Pharmaceutical Industry of Bangladesh

The pharmaceutical market in Bangladesh is pretty small compared to the population size of the
country, mainly because of the lack of spending power of the population. Pharmaceutical sector
is technologically the most developed manufacturing industries in Bangladesh and the third
largest industry in terms of contribution to government’s revenue. Bangladesh pharmaceutical
companied focus primarily on branded generic final formulations, mostly using imported APIs
(Active Pharmaceuticals Ingredient). Branded generics are a category of drugs, including
prescription products that are either novel dosage forms of off-patent products produced by a
manufacturer. About 85% of the drugs sold in Bangladesh are generics and 15% are patented
drugs - the structure differs significantly from the international market. Branded generic drugs
represent about 25% on average of worldwide pharmaceuticals sales’; however, given the
popularity in emerging markets like China, India and Latin America, branded generic drugs may
well dominate the total sales within a decade.

Domestic manufacturers account for 97% of the drug sales in the local market while the
remaining 3% are imported. This is a complete turnaround over from two/three decades back
when imports used to dominate the market. The imported drugs include essential live saving
drugs and other high quality drugs. The size of the retail market reached BDT 84.0 billion as on
2011 based on IMS report. The report further stated that, retail sales in the domestic market
achieved 23.6% growth in 2011 following 23.8% and 16.8% growth in 2010 and 2009
respectively. There has been a gradual demographic shift - life expectancy improved from 64.7
in 2000 to 68.3 in 2009 which highlights the increased health consciousness among the people.
Also the income level of the population increased over the last decade which allowed them to
spend more for healthcare. Income base of the population has been growing over the last decade.
Health expenditure per capita doubled in the last decade, indicating people’s willingness to spend
more to remain healthy. Some other factors that will also boost the industry growth include
increase in number of modern hospitals, increase in level of service/treatment provided in the
hospitals with improved/more modern diagnostic equipment. The price of most of the drugs
increased in recent times owing to higher manufacturing cost. Since the companies have already
shifted the import source of the raw materials to low cost producers (China and India). The
World Trade Organization's (WTO) Trade-Related Aspects of Intellectual Property Rights
(TRIPs) agreement permits Bangladesh to reverse-engineer patented generic pharmaceutical
products to sell locally and export to markets around the world. The government has given
support to the manufacturing industry for decades. It adopted The Drug Act 1940 in 1974. The
Drug Act gave protection to the local manufacturers by restricting import of pharmaceutical
products that are manufactured in the country. It successfully prevented the Indian
manufacturers, who could serve the market at competitive price, from entering the country.
Going forward there is no regulatory risk that import restriction will be removed and local
companies are likely to continue on dominating the pharmaceutical market. Government
provided various incentives to lower the import cost of the pharmaceutical manufacturers. In this
coming budget for FY 2013, it is expected that the government is going to provide incentive to
export - in particular easing up the documentation procedures and removing bottleneck for
exporting goods. Based on the IMS report for the fourth quarter 2011, Square Pharmaceuticals
holds the top market share in the retail market - 18.7%, followed by Incepta Pharmaceuticals -
9.3%, Beximco Pharmaceuticals - 8.8%, Opsonin Pharma- 5.1% and Renata - 4.9%. The top five
companies held 46.8% market share in 2011. Sanofi-Aventis ranked the top among the
multinational pharmaceutical companies followed by GlaxoSmithKline and Sandoz took the
third position. The professional knowledge, thoughts and innovative ideas of the pharmaceutical
professionals working in this sector are the key factors for this development. Due to recent
development of this sector, the industry is exporting medicines to global markets, including the
European market. This sector is also providing 97% of the total medicine requirement of the
local market. Some of the companies produce insulin, hormones, and anticancer drugs, which
were not previously produced in Bangladesh. Pharmaceutical Companies committed to produce
medicine strictly under GMP compliance and extended its services to all the valued Customers.
The company complies with GMP at its plant, where validation and documentation ensures the
position in accordance to international standard. The packaging and the presentation of the
products of Bangladesh are comparable to any international standard and have been accepted by
them.

Square Pharmaceuticals Ltd. the flagship company of Square Group, is holding the strong
leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its
way to becoming a high performance global player. It offers quality products at competitive
price. Square has invested in state of the art formulation plants aligned to regulated market
standards. Six manufacturing units of the Dhaka site can produce pharmaceutical products
maintaining cGMP requirement for highly regulated markets in Europe, Australia and USA.
Other five manufacturing units at Pabna site are producing finished formulations targeting
markets in ASEAN, SAARC and marketing in RoW region. They have 700 product approvals
for export markets and 900 product approvals for Bangladesh market. They are the pioneer in
pharmaceutical export from Bangladesh.

Analyse the Pharmaceutical industry of Bangladesh based on Porter’s Diamond Model.