Pharmaceuticals, a good bet for Bangladesh

The global pharmaceuticals industry – responsible for the research, development, production, and distribution of medications – grew significantly over the past two decades, with worldwide revenue totaling $1.27 trillion in 2020.

To say that Bangladesh’s pharma industry can be a lucrative one is an understatement, as the country has the potential to earn as much as $5 billion in the next five years if it manages to take even a small bite out of this global market.

However, to make our dream of bringing in billions through pharmaceutical exports a reality, first we need to build a stronger backward linkage industry, and invest more in human resources, research and innovation. A report published by this daily on Sunday reveals that Bangladesh’s pharma industry earned $189 million from exports in FY22, but the global export revenue from this sector was much higher – hitting $825 billion.

Capturing a five per cent stake in this market can net Bangladesh around $41 billion, making the local pharma industry second only to the RMG industry in terms of export earnings.

Needless to say, achieving such a robust figure is no easy feat by any means. Bangladesh produces about 15 per cent of the active pharmaceutical ingredients (APIs) locally, but value addition is the most pressing issue in the pharma sector. To get onto a level similar to the readymade garment sector, the local pharma industry should get similar facilities as well. In this regard, there is no alternative to more policy support from the government.

Bangladesh’s pharma exports witnessed a boom during the last decade with a 215 per cent growth from $60 million in FY13 to $189 million in FY22. Bangladesh ranked 67th in the global pharma export market of $825.65 billion in 2021, with $160 million in exports that year. The local pharmaceutical sector meets 98 per cent of our domestic demand. The country imported APIs worth $1.05 billion in FY21, and a stronger backward linkage in API production can help boost our export competitiveness.

Bangladesh will achieve LDC graduation in 2026, but the country will have to face a lot of challenges if it fails to graduate in a sustainable manner. We should take advantage of a compulsory licensing provision of the TRIPS Agreement by bringing in required changes in the patent laws and drug policies. Bangladesh will get the TRIPS facility until 2033.

A Bolar provision allows interested (generic) manufacturers to start producing test-batches of a product before the expiry of the patent, to collect necessary data for submission to regulatory authorities. Bangladesh’s pharmaceutical companies can utilise this provision even after the TRIPS flexibilities expire, which will be very helpful for the local industry to compete at a global level.

Contract manufacturing, also known as toll processing, has excellent potential in the Bangladesh context. It saves a client company from undertaking significant capital investment, since the local contract manufacturer already has the plant and equipment to make a product.

The global contract manufacturing market stood at $79.2 billion in 2019, rising at an average annual rate of 7.5 per cent.

Following LDC graduation, our pharmaceutical sector might be affected by the loss of IP (intellectual property) waiver, resulting in decline of generic and patented drugs production and export share.

The government must introduce appropriate policies and initiatives to overcome such challenges. Regular consultation with different stakeholders can play a vital role in identifying and rising above such hurdles.

According to Statista, many of the leading pharma companies come from the United States, and, therefore, it is no surprise that the country has the largest national pharmaceutical market worldwide.

China has become one of the main players in the industry, and annual growth rates of the emerging pharma market have been strong in recent years. However, projected pharmaceutical sales show that the established markets of North America and Europe will still be leading the way in 2024. Some of the biggest European companies are Novartis, Roche, GlaxoSmithKline, and Sanofi.

To even think about competing with the global pharmaceutical giants, the local industry will need all the support it can get from the government. It is high time we work towards diversifying our export basket as much as possible.