1

Introduction
INTRODUCTION
The pharmaceuticals sector is one of the fastest growing sectors in Bangladesh. Before
liberation, there was hardly and pharmaceuticals enterprise in Bangladesh. After several years of
liberation, the govt. could not increase budgetary allocations for the improvement of health
sector. After the promulgation of drug control ordinance-1982, the development of
pharmaceuticals industry has accelerated. Due to recent development of this sector, the country
is exporting medicines to global market including European countries.
In recent years, the country has achieved large volume of parental products by which the country
becomes self-sufficient, huge volume of these products are also exported to other countries.
From the year of 2003 BAPI has been organized ASIA PHARMA EXPO which attracting most
of the largest stakeholders of Pharma & associated industry of Asia & Europe.
The economy of Bangladesh is rapidly developing market based economy. The economy has
grown at the rate of 6-7% per annum over the past few years. Pharmaceuticals sector has
definitely contribution this growing. The Bangladesh govt. continuous to court foreign
investment, something it has done fairly successfully in pharmaceutical sectors. The sector
consistently creates job opportunities, especially for highly qualified people. Like other
industries pharmaceutical industry also believes that the human resources are most

valuable

asset for the organization. Pharmaceuticals industry is making considerable investments in

attracting and developing competent professional human resources.
The country can continue produce patented products until 2016 as per trade related intellectual
property rights (TRIPS). Bangladesh can share its long years of experience in pharmaceuticals
formulation and marketing with the LDCs, and developing ones, who need it. Among the 50
LDCs, Bangladesh has the strongest base to manufacture pharmaceuticals products.
Two organizations, one governmental the Directorate General of Drug Administration (DGDA),
Under the Ministry of Health and family welfare. DGDA regulates all activities related import
and export of raw-materials and finished products, packaging materials, production, sale, pricing,
license, registration etc. of all kinds of medicine including those of Ayurvedic, Unnan, Herbal
and Homeopathic system and one semi-Government. The Pharmacy Council of Bangladesh
(PCB), regulates the practice of Pharmacy throughout Bangladesh, control pharmacy practice in
Bangladesh.

2.1 PHARMACEUTICAL INDUSTRY

Pharmaceutical is the core of Bangladeshs Healthcare sector, and serves as one of the most
important manufacturing industry. With a history since 1950s, the industry has now turned one
of the most successful pharmaceuticals manufacturing industry among the developing
countries. Presently, the industry meets 97% of local demand and exports to more than 80
countries.
The industry has been experiencing robust growth over the last few years. A local industry
supporting drug policy and effective regulatory framework, along with TRIPS relaxations are
the key reasons for success of the industry.
While the industry is achieving self-sufficiency, it yet procures 70% of raw materials from
abroad. But developments are already taking place, with a number of firms now manufacturing
raw materials locally. In addition, an API project has already been undertaken to accelerate the
vertical integration within the industry.
The industry has been expanding locally and internationally. Local market grew at 23% in
2014, while import reached USD 50 Million landmark. A number of firms got accreditations
from USA, UK, Australia etc. developed markets, and are underway toward expansion into the
developed markets. Locally, firms are preparing themselves for post 2016 scenario, when
TRIPS will be implemented. Almost all the firms are upgrading their facilities and taking up
precautions for post 2016 scenario, while aggressively expanding in both local and export
markets.
While TRIPS and import dependence on raw materials put challenges to the growing sector,
prospect of the sector depends largely on the interactions among the players, regulatory bodies
and the govt., whether they can meet up the requisites to continue growth of the sector while
facing the challenges.

2.2 INDUSTRY OVERVIEW

The pharmaceutical industry is one of the most technologically advanced sectors currently in
existence in Bangladesh. It has grown in the last two decades at a considerable rate. The skills
and knowledge of the professionals and innovative ideas of the people involved in this industry
are the key factors for these developments. 20 years ago, 75% of the drugs needed to be
imported. Now, only 2% of the drugs are imported, the remaining 98% come from local
companies. Since the promulgation of Drug Policy in 1982, the sector has grown from BDT
1730 mn to more than BDT 113 bn ($1.5 bn). In 2000, there were 210 licensed allopathic drugmanufacturing units in the country, out of which only 173 were in active production; others
were either closed down on their own or suspended by the licensing authority for drugs due to
non-compliance to good manufacturing practices or drug laws. About 300 pharmaceutical
companies are operating at the moment. The industry manufactured about 5,600 brands of
medicines in different dosage forms. There were, however, 1,495 wholesale drug license
holders and about 37,700 retail drug license holders in Bangladesh. According to IMS report of
2014, the total size of the pharmaceutical market of Bangladesh is estimated to be approximate
Tk. 113 bn. With an annual growth rate of about 11.37 %, Bangladesh Pharmaceutical Industry
is now self-sufficient in meeting the local demand. Bangladesh pharmaceutical industry is a
contributor to the national exchequer, and it is the largest white-collar intensive employment
sector of the country employing around 115,000 workers.

