SALIM AFZAL SHAWON

Management Trainee
Salim@idlc.Com

Research Report
Date : 28 June 2011

: Pharmaceutical Industry of Bangladesh

Abstract

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 2010, 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

List of Abbreviations
API

Active Pharmaceutical Ingredient

TRIPS -

Trade Related Intellectual Property Rights

IMS

Intercontinental Marketing Services, a market research company providing data on

markets, especially on healthcare industry

WTO

World Trade Organization

MNC

Multi National Corporation

R&D

Research and Development

cGMP -

Current Good Manufacturing Practice

BP

British Pharmacology

USP

United States Pharmacology

BAPI

Bangladesh Association of Pharmaceutical Industries

LDC

Least Developed Country

VAT

Value Added Tax

OTC

Over The Counter

ETP

Effluent Treatment Plant

IV

Intra Vascular

1.0 PREFACE

3.50%
3.00%
2.50%

Pharmaceuticals industry is the core of healthcare sector of Bangladesh.

Being part of healthcare sector, its performance is related to
demographic variables like population growth as well as economic
growth and healthcare policy. In our country, with improving
demographic characteristics, recent economic growth and favorable
policy, the industry has seen good growth.

2.00%
1.50%
1.00%
0.50%
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010

0.00%

The following table represents changes in our demographic variables,

economic growth and performance of Pharmaceuticals industry -

Health expenditure, public (% of GDP)

Health expenditure, private (% of GDP)

Indicator Name
GDP growth (annual %)

Health expenditure, total (% of GDP)

Pharmaceuticals market size

2005

2006

2007

2008

2009

5.96%

6.63%

6.43%

6.19%

5.74%

6.7%

3.21%

3.40%

3.46%

3.32%

3.35%

3.21%

35.42

37

40

54.93

68

26.96

37.74

46.54

45.71

BDT Bn

Pharmaceuticals Industry Growth

Pharmaceuticals Export

Unit

$ Mn
3

2010

18.18

50

Source - WorldBank, IMS, WTO, National Budget 2011-12

2.0 INDUSTRY OVERVIEW

A brief history
The history of Pharamceuticals industry dates back to 1950s. Over the
years, The industry has gone through some significant changes. After
liberation in 1971, the industry was largely dominated by MNCs, and the
country was very much import dependent. In 1982, through the
formulation of national drug policy, and drug control ordinance, a
defined guideline for the development of the industry was created. By
then, 75% of the market was dominated by the MNCs, whereas the rest
were shared by some 133 local firms. Since then, the local firms have
established a stronger foothold, and the country has become from an
import dependent to an active exporter of pharmaceuticals products. At

2010, top 5 MNCs have approximately 9.05% of the market share and
97% of total local demand is met through local production.

2.1 Industry Classification

As per Global Industry Classification Standard (GICS), it can be defined
as Pharmaceuticals industry, a part of Healthcare Sector.

2.2 Industry Structure

Branded Generic Industry

Mainly Finished
Formulation products

The industry has some distinct features compared to other countries.

First, R&D activity is virtually nil in Bangladesh pharmaceutical industry
it is a branded generic market. At present, there is approximately 258
manufacturers, with approximately 8000 branded generics in
Bangladesh pharmaceuticals market. Companies basically manufacture
finished formulation by assembling known generic and patented (in
some cases) product combination. Some firms have been engaged in
producing APIs, the core of pharmaceutical products, but these
productions are limited to synthesis stage (final stage) only.
2.2.1

Degree of concentration
Being Branded-generic product oriented business, manufacturers
usually are able to charge a premium for established brands, and enjoy
a relatively stable market share. As a result, the list of top performing
firms have been quite consistent over the years, with the leader, Square
pharmaceuticals topping since 1985.

