY OF COMPETITOR

The current market strategy of competitor is to maintain their market share. To maintain their
market share firms focusing on sales promotion in the market. The pharmaceuticals companies
know that if they don’t promote their product or firm they cannot stay in current position.

6.3 COMPETITOR’S BELIEFS ABOUT THE INDUSTRY AND CAPABILITIES

Competitor beliefs vary from competitor to competitor. For example Square Pharmaceutical ltd is
the market leader in the pharmaceutical industry. They will try to maintain their status que by
producing premium quality medicine. On the other hand incepta will try to increase their
production capacity to reach the market leader. We believe that pharmaceutical industry has a great
future in Bangladesh. So investment in pharmaceutical industry will not go in vain.

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6.4 RESPONSE TO COMPETITOR
By analyzing the competitor it seems that pharmaceutical industry has a great prospect. To grab
the opportunity firm needs to be quality conscious and invest in hi tech machines. It needs huge
amount of money. However, enough money is available then firm the advantage.

7 SWOT ANALYSIS
SWOT analysis analyzes four factors of an industry: Strength, Weakness, Opportunity and Threat.
The first two factors are internal and last two factors are external factor for an industry. Here, we
did this SWOT analysis on the pharmaceuticals industry in Bangladesh.

7.1 Strength
1. Bangladesh pharmaceutical producers are one of the lowest cost producers of drugs in the
world. Bangladesh manufactures can produce drugs at 40% to 50% lower cost than any
other pharmaceutical industry in the world.
2. Most of the companies have their own premises and large factory base where they can
produce a huge number of drugs at one single production.
3. Some of the companies have a good reputation in the domestic and global market like
Square pharmaceuticals Ltd., Beximco Pharmaceuticals Ltd. etc. there are basically the
well-known brand in the market.
4. Bangladesh pharmaceutical industry possesses excellent chemistry, skilled workforce and
process reengineering skills. This creates competitive advantages for the industry and helps
them to develop process, which is cost effective.
5. Most of the pharmaceutical companies follow the relationship selling method. At first the
companies’ representatives make a good relationship with doctor and then try to convince
them for prescribing their medicines by giving the trial facility first.
6. Our pharmaceutical industry has the loyalty of customers and vendors which is a big plus
point for the industry.
7. This industry has some competitive advantages over other industries in the country. Most
of the companies have strong manufacturing capacities all over the country.

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 8. All companies have quality control system where the employees are committed to
formulate and supply drugs in a qualified manner.
9. Some companies have got the license of global brand. Such as Healthcare Pharmaceuticals
company manufacture the brands of the Hoffman-La Roche Limited.
10. Latest technologies are installed most of the companies in Bangladesh. Some companies
have got the technical guidance from the globally reputed pharmaceuticals company.
11. Beximco Pharmaceuticals Company has introduced the Metered Dose Inhalation Aerosols
for the first time in Bangladesh by setting up a MDI plant. They design their MDI plant in
such a way through which they can ensure highest possible quality of drugs.
12. To ensure all the quality, a highly dedicated academically sound and professionally
competent team is using most modern and sophisticated equipment to serve best quality to
customers.
13. Some of the company dominates the pharmaceuticals market in Bangladesh. 65% of the
drugs used in Bangladesh are produced in Bangladesh and the other 35% of drugs are
imported from form countries.
14. Our companies have strong distribution system all over in Bangladesh. Most of them have
their own depots through which they distribute their products all over the 64 districts in
Bangladesh.
15. Some companies have strong research and development department. For example Beximco
pharma employs a significant part of its resources in R and D department.
16. Some of the company export medicines in many countries of the world. Some of those are
Bhutan, Germany, Iran, Malaysia, Myanmar, Nepal, Pakistan, Russia, Singapore, Thailand
etc.

