Bangladesh’s pharmaceutical industry is one of the country’s most progressive industries. Manufacturers make practically every sort of medication, including sophisticated items such as insulin, hormones, and anticancer drugs. However, the industry is still dependent on imported raw materials (active pharmaceutical ingredients) from several nations, like China, India, Korea, Singapore, and Malaysia. This will change with the government taking up the project of establishing the API Industrial Park located in Munshiganj on 200 acres of land.

Since the early 1980s, Bangladesh’s pharmaceutical business has been developing and evolving. As this is a technology and knowledge-based business, the road was not simple for an LDC facing severe economic problems. Bangladesh is now proudly the only LDC with a well-developed pharmaceutical sector. According to the Bangladesh Association of Pharmaceutical Industries (BAPI) and the Directorate General of Drug Administration (DGDA), the sector currently fulfils 98% of the entire medicinal requirements of the country. The following chart shows the pharmaceutical market segments by share.

The top five pharmaceutical manufacturers in the country include Square Pharmaceuticals Limited, Incepta Pharmaceutical Limited, Beximco Pharmaceuticals Limited, Opsonin Pharma Limited, and Renata Limited. According to a report published by EBL Securities, the current size of the pharmaceutical industry stands at more than BDT 275 billion, as it grew at an average of 15.6% per annum in the last 5 years.

So far, generic medications have contributed to the industry’s growth, with 80% of all drugs being generic, thanks to the WTO’s patent exemptions from the TRIPS Agreement. However, since the facility will expire in 2033, the industry may have to shift its makeup progressively. As pharmaceutical companies develop their separate composition strategies towards the end of this decade, the competitive environment will be intriguing.

It is projected that 22.4% of the population (more than 40 million people) will be aged 50 and above by 2030, compared to 17.1% at present. Therefore, chronic diseases and the demand for medications will rise. This demographic will be more dependent on medical drugs and have a better perception of modern medicine. Thus, it will be a key driver for the pharmaceutical industry’s growth. This industry is expected to reach BDT 1.0 trillion in size by 2030, with the possibility of growing at 16% per annum.

Demand Drivers
It is quite evident that the main reason behind the growth of our pharmaceutical industry is the ever expanding demand. This increase in demand has been driven by some positive changes in our country’s overall dynamics. For example, as our economy is growing and people’s healthcare awareness is increasing, the demand for medicine items is also increasing. On the other hand, with increased income, protein consumption in our country is rising. As a result, our poultry, fishery, and cattle industries are growing, and demand for medications relevant to animal health is increasing.

Economic Growth

The growth of the pharmaceutical industry moves in tandem with the economic growth of Bangladesh. The country has one of the fastest-growing economies in the world. In the fiscal year 2020–2021, the country’s GDP grew by 5.4%, and per capita income rose to USD 2,227. In line with the economy, the pharmaceutical industry grew by 18.6%. The World Bank (WB) predicts 6.2% GDP growth in FY 2022-2023, while the government predicts 6.6% growth. The MAC (Middle and Affluent Class) population is expected to account for 17% of the total population by FY 2025, compared to 7% in FY 2015. With rising purchasing power and rapid urbanisation, the demand for pharmaceuticals is bound to increase.

Healthcare Awareness of the Mass

Both urban and rural residents are developing awareness concerning health, proper nutrition, and modern medicine. According to the Bangladesh Bureau of Statistics (BBS), the average life expectancy of people

increased from 66.4 years in 2002 to 72.6 years in 2020. People consult with doctors and experts more than before, as they are now more concerned about their health. This, in turn, increases the overall healthcare expenditure of the Bangladeshi population.

Growing Animal Health Market
The current animal health segment is a BDT 30 billion market. Local pharmaceutical companies like Renata, Square, ACI, Acme, Opsonin, Eskayef, Navana, Popular, and Incepta hold 70% of the market share. Renata dominates this segment with more than 5% market share. Bangladesh’s poultry market is worth BDT 350 billion and is the primary driver of Renata’s market share. Antibiotics, minerals, vitamins, enzymes, and toxin binders are the major products of the company. The COVID-19 epidemic has taken a toll on the meat and dairy industries. According to reports, chicken meat and egg output have decreased by 40-45% from the previous year, and 40% of registered poultry farms have closed over the last year. As Bangladesh is shifting to the middle-income segment by 2026, protein consumption will increase significantly. It will boost the growth of the poultry and cattle industries, increasing the demand for animal health products.

Expanding Outlook of the Supply Chain
The value chain of the pharmaceutical industry is divided into two parts: finished formulations and APIs. The entire sector is dependent on China and India for importing APIs, which are the raw materials required to manufacture drugs. Disruptions in the supply chain and global price hikes can hinder production. According to a report published in The Daily Star, as of 2019, only 15 local companies produced 41 API molecules, whereas Gonoshasthaya Pharmaceuticals Limited alone manufactured 60% of the raw materials. As a solution, the government has taken the initiative to build an API Park in Munshiganj. It is expected to start production by the end of 2022. The API policy has been created with the hope of reducing the reliance on raw material imports by 97% and raising API export income from USD 1.5 million in 2016 to USD 90 million in 2032. However, it will take a very long time to reduce the dependence on India and China for APIs. Currently, 27 companies have plots allocated in the API Park, with ACME Laboratories and Healthcare Pharmaceuticals set to become the first ones to start production.

Going Borderless
For the time being, foreign revenues comprise only around 5% of the total sales volume of the industry. However, as we have achieved near-self-sufficiency in the local market in terms of finished products, the local companies have been increasing their focus on the foreign market. In addition to speeding up their export efforts, some of the companies are setting up separate business entities overseas to make their operations in other countries run more smoothly.
Export Outlook
As an industry, pharmaceuticals make up the secondlargest exchequer of Bangladesh. According to the Bangladesh Association of Pharmaceutical Industries (BAPI), total pharmaceutical exports now stand at USD 169 million. At present, local pharmaceutical companies are exporting to 151 countries, with Sri Lanka being the top destination, accounting for roughly 15% of our export earnings. According to the Bangladesh Investment Development Authority (BIDA), almost 1,200 products are exported to countries such as Australia, the UK, and the USA. Due to manufacturing efficiency and cheap labour, the cost of pharmaceutical production is low, and therefore the products can be sold at a lower price to export destinations. There are favourable export policies as well. There is a cash incentive if exporters apply with certification from the Directorate General of Drug Administration (DGDA).

A cash incentive is also received if companies attach invoices of raw material imports or L/C documents.
The export of pharmaceuticals is expected to grow at a CAGR of approximately 24% by the end of 2030, reaching USD 1.5 billion. The global generic market is valued at around USD 1.3 trillion and is projected to grow to USD 1.52 trillion by 2023. As an emerging generic hub in Asia, it is expected that Bangladesh would be able to utilise such an opportunity. Focusing more on prescription drugs than over-the-counter drugs and establishing a robust supply chain with reliable foreign partners will help in achieving such growth in the future.

Contract Manufacturing

According to GlobeNewsWire, the current global contract manufacturing market is worth around USD 100 billion. Bangladeshi pharmaceutical companies are attempting to enter this market, as nearly all of the notable pharmaceutical companies have now delved into contract manufacturing.

Overseas projects
Public companies like Square Pharmaceuticals and Renata are establishing their own subsidiaries in order to utilise emerging foreign market opportunities. On the other hand, private companies like Incepta are also undertaking strategies like entering into majority partnerships overseas or deploying a dedicated foreign sales force.