LOCAL SALES:

EXPORT:

Source: IMF 4th quarter report

The figure above shows the Local Sales of Pharmaceutical Products. Pharmaceutical Sales
rose by 11.37% in 2014 to BDT 113 bn due to increased medical coverage of the population &
easy access to Health Care Services because of strong distribution network. According to IMS
Health, Annual Pharmaceutical Sales in the Local Market are likely to hit BDT 160 bn by
2018. Sales of Square (the market leader) in 2014 was BDT 21 bn followed by Incepta with
Sales amounting BDT 12 bn & Beximco with Sales of BDT 10 bn.
Bangladesh Pharmaceutical Industry exports a wide range of products covering all major
therapeutic classes and dosage forms to 92 countries. The major destinations for Bangladeshi
medicines are now Myanmar, Sri Lanka and Kenya while nearly 50 countries import
Bangladeshi Pharmacy products regularly. Beside regular forms like; Tablets, Capsules &
Syrups, Bangladesh is also exporting high-tech specialized products like HFA Inhalers, CFC
Inhalers, Suppositories, Nasal Sprays, Injectable, IV Infusions, etc. and have been well
accepted by the Medical Practitioners, Chemists, Patients and the Regulatory Bodies of all the
importing nations. The packaging and the presentation of the products of Bangladesh are
equivalent to any international standard and have been accepted by them. While drug exports
posted double-digit growth from 2010 fiscal through 2014, overseas sales began to decline in
the last few months. The sector made $41.17 million worth of shipments, registering a 2.8%
decline compared to that of FY'14 mark worth $42.4 million in the first seven months (JulyJanuary) of the current financial year (FY'15) (EPB).

COMPETITIVE SCENARIO/ MARKET PLAYERS:

Figure: Production of Top 10 companies

Figure: Market Share of the Top 10 companies

Company
SQUARE
INCEPTA
BEXIMCO
PHARMA
OPSONIN
PHARMA
RENATA
ESKAYEF
ARISTOPHARMA
A.C.I.
ACME

Market

Market

Size

Share

(BDT

(%)

Growth
(%)

21.15
11.78
9.56

18.7
10.4
8.5

7.3
15.6
7.6

6.35

5.6

19.8

5.74
5.09
5.07
4.69
4.51

5.1
4.5
4.5
4.1
4.0

13.5
12.0
15.7
9.9
14.1

Figure: Most Popular Brands in 2014

According to IMS-Health, the top 10 players took 68.1% of the market. Companies ranked
11th to 20th took 17.50% of the market; the next 11 companies took 8.60% while the
remaining 222 companies shared 5.8% among them. Square Pharmaceuticals led the industry
with a market share of 18.70%. Incepta and Beximco took 2nd and 3rd positions with market
shares of 10.4% and 8.5% respectively. Interestingly except for Square, Beximco, Renata and
ACI, none of the other leading 6 companies in the top 10 are listed in the Dhaka Stock
Exchange (DSE) or Chittagong Stock Exchange (CSE). Growth of Healthcare Pharma was
highest in 2014 while Square had the least growth.

2.3 REGULATORY REGIME

The Directorate General of Drug Administration (DGDA): DGDA is the drug regulatory
authority of Bangladesh, which is under the Ministry of Health and Family Welfare. DGDA
regulates all activities related to import and export of raw materials, packaging materials,
production, sale, pricing, licensing, registration, etc. of all kinds of medicine including

those of Ayurvedic, Unani, and Herbal and Homoeopathic systems.

The Pharmacy Council of Bangladesh (PCB): PCB was established under the Pharmacy

Ordinance in 1976 to control pharmacy practice in Bangladesh.

The Bangladesh Pharmaceutical Society is affiliated with international organizations
International Pharmaceutical Federation and Commonwealth Pharmaceutical Association.
The National Drug Policy (2005) states that the WHOs current Good Manufacturing
Practices (GMP) should be strictly followed and that manufacturing units will be regularly

inspected by the DDA. Other key features of regulation are restrictions on imported drugs;
a ban on the production in Bangladesh of around 1,700 drugs which are considered nonessential or harmful; and strict price controls, affecting some 117 principal medicines.

2.4 GOVERNMENT INCENTIVES

This sector has been considered as a thrust sector in the export policy since 2006. Customs
duty on 40 basic raw materials used in medicine manufacturing were reduced to 5% from
10%-25% rate. Customs duty on 14 items used in anti-cancer medicines have been withdrawn.
(Budget 2014-15). Government has been facilitating this industry through reducing customs
duty on raw materials. The government recently gave 200 acres of land for the API Park in
Munshiganj. It is also planning to give 10% cash incentives to boost the pharmaceutical sector.
(Source: The Independent, 9th January 2015)