High concentration of
business

Market share

46.40%
67.60%
77.70%
97%

0%

50%

100%

Top 5

Top 10

Top 20

Local Production

Local firms dominate

Competitive structure

Over the last three years, the top 4 players are consistent, with 5th to
10th position interchanged among 6 market players. As a total, top 5
firms capture on average 45% of the aggregate market. Adding 5 more
to the list brings on average 66% of total market to Top 10. Thus the
market is very much concentrated. (Source:IDLC Research)
Market Dominance
Prior to formulation of National Drug Policy and Drug control ordinance,
the market was chiefly controled by MNCs, holding about 75% of total
market (1985). Since then, market structure has changed, and now local
firms dominate the industry. At present, 97% of local demand is met
from local production, and the top 10 MNCs possess only 9.05% of
market share, compared to 67.6% held by local top 10 firms. (Source:IDLC
Research)

Intra industry Business Practices

Pharmaceutical is an emergency product, and its demand is not akin to
other products. Not only consumers show inelastic demand, but also
the demand is more driven by doctors prescription and product
availability compared to end customers demand. Furthermore, brand
loyalty is quite common. Thus, success in this market requires
competitor firms to strive for higher share in prescriptions as well as
higher product availability in pharmacies.
For this, firms engage in several product promotion strategy, including
aggressive pricing, credit policy and establishing relationships with
doctors, hospitals and pharmacies.
The common business strategy is to employ medical representatives to
establish these relationships. Success is usually measured in terms of
prescription share (often termed as Rx share), which demonstrates how
much of pharmaceuticals product demand goes to a certain producer
and is an indicator of future market share.
And for increased product availability, firms often engage in aggressive
marketing, particularly for products in the low end. The strategy is
reflected in providing products at a lower price than competitors, and
providing a more relaxed credit policy. The industry on an average has a
collection period of approximately 30 days.
Alongside, Bangladesh pharmaceutical industry is more retail oriented
and thus, mass distribution is done by the companies themselves
through their own warehouses to retailers and wholesalers.
Wholesalers usually have a limited role in marketing of such products.
Key Players:
Due to the branded generic nature of products, companies are usually
able to charge a premium price, while enjoy stable position. As a result,
the top performing companies in the industry are relatively consistent
over the years, often along with their respective market position. The
market leader is Square pharmaceuticals, which have enjoyed the top
position since 1985. At present, it has a 19.19% market share. The next
player is Incepta, followed by Beximco, Acme, Opsonin, and others. The
top 10 firms are almost the same over the years, often with little change
in order.

Market share of the top 10 firms over last two years are presented

Market

Market Share

3.88%
3.79%

4.48%
4.21%

5%

4.07%
3.97%

46%

10%

2010

4.54%
3.23%

Top 5

15%

4.76%
4.94%

68%

20%

4.81%
4.53%

Top 10

7.72%
8.35%

84%

2009

8.24%
8.98%

25%

19.48%
19.19%

Top 20

4.59%
4.92%

100%

0%

below-

Layer 1 : Research & Development

Layer 2 : Manufacture of ingredients

Market
Structure
2010
Layer
3: Manufacture
of Formulation

2.2.2 Segmentation
The overall business activities of pharmaceuticals can be classifeid in
three layers. The primary layer is R&D Activities where reasearch and
development of new drugs are done, and this business concerns Drug
Discovery, and development. This is often a very costly and hish risk
business, and for many of global Pharmaceutical firms, represent the
majority of costs. However, in Bangladesh, this activity is nil, and all the
firms are producers of known and established drugs.
The second layer is manufacture of ingredients for finished
formulations. These activities cover production of Active
Pharmaceuticals Ingredients (API), Excipients, Solvents etc. that are
Source: IMS

used as raw material in producing the final drug formulations. Among

these, the major business area is in production of APIs, also known as
Bulk drugs business, that has a large global market. In bangladesh,
companies have only recently entered API business. They are also

