Since our independence in 1971, the pharmaceutical industry has flourished alongside the RMG sector. By registering yearly average growth of 8.3% between 2014-2018 and with the growing production of pharmaceutical products, this sector has succeeded in fulfilling close to 97% of the country's local demands.
Bangladesh is not only one of the 47 LDC countries that have achieved self-sufficiency in the medicine sector, but it also exports medicines to other countries around the world. Being the country's largest white-collar employer, the pharmaceutical sector's market valuation grew to $3 billion in 2019. However, it is expected to be worth around $6 billion by the year 2025. [According to the 2019 report of Research and Markets, a Dublin-based Research organization].
There are certainly some reasons behind the upward trend of the local and export market of the Bangladeshi pharma industry that has been reflected in the given figures. The average 6% increase in the Gross National Income in the last 10 years, rapid urbanization (36.863% of the whole population of 2018), increase in life expectancy, increase in 'out of pocket' expenditures are some of the reasons behind increasing local demands for medicines in Bangladesh.
Any drugs whose patent has expired can be produced by another company without any formality or memorandum whereas, the trips weaver allows the LDCs to produce the generic version of these patented drugs and enables them to export those drugs to those countries where the patented drugs are not available.
However, the ability to produce generic drugs at a low cost may be the sole reason behind the success of exporting medicines to other countries and it may also be the main factor that has helped Bangladesh to successfully use the advantage of the trips weaver enabling the pharmaceutical industry to flourish.
It is firmly believed that the national drug policy that was adopted in 1982 limited the operation of the foreign companies and also opened a new opportunity for the local companies which they utilised fully that resulted in the growth of a tremendous generic drug market.
Bangladesh exports its pharmaceutical products to more than 120 countries all around the world among which 31 are LDC countries [According to the Reports of the Export Promotion Bureau data]. However, the top-5export destinations of Bangladesh medicines constitute 51.6% of the total exports.
Since the economies of export destination countries are expanding and there is also an upward trend of the demand for low-cost medicines in those countries, the export opportunity for Bangladesh has risen.
According to the United Nation's CDP policy review of the August 2020 edition, Daniel Gay and Kevin Gallagher predicts Myanmar's Market to be worth around USD 1 billion by the year 2023. It is also expected that by 2024 nearly USD 251 billion patented drugs will be going off patent.
Again, we have to keep in mind that not only is the demand for cheap drugs increasing in our export destinations but the demand for cheap medicines is also increasing in other regions. According to the prediction of IQVIA, a USA based research firm, between 2018-2022 the Compound Annual Growth Rate (CAGR) of the 'pharmerging markets' (developing countries where the use of pharmaceuticals are increasing) will be around 6-9 %.
Though Bangladesh being an LDC country enjoys the trips weaver until the LDC graduation in 2024, it is also planning to seek an extension of five years (2021-2026) to the preparatory period of LDC graduation.
If this extension period is granted, hopefully Bangladesh will have enough time to cope with the new normal of the Covid-19 pandemic and at the same time it will also allow the pharmaceutical industry to keep itself ahead of tough competitors like India and China in the field of generic drug production.
Recently the plots under the project of API (Active Pharmaceutical Ingredient) park at Gauzaria, Munshiganj has been handed to the local drug makers and its work is at the final stage. Although initially this project was to be completed within five years (project announced in 2008) it took a long time to take shape.
However, according to the reports of BAPI (Bangladesh Association of Pharmaceutical Industry), the installation of the API park will not only help to save the import cost up to 70% but will also help to raise API export income from USD 1.5 million in 2016 to USD 90 million in 2032. Again, the tax exemption on local API manufacturers until 2025 and other policies like the obligation of the firms to spend 1% of its annual turnover on research and development will help the local manufacturers to compete with the global players as the local manufacturers will likely enjoy 'the cost advantage'.
However, the successful implantation of reverse engineering along with the low cost of labor has also attracted foreign investors which has led to collaboration among many MNCs (Multi-National Corporation) and local pharmaceutical companies. All of these have played a great role in helping the nation achieve self-sufficiency in this sector.
Now, the government needs to think about infrastructural development in this sector which will help us to get increasing FDI (foreign direct investments). At the same time, authorities have to keep the focus on implementing and monitoring the approved policies to stop any delay in the undertaken projects.
Implementing and monitoring effective policies will not only help Bangladesh to be a global player in the pharmaceutical sector but will also help us attain an enviable position in the global market which will in turn lead us to attain the SDG-3 goal (Good Health & Well Being) by the year 2030.
Dr Mohammad Abdul Hannan Pradhan, Professor, Department of Economics, Sust. Email: email@example.com
Sayed Arafat Zubayer, Undergraduate Student, Department of Economics, Sust. Email: Arafat.firstname.lastname@example.org
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.