2.5 RAW AMTERIALS AND API SECTOR

While the industry is achieving self-sufficiency, it yet procures 90% of raw materials from 98
indenters around the world as only one company (Active Fine Chemicals) produces raw
materials independently. There are 3000 valid sources of raw materials including countries like
China, India, Korea & Italy. API consists a significant percent of total cost in medicine which
can run up to 30-40%. At present, only a few companies Square, Beximco, Ganasastha
Pharmaceuticals, Globe and Active Fine are manufacturing raw materials for drugs like
paracetamol, amoxicillin, flucloxacillin, ampicillin and metformin, on a limited scale.
Ganashastha Pharmaceuticals Limited (GPL) alone accounts for about 60% of the raw
materials manufactured in Bangladesh. Bangladesh is trying to establish an industrial park for
pharmaceutical production. One such park in Munshiganj near Dhaka is nearing completion
and it might result in a big jump in the income from pharmaceutical exports. A National
Control Laboratory Project is taken by the govt. for facilitating the pharmaceutical sector. The
proposed API technology Park in Munshiganj, which was scheduled to be completed by July
2012, is delayed with the cost of the project now increasing by 55%. This delay has been a
major hurdle for the pharmaceutical industry to gain better control over the inputs and improve
operational efficiencies. India, the major generic drug player, has more than 3500 Drug Master
File (DMF) approval for APIs whereas we have none.

3.1 RISE OF PHARMACEUTICAL INDUSTRY OF BANGLADESH

In Bangladesh Pharmaceutical sector is one of the most developed hi-tech sector which is
contributing in the country's economy. After the promulgation of Drug Control Ordinance 1982, the development of this sector was accelerated. The professional knowledge, thoughts and
innovative ideas of the pharmacists working in this sector are the key factors for this
development. Due to recent development of this sector we are exporting medicines to global
market including European market. This sector is also providing 95% of the total medicine
requirement of the local market. Leading Pharmaceutical Companies are expanding their
business with the aim to expand export market. Recently few new industries have been
established with hi-tech equipments and professionals which will enhance the strength of this
sector.
Bangladesh Association of Pharmaceutical Industries (BAPI), the stalwart association of
pharmaceutical manufacturers of the country was instituted in 1972, since then BAPI playing a
pivotal role in shaping up the industry. Association's member include large, medium, small,
national and foreign companies who together are responsible for manufacturing 96% of the
country's pharmaceutical production. This indeed proves the success of BAPI as a responsible
and acceptable body.

3.2 CURRENT MARKET SCENARIO

Bangladeshi pharmaceutical companies are not allowed to do any direct promotion of their
products since the regulatory policies prohibit it. The policy frame work for promotion of
pharmaceutical products is guided by the Directorate of Drug Administration (DDA). DDA
has a detailed Code of Pharmaceutical Marketing Practices (CRMP) regulates the promotion
of pharmaceutical products and this excludes any form of direct marketing through media tools.
To illustrate this, the pharmaceutical companies cannot promote their products or their company
through the Television, Radio, Newspapers or any other form of printed media. The primary
means of promotion for the pharmaceuticals is through personal selling and trade marketing.
The companies try to identify the Key Opinion Leaders namely the reputed doctors and
convincing them to prescribe and promote the companies products.
Currently there are 245 registered pharmaceutical companies in Bangladesh out of which 200
are still in operation. These 245 companies together have 5300 registered brands. The market is
largely dominated by local companies and there are only 5 multi-national companies currently
operating. The table below lists the top ten pharmaceutical companies in Bangladesh in terms of
sales value and market share

3.3 COMPETITIVE STRUCTURE

To get the better understanding we analyzed the sector through Porters ve forces model.
Details are given here
The threat of new entrants in the industry
Increasing market size, sustainable product demand and economic prot opportunity will
certainly fascinate new players. However, signicant capital requirement, economies of scale of
production, brand identity and access to distribution channels creates discouragement.
Therefore, the threat of new entrants in the industry is moderately low.

The threat of substitute products

Switching cost of the product is low. However, in our country people are not aware of substitute
of medicine like, balanced nutrition, workout, meditation etc. Therefore buyers propensity to
substitute the medicine is less likely. Consequently, the threat of substitute products is low.
The bargaining power of buyers
For pharmaceuticals industry, substantial portion of the market is dominated by retail customers
indicating buyers are not concentrated. Sometimes customer shows price insensitivity due to
brand image. These features results low bargaining power of buyers.
The bargaining power of suppliers
Most of the companies import raw materials mainly from China and India. Switching cost from
these countries to Europe is also high. Therefore supplier concentration and high switching cost
imply that the bargaining power of suppliers is quite high.
The degree of rivalry among existing competitors
Population growth and export opportunity create enough room for everyone to expand operation
in the industry. Although several companies are listed in the sector yet substantial chunk of
market shares are controlled by few large companies. As a result, the degree of rivalry among
existing competitors is moderately high.

3.4 GROWTH POTENTIAL OF THE DOMESTIC DRUG MARKET

In order to get a sense of what might potentially be the size of the drug market let us consider a
simple model. Here we assume that the economy will have an average GDP growth of 6%. The
economy will witness an uptrend in healthcare expenditure because of the growing health
consciousness and the increased demand for wellness drugs as well as government
expenditure. This means that drug and non-drug healthcare expenditure will increase at about
the same pace. So, we also assume that the percentage spent on drug as part of total healthcare
expenditure will remain similar current level, which is about 28%. These simple assumptions
present in impressive growth upside of 83.6% by 2015 with a 6 year CAGR of 10.7%. Recent
growth figures have provided to be better than the projection, which demonstrates that the

growth figures have proved to the better that the projection, which demonstrates that the growth

HEALTH EXPENDITURE
4.40%

4.20%

4.20%

4.30%

4.00%

4.00%

(% of GDP) 3.80% 3.60%

3.60%

3.80%

3.40%
3.20%

2010 2011 2012 2013 2014

Source: Bangladesh Bank

prospect of the sector is

justified.