producing other necessary ingredients as well, but the overall

production is very low compared to total demand.
The final layer concerns producing final products, finished formulations.
In this layer, there are both patented and generic products. However, in
bangladesh, only generic products are produced.
API, Excipients and other ingredients
Historically, bangladesh has been dependent on imports for APIs and
other ingredients. Companies imported APIs and other materials and
used them for final production. The pharmaceutical manufacturers in
Bangladesh procure raw materials from various countries namely UK,
France, Germany, Japan, Holland, Italy, Denmark, China, Switzerland,
Austria, Hungary, India, Ireland etc. Recently, local firms has been
approaching to producing ingredients locally, especially API. These has
reduced dependency on imported raw materials to 70% of total.
Active Pharmaceutical Ingredient or API is the core element of
pharmaceutical products, and is the primary cost component for
production. At present, there are 21 companies in Bangladesh
manufacturing 41 APIs. Industry participants claim already becoming
self-sufficient in some APIs, namely, Penicillin, Cephalexin, NSAID and
Anti-Pyretic. The production of APIs is confined to the last stage of
Synthesis. Presently, Local APIs take a 20% share in domestic
production. The rest 80% is imported. These imported APIs represent
majority of raw materials import by bangladesh, approximately 70%.
Another important area is regarding packaging materials. In this area,
firms have improved their position. A number of firms now produce
many of the packaging materials.
Major APIs presently produced in Bangladesh
1. Amoxicillin Trihydrate
4. Flucloxacillin Sodium
7. Cefalexin
10. Metronidazole
13. Cephradine
16. Trimethoprim
19. Diclofenac Free Acid
22. Salbutamol

2. Ampicillin Trihydrate
5. Ferrous Suplhate
8. Ciprofloxacin Hcl
11. Oxytetracycline
14. Celecoxib
17. Ranitidine
20. Diclofenac Potassium
23. Zinc Sulphate Monohydrate

3. Aspirin
6. Fluconazole
9. Loratadine
12. Paracetamol
15. Ceterizine
18. Diclofenac Sodium
21. Diclofenac Diethylamine

Source: Presentation by Square Pharmaceuticals in International Conference on Local Pharmaceutical Production in Africa, Cape Town, 2011.

Formulations
Formulations represent the mainstream business in pharmaceuticals
industry of Bangladesh. Presently, the market consists of approximately
8000 generic products and 258 firms with manufacturing capability,
along with some imported patented products. (Source:IDLC Research)

High End

Branded Generics

FORMULATIONS
MARKET
Contract
Manufacturing

Low End

High End Generics

Small % of total market
Mostly imported
Recent entry of local firms
High Profit margin

Branded Generics
Largest % of Market
Local firms dominate
Stable Margin
Branding strategy

Low End
Smallsegment
Price based competition

From the perspective of business nature, the industry can be classified

as1.
2.
3.
4.

High-End products (Anti Cancer, Insulin, Vaccines etc.)

Branded generics (Products with a brand presence )
Low End generics
Contract manufacturing (domestic and export)

High End Generics:

These are essentially products specific to market niches, i.e. Anti cancer,
Diabatic products, Vaccines etc. these products are usually high priced
and represent a small portion of the market. Profit margins in such
products is very high. Historically, it has been import dependent, and
MNCs were the key provider. Recently, domestic firms have been
entering into this field, and competition is expected to drive prices and
import dependency down. Especially, in Anticancer, Insulin and several
vaccine production, several local firms have made significant progress.
Branded Generics:
This represents broadest segment of the market, comprising products
with relatively stable margin and Brand orientation. This segment is
dominated by local manufacturers, and due to high brand loyalty
observed in our market, market share of manufacturers is usually moves
rarely. Competition is branding oriented, and firms try to improve RX
share and relationships with doctors and related parties to increase
market presence. Anti-Gastric and Anti-Biotic are the two dominant
product category in this segment.
Low-end branded generics:
This segment is small, often for products with low branding possibility,
and price war is most evident here. The number of competitors is very
high, and market share of each competitor depends on success of
marketing strategy.

Contract Manufacturing
Significant Growth
oportunity exists in export
Requires cGMP compliant
plants

Contract manufacturing:
Locally, this segment is small as almost every firm manufactures its own
products. The business usually comes from Health organizations like
SMC (Social Marketing Company), UNICEF etc. to provide products such
as saline, contraceptives etc. However, there is a good market for
foreign contract manufacturing. As per observation of Bangladesh
Pharmaeuticals Society, our industry can earn approximately BDT 200
billion (USD 2.9 Billion) each year.
Presently, a number of top firms engage in contract manufacturing.
Competition is very low, as each firm engage based on foreign
counterpart relations. Manufacturing technologies and accreditations
play a vital rolein developing contract manufacturing capability.