7.2 Weakness
1. The pharmaceutical industries are marred by the price regulation. This regulation has
reduced the pricing ability of companies. The DGDA (Directorate General of Drug
Administration) is the authority to decide the various pricing parameters, sets prices of
different drugs, which leads to lower profitability for the companies. The companies, which

14
 are lowest cost producers, are at advantages while those who cannot produce have either
to stop production or bear losses.
2. Bangladesh pharmaceutical sector are marred by lack of product patent, which prevents
global pharmaceutical companies to introduce new drugs in the country. This discourages
our innovation and drug discovery.
3. Bangladesh pharmaceuticals market is one of the least penetrated markets in the world. As
a result, most of the companies are relying on export for growth.
4. Some of the pharmaceuticals companies are in low financial position. Due to this low
financial position, they are not able to install latest technology in their premises.
5. Some companies have unskilled workforce. As a result these companies cannot minimize
their cost of production.
6. Due to low barriers to entry, Indian pharmaceuticals industry is highly fragmented with
about 250 large manufacturing units and about 18000 small spread across the country. This
makes our industry vulnerable.
7. Most of the companies do not up to date their machineries. So it is difficult for them to
maintain high quality with traditional machineries in production.
8. Some of the companies have rented premises. This increases the cost of production and
also selling price of drugs.
9. Innovative effectiveness is low in our country, due to lack of sophisticated equipment, lack
of capital and lack of skilled manpower.
10. Sometimes per unit cost of the medicines are higher than the buying price of imported
medicines. These creates unbalance situation in domestic market.
11. Most of the time, the industries have to depend on foreign experts, technology and raw
materials. Also due to the lack of proper guidelines and proper infrastructure facilities, the
industry faces problem in marketing the products.

7.3 OPPORTUNITY

1. Our government approves some facility for pharmaceuticals industry under which
companies can gather finance for themselves with a least cost of capital. This is increasing
our overall market expansion opportunities.

15
 2. We have many reputed company in Bangladesh and they can produce drugs at international
standard. This facility helps us to become globally reputed too.
3. Some companies have achieved huge loyalty in our local market and their market share is
growing day by day.
4. The interest of obtain degree in pharmacy is getting high day by day. This can be a good
opportunity for the companies to get skilled and well knowledge employees.
5. Our government recently gave some facility to them who wants to install advance
manufacturing base in their production premises. This helps the company to become self-
efficient in making international standard drugs.

7.4 THREAT

1. The competition in the pharmaceuticals industry is increasing day by day. For this all the
companies are facing huge competition in the market which is decreasing their market
share.
2. Rising cost of wages, salaries increases the total cost of drugs production. For this selling
price of drugs is increasing day by day.
3. Increasing interest rate decreases the opportunity for drugs companies to expand into huge
market.
4. Country like china can produce drugs with a very low cost. This situation can hamper
overall market share, reduced our differentiation capacity.
5. As the competition is huge in the market, some companies are trying the bad selling
practices or producing below standard drugs to expand their market share.
6. Depreciation of taka also creates a negative impact by increasing the price of raw materials,
companies import from abroad.

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8 RECOMMENDATION AND CONCLUSION

BANGLADESHI DRUG INDUSTRY TO MANUFACTURE DRUGS IS WELL ESTABLISHED. MANY

PHARMACEUTICAL COMPANIES TRYING THEIR BEST TO CONTRIBUTE IN THE ECONOMY. TO DO SO

THEY ARE TRYING TO UTILIZE THE CURRENT RESOURCE. BANGLADESHI PHARMACEUTICAL

INDUSTRY CAN GROW MORE IF THE GOVERNMENT LIBERALIZE THE RULE AND PROVIDE LOANS.

PHARMACEUTICAL COMPANIES NEEDS TO PRODUCE THEIR OWN RAW MATERIAL AND TO DO SO

GOVERNMENT SHOULD HELP. BANGLADESHI PHARMACEUTICAL COMPANIES NEEDS TO EXPEND
THEIR BUSINESS GLOBALLY. IT WILL HELP THIS COUNTRY TO BE A DEVELOP COUNTRY.

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9 REFERENCE

1. EBl securities ltd, Bangladesh Pharmaceutical Industry Review, October 31, 2016
2. Mohammad Nayeem Abdullah, Robaka Shamsher, A Study on the Impact of PEST
Analysis on the Pharmaceutical Sector: The Bangladesh Context, December 2011
3. Fariha Tazin, Pharmaceutical Industry of Bangladesh: Progress and Prospects, The
Millennium University Journal
4. Bhuiyan M.A.R., Maniruzzaman., Sulatana S. (2011), Analysis of Pharmaceutical Industry
of Bangladesh: (It’s challenges & critical success factors), Bangladesh Research
Publication Journal
5. BRAC EPL Stock Brokerage Ltd. (2012), An Overview of the Pharmaceutical Sector in
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