AVERAGE GDP GROWTH RATE

12.00%
10.00%
8.00%

6.70%

7.50%

8.40%

9.30%

10.10%

6.00%
4.00%
2.00%
0.00%
2010

2011

2012

Source: BB, WHO

2013

2014

Yea
r
200
9
201
0
201
1
201
2
201
3
201
4

Pharma
Growth Rate
16.83%

Sector

23.80%
22.30%
11.91%
8.12%
11.36%

P harma Sec tor Growth Rat e

23.80%

22.30%

16.83%
11.91%

11.36%
8.12%

2009

2010

2011

2012

2013

2014

3.5 MARKET PLAYER

Domestically, Bangladeshi companies including the locally based MNCs produce 95%-97% of
the drugs and the rest are imported. Although about 250 pharmaceutical companies are
registered in Bangladesh, less than 100 are actively producing drugs.
The domestic market is highly concentrated and competitive. However, the local manufacturers
dominate the industry as they enjoy approximately 87% of market share, while multinationals
hold a 13% share. Another notable feature of this sector is the concentration of sales among a
very small number of top companies. The top 10 players control around two-third of the market

share while the top 15 companies cover 77% of the market. In comparison, the top ten Japanese
firms generated approximately 45% of the domestic industry revenue, while the top ten UK
firms generated approximately 50%, and the top ten German firms generated approximately
60%.
Square Pharmaceuticals is the stand out market leader with a market share of 19.3% which
posted domestic revenue of BDT 11.2 billion in the last four quarters. Their nearest competitors
are Incepta Pharmaceuticals and Beximco Pharmaceuticals with market shares of 8.5%
and

7.6% respectively. Incepta and Beximco had BDT 4.9 billion and BDT 4.4 billion in

domestic sales for the last four quarters. Although a number of MNCs are operational in
Bangladesh market, no MNCs are in the top ten in terms of domestic sales.
Because Bangladesh API capacity is insignificant, pharmaceutical companies import
approximately 80% of their APIs. Fifteen to twenty Bangladeshi firms are involved in the
manufacture of about twenty APIs, but they usually run the relatively easier final chemical
synthesis stage with API intermediaries, instead of the complete chemical synthesis. The other
1,000 required APIs are imported. Approximately 75-80% of the imported APIs are generic.

3.6 MAJOR PLAYERS

ACI
ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East
Pakistan in 1968. After independence the company has been incorporated in Bangladesh on the
24th of January 1973 as ICI Bangladesh Manufacturers Limited and also as Public Limited
Company. This Company also obtained listing with Dhaka Stock Exchange on 28 December,
1976 and its first trading of shares took place on 9 March, 1994. Later on 5 May, 1992, ICI plc
divested 70% of its shareholding to local management. Subsequently the company was
registered in the name of Advanced Chemical Industries Limited. Listing with Chittagong Stock
Exchange was made on 22 October 1995.
Beximco
Beximco Pharma started operations in 1980, manufacturing products under the licenses of Bayer
AG of Germany and Upjohn Inc. of USA. It has now grown to become a leading pharmaceutical
company in Bangladesh, and it supplies more than 10% of country's total medicinal needs.
Today Beximco Pharma manufactures and markets its own branded generics for several diseases

including AIDS, cancer, asthma, hypertension, and diabetes for both national and international
markets.
Square
The company was founded in 1958 by Samson H. Chowdhury along with three of his friends as
a private firm. It went public in 1991 and is currently listed on the Dhaka Stock Exchange.
Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in
the pharmaceutical industry of Bangladesh since 1985 and it has been continuously in the 1st
position among all national and multinational companies since 1985. Square Pharmaceuticals
Ltd. is now on its way to becoming a high performance global player.
Renata
Renata Limited (formerly Pfizer Laboratories (Bangladesh) Limited), also known as Renata, is
one of the top ten (in terms of revenue) pharmaceutical manufacturers in Bangladesh. Renata is
engaged in the manufacture and marketing of human pharmaceutical and animal health
products. The company also manufactures animal therapeutics and nutrition products. Renata
currently employs about 2300 people in its head office in Mirpur, Dhaka and its two production
facilities in Mirpur, Dhaka and Rajendrapur, Dhaka.
Incepta
Incepta Pharmaceuticals was established in 1999 and produced its first product, ranitidine, in
December of that year. The company's manufacturing facility is located 35 miles from Dhaka in
Savar, where they produce various types of drug dosage forms such as tablets, capsules, oral
liquids, injections, and nasal sprays. The companys specialties include sustained-release tablets,
quick-dissolving oral tablets, and barrier-coated delayed-release tablets. Incepta also conducts
research and development on advanced dosage forms for various drugs and devices including
poorly-soluble drugs, dry powder inhalers, coated pellets, modified-release products, and tastemasked preparations. The company sells its products in Bangladesh and plans to begin exporting
to both developed and developing countries around the world.