2.3 Regulatory environment

The industry is regulated by Drug regulatory authority (DRA) through
the Drug Control Ordinance of 1982, and National Drug policy 2004

Price Regulations exists

Pricing:
Under the present regulatory structure, government fixes the maximum
retail prices (MRP) of 209 essential drug chemical substances. Other
drugs, listed as non-essential, are priced through an indicative price
system. For imported finished products, whether they fall in the
category of vital or non-vital drugs, a fixed percentage of markup is
applied to the C&F price to obtain the MRP. For local distribution, all
drugs must be registered with DRA. However, for export purpose, such
registration is not mandatory. (SOURCE: National Drug policy 2004)
Key registration areas:
1. Combination drugs (other than vitamins, nutritional preparations or
therapeutically useful) are not allowed
2. For imported drugs, GMP validation, bioavailability and bioequivalency are important registration criteria

Strong Quality control

issues

Drug Production regulations:

1. Firms are required to upgrade their productive facilities to ensure
cGMP is followed.
2. Foreign and MNCs are allowed to manufacture drugs in Bangladesh
only if at least three of their original research drug products are

Stimulates Export of
products

Direct marketing is
prohibited

registered in at least two of the following countries: USA, UK,

Switzerland, Germany, France, Japan, and Australia.
3. Drugs not in BP, USP, IP, INN or BPC will not be allowed to
manufacture.
4. Foreign firms can produce drugs in Bangladesh under licensing
agreement following certain conditions.
5. For export purpose only, any drug can be produced in Bangladesh
Drug distribution, storage and sale:
1. Only registered drugs are allowed for sale
2. Other than OTC drugs, no drugs should be sold without
prescriptions.
3. Advertisements are not allowed

3.0 RECENT DEVELOPMENTS

3.1 Budget
In the recent budget 2011-12, Pharmaceuticals industry has seen some
positive moves.
Withdrawal and
reduction in Taxes of
certain inputs

Withdrawal of VAT (15%) and Import duty (5%) from leucocyte filter
import by pharmaceutical companies.

Withdrawal of supplementary duty (20%) and reduction of import

duty (12% from 25%) for Cartridge/ Membrane filters import by

Extension of Tax Holiday

Benefit

pharmaceutical companies.

Reduced duty (3% from 12%) for sandwich panel import by

pharmaceutical companies.

Reduced duty for import of certain pharmaceuticals raw materials

(5% from 12%).

Extending eligibility for tax holiday from June 2011 to June 2013.

The declared moves will most likely result in following changes -

Anticancer producers will

have lower input cost

Reduced duty will lower product cost for certain product classes
(Anticancer drugs, Analgesics, Antipyretics, and Injectables)
providing potentials for local pharmaceuticals manufacturers.

In addition, completion of the API Park within 2011-12 would

provide pharmaceutical industry a cheaper source of API, improving

Tax Holiday reducing tax

expense of producers

cost efficiency. Meanwhile, tax holiday would help reduce eligible

producers (API and Finished formulation) tax obligations and
achieve better return. Active Fine Ltd. will be one of the major
beneficiaries from the inclusion of this sector under tax holiday.

Period Of Tax Holiday And Tax Holiday Rate

For Dhaka and Chittagong divisions (excluding districts of Dhaka, Narayangonj, Gazipur,
Chittagong and three hill districts)
Tax holiday period

Other divisions and three hill

districts

Tax holiday rate

Tax holiday period

Tax holiday rate

First two years

100%

First three years

100%

Next two years

50%

Next three years

50%

Next one year

25%

Next one year

25%

Source: National Budget 2011-12

3.2 TRIPS
In 2001, under the trade-related aspects of intellectual property rights
Due to TRIPS relaxation,
LDCs can produce drugs
without patent or license
cost up to 2016

(TRIPS), the World Trade Organization allowed developing and poor

nations to produce generic drugs without compulsory licenses or paying
the patent holders for a certain time frame. For developing countries
like India and China, the timeline was up to 2005. For Least developed
countries, including Bangladesh, the time line was up to 2016. Within
this timeframe, pharmaceutical industries are legally allowed to reverse
engineer, manufacture and sell generic versions of on-patent
pharmaceutical products for domestic consumption as well as for export
to other LDCs.

And as 2005 passed, developing countries like India and China had to
Growth in exports to LDCs
till TRIPS implementation

stop exporting to other LDCs due to TRIPS implementation. This opened

a wide export opportunity for Bangladesh, since it is the only country
among the 49 LDCs having a strong manufacturing base in
Pharmaceuticals. And since then, Bangladeshi firms has been
experiencing a surge in exports.
Recently, the least developed countries have sought an extension of the
deadline from 2016 to 2021, as most of them have not yet enjoying the

LDCs have sought an

extension of TRIPS
relaxation up to 2021

benefits of TRIPS relaxation. In addition, WTO still could not finalize the
list of patented products. If such an extension is provided, Bangladeshi
pharmaceutical industry is most likely to enjoy a good growth from
exports to LDCs. (Source:IDLC Research)

3.3 API Park

The govt. has undertaken a Pharma Ingredient project with an
estimated cost of BDT 235 Crore, which is to be completed by Dec-12.
API Park to be completed
by 2012

The project would include common ETP and adequate utility services.
The costs would be borne by Plot Owners, on a 60% Allotment and 40%
Installments basis. The Projected impact of this project is to save 90% of
pharma ingredient (API) import. At present, land filling of the park is to
be completed by June 2011. (Source:IDLC Research)

3.4 Formulations Market:

Presently, the formulations market is shifting gradually from acute care
Shifting market focus

to chronic care. Many of the previous high growth Branded generic

products are experiencing lower growth, and price based competition is
getting intense over time.
Regionally, pharmaceutical business is experiencing higher growth in

Change in regional
business growth

areas like Chittagong and Rajshahi. Whereas Dhaka region had a growth
of 18% in 2010, Chittagong and Rajshahi showed a growth of 24% and
33% respectively.

Declining Wholesalers
contribution

Due to higher direct sales and aggressive marketing strategy pursued by

companies, wholesalers role is on the decline. In 2008, their
contribution stood about 20.73%; by 2010, it has fallen to 16.19%.
(Source:IMS)

A tendency toward producing Raw materials locally has been seen as

Local manufacture of
ingredients increasing

firms are now manufacturing everything from pellets to freeze-dried

injections to IV amino acids.
Alongside, entry of local firms into High end product segment (Insulin,

Local entry into High

Margin segment

Anticancer etc) is also noticeable. In the insulin market, Square

Pharmaceuticals has already made its entry, providing at 22% lower
price than imported ones. Novo-Nordisk, the largest producer of insulin
(80% of local market), has established a 5 million vials insulin plant that
is to be operational from October 2011. In the anticancer field, Beacon
Pharma, Orion, Square pharmaceuticals, Renata etc several firms have
made entry.
Firms has been establishing cGMP compliant plants, and some has

Move toward grabbing

international market

already achieved accreditations from UK,USA, Australia etc countries

which suggest a stronger international presence in upcoming future.
Among the top firms, Beximco Pharmaceuticals Ltd. has already made
an agreement with Adamis Pharmaceuticals of USA to introduce four
drugs in the US market over within 2013. (Source:IDLC Research)

4.0 INDUSTRY OUTLOOK

Globally, Bangladesh market has demonstrated the highest growth
25.00%

5.00%

15.70%

10.00%

6.70%

15.00%

24.58%

among all countries in 2010. Whereas Global market and Afro-Asian

20.00%

0.00%
Market Growth Rate
Global Market
Afro Asian Market
Bangladesh Market

market is growing at a rate of 6.70% and 15.70% only, our country is

demonstrating an annualized growth of 24.58%. As a result of such
sigfnificant growth along with a consistent economic growth of around
6%, recently bangladesh was included on the Goldman Sachs "Next