3.7 PRODUCTS OF THE PHARMACEUTICAL INDUSTRY

UNANI: The Directorate of Drugs Administration under the Ministry of Health & Family
Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This Directorate
supervises and implements all prevailing Drug Regulations in the country and regulates all
activities related to import and procurement of raw and packing materials, production and
import of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of
Ayurvedic, Unani and Homoeopathic systems. At present, there are 295 Unani companies
operating in Bangladesh.
AYURVEDIC: The Directorate of Drugs Administration under the Ministry of Health & Family
Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This Directorate
supervises and implements all prevailing Drug Regulations in the country and regulates all
activities related to import and procurement of raw and packing materials, production and
import of finished drugs, export, sale, pricing, etc. of all kinds of medicine including those of
Ayurvedic, Unani and Homoeopathic systems. At present, there are 201 Ayurvedic companies
operating in Bangladesh.
HERBAL: The Directorate General of Drug Administration under the Ministry of Health &
Family Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This
Directorate supervises and implements all prevailing Drug Regulations in the country and
regulates all activities related to import and procurement of raw and packing materials,
production and import of finished drugs, export, sale, pricing, etc. of all kinds of medicine
including those of Ayurvedic, Unani, Homoeopathic and Herbal systems. At present, there are
15 Herbal companies operating in Bangladesh.
HOMEOPATHIC: The Directorate of Drugs Administration under the Ministry of Health &
Family Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This
Directorate supervises and implements all prevailing Drug Regulations in the country and
regulates all activities related to import and procurement of raw and packing materials,
production and import of finished drugs, export, sale, pricing, etc. of all kinds of medicine
including those of Ayurvedic, Unani and Homoeopathic systems. At present, there are 79
Homeopathic companies operating in Bangladesh.
ALLOPATHIC: The Directorate General of Drug Administration under the Ministry of Health
& Family Welfare, Govt. of Bangladesh, is the Drug Regulatory Authority of the country. This
Directorate supervises and implements all prevailing Drug Regulations in the country and
regulates all activities related to import and procurement of raw and packing materials,

production and import of finished drugs, export, sale, pricing, etc. of all kinds of medicine
including those of Ayurvedic, Unani and Homoeopathic systems. At present, there are 258
Allopathic companies operating in Bangladesh.
Tablets: Non-Coated (plain, chewable, dispersible, vaginal)
Coated (sugar coated, film coated, enteric coated)
Sustained/Extended Released (coated, non coated)
Capsules: Granulated Material filled
Pellets Filled
Suppositories: Suppository based
Injections: Vials containing Dry Powder for Injections
Small Volume Liquid Potentials
Liquids: Oral Syrups (Sugar based, Non-Sugar based)
Oral Suspensions
Topical Liquids
Spray, Drops, Ointment, Cream and Powder: Small Volume Sterile Eye & Ear Drops
Small Volume Nasal Drops & Sprays
Topical Ointments & Creams
Topical Antibiotic Powder
Oral Dry Powders: Dry Suspensions (Antibiotic & Anti Infective)
Dry Syrups (Antibiotics)
Dry Powder Inhalers: Partial Filled (Premix) Capsules for Respiratory Tract Application with a
Device
Metered Dose Inhalers: Pressurized Canisters for Oral use with an Actuator
Pre-filled Syringe Injection: The advanced potential technology.

4.1 EXPORT
The export market has shown significant growth over the years. Since 2004, Exports have
increased multifold, with export destinations rising from 37 in 2004 to 84 in 2011.
API

Due to the relaxations provided by TRIPS up to 2016, APIs can bring huge opportunities from
exports. This is because for API (also known as Bulk Drugs), there is no stringent registration
requirement and the operational as well as promotional costs are also nominal. The only
decisive factor in this regard is the cost competitiveness. API can be exported to several
countries if cost effectiveness is ensured.
But being confined to synthesis stage only, Bangladesh has to rely on import of core compound,
solvent and other intermediates. Thus cost effectiveness of local production can be a bit
dependent on import costs. Alongside, these productions often also entail effluent treatment
plans, requiring a high investment. Further, economy of scale is yet to be achieved, and high
investment requirement has troubled achieving entrepreneurs attention.
Formulation
Finished formulations (finished products) have a global market with varying rules and
regulations. In terms of regulatory structure, overseas markets can be categorized in three ways.
First one is the Highly Regulated Markets like USA, UK etc. that require various certifications
like USEDA, UKMCA etc. and need huge investment in facilities and documentation.
Second one is the Moderately Regulated Markets like Russia, Singapore etc. which usually ask
for Bioavailability, Bioequivalence, and Clinical Trials etc.
Third category is the Less Regulated Markets like Myanmar, Sri Lanka, Nepal, Kenya, Yemen
etc.
Bangladesh have already entered less regulated markets. And entry in moderately regulated
markets are already taking place. To continue future growth in exports, Bangladesh will have to
enter the highly regulated markets soon. In this regard, some of the major companies have
already made million dollar investment in their manufacturing and R&D facilities, and are going
for certification in the highly regulated markets.

4.2 GLOBAL EXPORT MARKET

Due to cost pressures, MNCs increasingly seeking to manufacturer pharmaceuticals in
developing countries. Pharmaceutical contract manufacturing and research services is a large
and growing business. With a predicted average annual growth rate of 10.8%, revenues are
estimated to reach $168 billion by 2016. Pharmaceutical firms in Bangladesh exported

approximately $45.67 million (approximately 0.03% of the estimated global pharmaceutical

market revenue) in products to 73 countries.
The exporter of Drug Products Beximco Pharma Ltd., Novertis, Incepta, Square, Techno Drug,
Reneta, ACME, Skayef, Aristopharma, Jayson, Global Cap., Opsonin, ACI, General, Popular,
Biopoharma, Glaxo Smith Klile, Orion, Navana, Glob, Health care, Sanofi aventies, Delta,
Drugs Int. Beacon, IBN Sina, Remon Drug, Medicon, Novo, Somatec, Ziska, Radiant, Alco,
Popular, Modern, Amico pharmaceutical Ltd. etc.
Novatics has already received EU Certification and has started exporting to Europe. Square,
SKF and Renata have already obtain the UK, MHRA certifications. Other market leader like
Beximco is in the process of securing US-FDA, UK-MCA (MHRA) certification.
Pharmaceuticals exports Raw-materials and finished goods Iran, Hongkong, South Korea,
Malaysia, Thaiwan, Veelnam, Thailand, Nepal, UAE, USA, Indonesia, Jarman, Japan,
Myanmer, Kenia, Srilanka etc. and others countries.

Pharma Products Export (in USD million)

69.2

72.6

59.8
44.3

41

2009-10

2010-11

48.3

2011-12

2012-13

2013-14

2014-15

Source: Export Promotion Bureau

4.3

4.3 INDIRECT BENEFITS OF EXPORT

Bangladeshi firms that export are slightly more productive than non-exporting firms. Some
possible reasons for this advantage may be due to:
1. Technological lessons learned from foreign buyers.

2. Exporters improved their own technological capabilities to exploit profitable opportunities in

export markets. For example, exporters need to adopt stringent technical standards to satisfy
more sophisticated consumers, and/or they are under more pressure to fill orders in a timely
fashion and to ensure product quality for export markets which are more competitive than
domestic market.
3. Better firms self-selected to enter export markets for the prestige rather than the effects of
exporting necessarily improving the firms.
The pharmaceutical industry in Bangladesh has been aggressively investing in infrastructure.
Most of the companies invested heavily in the 1990s and the late 2000s most likely to upgrade
their facilities to obtain international export certifications. The top ten firms accounted for most
of the investments.
MNCs can operate in a country in multiple ways, including foreign direct investment
(FDI),

contract manufacturing, joint ventures and strategic partnerships or licensing. Each

arrangement varies in terms of which partner contributes more resources and technical
knowledge, which partner assumes more risk, and which partner accrues more benefits and
profits.

4.4 TRIPS
The WTOs Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS)
requires all signatories to legislate twenty-year patent protection for pharmaceutical products
into their domestic law. TRIPS is not a uniform international law, but a framework for
intellectual property protection with minimum agreed standards. While signatory countries must
meet its requirements through legislation, TRIPS provides significant flexibility.
Until 2016, TRIPS provides Bangladesh with domestic, patent-free production rights and
limited exporting advantages. Bangladesh imports approximately 80% of its APIs for domestic
production, 20-25% of which are patented. These API costs will most likely rise as TRIPS
phases in.
Bangladesh enjoys some export advantages from TRIPS. But these advantages are somewhat
offset by the pace and competitiveness of the Indian and Chinese generic markets. In both
markets, companies can produce drugs at highly competitive pricingeven with higher costs
associated with buying patented APIs or paying royalties.

Bangladesh will have to rely on the standard business practices of producing the highest quality
product at the lowest price to compete on the international market. Until 2016, however,
Bangladesh has the following export advantages under TRIPS:
1. Export to any country if the drug is not under patent. Any firm in any country can benefit
from this stipulation. For example, most drugs on WHOs Model List of Essential Drugs are
not patented, as affordability is one of the criteria used in designating medicines as
essential.
2. Export to another LDC or non-WTO country that has not implemented product patent
protection. It seems that most LDCs have instituted patent protection. Only two African LDCs
have not provided for TRIPS- compliant intellectual property protection, one of which was not
yet a WTO member, according to a 2001 Intellectual Property Rights (IPR) Commission
study. In Asia, Myanmar, which is engaged in the WTO accession process, is perhaps the only
country that has not yet put in place a patent protection regime. TRIPS states that any country
using the transitional flexibility period shall not change its laws to result in a lesser degree of
consistency with TRIPS. However, Bangladeshi firms are exporting generic versions of
patented drugs to many LDCs without a problem.
3. Export to a country where the patent holder has not filed for patent protection for the drug.
Companies do not file drug patents in all countries, particularly where sales and profit
prospects are low or there is no meaningful judicial patent protection. These gaps in patent
coverage can be exploited.
4. Export to a country that has issued a compulsory drug license and awarded the production
contract to Bangladesh. TRIPS grants governments the right to issue a compulsory license for
public health purposes, which occurs when a government overrides a patent and grants
another entity the right to produce the patented product. Although Canada, Japan, the United
States and the United Kingdom have all issued domestic compulsory pharmaceutical licenses,
very few developing countries have done so. The expense and time of litigation with
developed countries can act as a deterrent. Governments must also balance fully exploiting
TRIPS flexibilities while maintaining good relations with MNCs, which often use domestic
firms for outsourcing or manufacturing.
Before 2005, many countries could fulfill a compulsory license importation request because
many were manufacturing patented drugs off patent. As of 2005, Bangladesh patented drugs off
patent whereas India and China, the worlds largest suppliers of generic drugs, will no longer be

able to engage in this practice for any drug patented after 2005. Because firms require two to
three years to reverse engineer and start producing a specific drug of quality, if any country
issues an import request for a compulsory license for any drug patented after 2005, Bangladesh
will have an advantage if it is already manufacturing the drug domestically. However, TRIPS
has clearly stated that export for compulsory licensing is intended for health policy not
industrial policy.

The pharmaceuticals sector represents 12.5% of total market capitalization in Dhaka Stock

4.5 27
PHARMACEUTICAL
SECTOR
IN CAPITAL
Exchange (DSE).
pharmaceuticals companies
are currently
listed to theMARKET
countrys prime
bourse.
Stock Listed in the DSEs Pharmaceutical Sector
Ticker

Product Type

ACI

Pharmaceuticals, consumer brands,

agribusinesses

ACIFORMULA

Consumer brands, agribusinesses

ACTIVEFINE

APIs, laboratory reagents

AFCAGRO

Bio-pharmaceuticals, biochemical

AMBEEPHA

Tablet, capsule, liquid syrup, tube, injection

BEACONPHAR

Biotech

BXPHARMA

Pharmaceuticals formulation Products

BXSYNTH

Partial Oriented Yarn (POY), Draw

Texturized Filament Yarn (DTFY)

CENTRALPHL

Tablets

FARCHEM

Textile chemicals

GHCL

Caustic Soda, Hydrochloric Acid, Bleaching Powder, Chlorine,

Sodium Hypochlorite & Chlorinated Paran Wax (CPW)

GLAXOSMITH

Pharmaceuticals, vaccines and consumer healthcare

IBNSINA

Syrup, tablet, injection, capsule, eye drops

IMAMBUTTON

Logo, horn, fancy, chalk and pearl buttons

JMISMDL

Syringes and medical devices

KEYACOSMET

Personal hygiene and detergent products

KOHINOOR

Personal hygiene and cleaning products

LIBRAINFU

Intravenous uids

MARICO

Coconut oil and hair products

ORIONINFU

Fluids

ORIONPHARM

Tablets and injections

PHARMAID

Neutral Glass Ampoules

RECKITTBEN

Hygiene and healthcare

Pharmaceuticals, animal health and consumer goods

RENATA
SALVOCHEM

Chemicals/Acids

SQURPHARMA

Pharmaceuticals, herbal and agrochemical

WATACHEM

Fluids
Source: DSE Website, Companies
Website

Pharmaceutical Sector in the DSE (as on 30 Sep 2015)

No. of Listed Firms

27

Sectors Market Capitalization

421,131

Sectors Market weight (based on Market Capitalization)

15.1%

3 Months Average Turnover

919

3 Months Return

11.7%

Sectors forward P/E

18.6
Source:

DSE

Website

The pharmaceutical sector possesses signicant importance in the capital market of Bangladesh
not only because it represents a considerably large segment of DSE but also because it is one of
the major economic sectors of the country. With the ever increasing population of the country
and the continuous development within this industry, the pharmaceutical companies can expect
to grow in the years to come.

4.6 BANGLADESH PHARMACEUTICAL INDUSTRY

Bangladesh pharmaceutical industry is the largest (in volume) among the LDCs with a
market size of USD 600 million and an average annual growth rate of 12%.
The industry is primarily a generic one. There are about 8,000 different brands which meet
97% of the domestic demand. The local companies have 86% share of the market. Out of
245 registered companies the top ten companies account for almost 70% of the total market.
The LDCs are exempted from Patent Protection according to the WTO TRIPS policy. This
agreement allows legal reverse engineering and sale of patented product until 2016.This

gives the local pharmaceutical industry an advantage over India and China who do not come
under the exemption agreement.
After entering the global market Bangladesh pharmaceutical industry has made great
progress in export. Between 2003 and 2006 pharmaceutical exports increased to about 61
countries from 51 and quadrupled in value from USD 7.9 million to USD 36.5 million.
Many Bangladeshi companies have acquired international certifications like USFDA,
UKMHRA and TGA, This allows them to penetrate regulated and unregulated markets.
Bangladesh is in a position to emerge as one of the regional R&D centers for Pharmaceutical
Research as reverse engineering has ended in China and India. There is an opportunity to
emulate the Contract Research and Manufacturing Services (CRAMS) model of India.
Currently 80% of the APIs are imported from abroad. But with the establishment of
adequate reverse engineering and API manufacturing facilities the local demand for raw
materials can be met without import.
Bangladesh can provide a strong platform for off-shoring/outsourcing generic bulk and
formulation drugs due to a cheap labor force and established infrastructure. With more and
more western companies looking to cut cost in their manufacture of bulk drugs as they focus
more on the high-cost patented drugs, Bangladesh can present itself as an attractive
destination for off-shoring.
With the establishment of modern technical facilities, the industry can emerge as a regional
hub for pre-clinical testing and clinical trials. The Contract Research Organization (CRO)
model success of India can act as a template to emulate as subject cost will be very low in
Bangladesh compared to that of Western countries.
There is an opportunity for substituting import of vaccines and injectable through
manufacturing it locally.
Many local entrepreneurs are now looking to expand their operations beyond the country
borders. Some are looking to emulate the buying of distressed companies in the west to gain
immediate market access exemplified by the success of Indian powerhouses like Ranbaxy
and. Some are also venturing into newer horizons like biotechnological drugs.

4.7 FUTURE OF THE INDUSTRY

CHALLENGES:
Pharmaceutical industry of Bangladesh has obtained many achievements. However, compared
to pharma sector of other neighboring countries like India and China, Bangladesh pharma sector
has long way to go. As a knowledge-driven and technology-intensive industry, success
prescription is quite dierent from other labor intensive industry like RMG. Experts identied
several issues that need to be addressed to attain the sectors sustainable growth. Some of these
issues are described below
Import dependent backward linkage
Active Pharmaceutical Ingredients (APIs) are the prime raw material for the sector. So far the
sector is mostly dependent on import. To ensure sustainable growth the countrys pharma sector
needs its own raw materials sources. An API Park in Munshiganj is under progress. The
Government should take immediate steps to complete the project at quickest possible time.
Absence of central bioequivalence and drug testing laboratory
Bioequivalence testing is conducted to see if the generic version of the drug is identical to its
originator brand. Currently, Bangladesh does not have any such facilities for drug testing and
biochemical studies. Establishing a central bioequivalence and drug testing laboratory would be
a big leap for the countrys pharma sector.
Nonexistence of Special Economic Zone (SEZ)
The Countrys pharma sector has immense untapped export opportunity. Yet, there is no Special
Economic Zone for the sector. Establishing a Special Economic Zone (SEZ) for particularly
pharma industry could assist to seize the prospect. Both China and India have successfully
established several SEZs.
Underdeveloped biosimilar capabilities
A biosimilar is a biologic medicine designed with the intent to treat a patient in the same way as
an existing biologic therapy. Biosimilar made by dierent manufacturers will dier from the
reference product and from each other, making each biosimilar a unique therapeutic option for
patients. Several products have been expired every year in this category. This is a huge
opportunity for generic manufacturers. The major players of the Countrys pharma sector should
concentrate to build biosimilar capabilities with appropriate regulatory guidelines.
Feeble effort on R&D activities and weak collaboration with universities

The sector players failed to put required eort on R&D activities. At the same time, the
knowledge sharing link between dierent universities with the pharma companies is also weak.
Lack of proper regulatory environment
The sector suered setback of weak regulatory environment. There is so much scope to work on
this issue.

MEASURES:
Backward integration into API is also very important to reduce import cost.
Providing cash incentive by the govt. to the medicine exporters, like RMG may encourage
pharmaceutical exporters.
International fair arrangement by Export Promotion Bureau (EPB) is a very effective way to
search buyers and to establish business in a new country. A lot of initiative have been taken by
BAPI (Bangladesh Association of Pharmaceutical Industries) in different times, such as, high
level pharmaceuticals delegation team visited foreign countries to explore export initiated by
BAPI. This organization also upheld the demand and urged to the government and other
concerning authorities for API Park, Bioequivalence test laboratory, Central drug testing
laboratory, cash incentives, problems in remit transfer and sample sending etc. But many
issues are yet to resolve.

CONCLUSION

In the report, we wanted to find out the impact of pharmaceutical industry. The report we
prepared was harder than what we thought before. We had a real life experience about the topic
which was a great and hard experience for us. But due to tremendous efforts of the team
members and the team spirit made it a boneless fish for us.
We had the best of our experience preparing the report. Our sincere thanks to our course teacher
Tahmina Rita Anika, Lecturer, Department of Management Studies, Jagannath University, for
such a wonderful thought. We had a chance to prove and judge ourselves where we stand.

As Business Faculty students, we will have more such reports in future. We hope that our further
reports will also be as interesting as this.
All the information provided in this report is to the best of our knowledge. Though we prepared
this report with full attention and accuracy, any mistakes in this report is apologized.

BIBLIOGRAPHY AND REFERENCE

All the information given in this report has been collected from relevant and dependable
sources. The information given in this report is to the best of our knowledge. We collected the
information from various known sites government and international agencies and the monthly
reports of some financial institutions. The description of our information sources are as under:
REFRENCES:

EBL Securities Report on Pharmaceutical Industry

BRAC EPL Investments Report on Pharmaceutical Industry
World Bank Database
ILCL-ILSL Monthly Economy and Market Review September 2015

Bangladesh Bank (www.bb.org.bd)

Board of Investment (www.boi.gov.bd)
Export Promotion Bureau (www.epb.gov.bd)