Eleven" list as well as the JP Morgan "Frontier Five". As per their

observation, Bangladesh represents significant potentials to become an
important global manufacturer of pharmaceuticals, joining China, India,
Brazil and Russia. (Source:IMS)

4.1 Local Market

Being part of health care sector, domestic market size of
Millions
165

20
18
16
14
12
10
8
6
4
2
-

160
155
150
145
140
135
2009

2007

2005

2003

2001

130

Population, total
Health expenditure per
capita (current US$)

pharmaceuticals has a direct relationship with economic variables, such

as population growth, healthcare expenditure, income level etc.
In Bangladesh, the industry has been experiencing a good growth over
the last few years. The growth is attributable to rising population with
increasing healthcare expenditure per capita. Noticeably, the increase in
healthcare expenditure is due to higher level of private pending,
demonstrating a rising health awareness among the people. As
demographic variables improve over the coming years, the industry is
expected to continue its growth at least up to the implementation of
TRIPS [2016 expected].
However, the growth is not expected to be uniform across the market
due to differences among the segments.
API
The API indsutry is still at its infancy and significant growth opportunity
exists for the companies. In local market, there is a large gap between
local demand and local supply, as 80% of total demand is yet fulfilled
from imported APIs.
Formulation
In formulations, several changing trends are observed. Price based
competition is increasing within the local market. New investments are
also taking place. Firms are entering into previously unencharted
territories like insulin, AntiCancer etc products. And almost all the firms

are increasing product lines each year. Thus growth is likely to continue
for the coming future.

4.2 Export
The export market has shown significant growth over the years. Since
Export Destinations
(No. of countries)
62

68

72

80

2004, Exports have increased multifold, with export destinations rising

84

from 37 in 2004 to 84 in 2011.

API
Due to the relaxations provided by TRIPS up to 2016, APIs can bring

37

2011

2010

2009

2007

2006

2004

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, 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.

4.3 Expected scenario after TRIPS Implementation

The present relaxation of TRIPS are to be withdrawn from 2016. This will
create a radical change in the industry scenario as several major
changes is expected. First, price control will be lifted. Producers have to
Post TRIPS threats
No Price control
Impeded market access
Increased competition
Cost pressure

pay for patented products, as well as license fees. Meanwhile, export of

patented products will face problems, as Bangladesh cannot export
patented products without patent owners approval [which will be more
costly]. In addition, foreign firms will get access to local market, and
MNCs can produce several products in bangladesh that are not allowed
now. However, the impact will not be as much devastating as it seems,
because about 75% of the drugs in the WHO list are not subject to
Patent protections. And many of the products in bangladesh are
generics, thus not subject to patent protections. However, costs from
licensing fees, impeded access to export markets, withdrawal of local
protection, and potential rise in import costs (especially APIs) represent
significant challenges in the post TRIPS implementation scenario for
bangladesh pharmaceuticals industry.

4.4 Growth Expectation

For a strong API base, R&D Activities, formulation and market are three
primary concerns. Whereas our industry does not have R&D activities,
we have a good domestic formulation industry and a moderate size
domestic market. Alongside, we have trained local human resources to
support development in the industry. With the govt. proposed utility
and ETP benefits, and present regulatory structure, it is possible for
Bangladesh to develop a good base in formulation of API and
formulations for generic products.
Alongside, due to growth factors such as low manufacturing labour cost,
availability of relevant manufacturing technology and entrepreneurial
assertiveness, the doemstic market is to become a major emerging
market. Change in affordability, strength of continuous investment,
rapid spread of urbanization and education will result in high growth of
the industry in the coming years.
Being a part of healthcare sector, gorwth of pharmaceuticals industry is
related to several economic variables. And at present, bangladesh has a
quite good outlook on its demographics. GDP growth has been roaming
around 6% over last few years. Within 2001-09, average population
growth is 1.58%, with the growth rate declining at 1.68% per year. Life
expectancy at birth has increased at 0.89% annually, along with poverty
level reducing 1.68% each year. Most importantly, healthcare
expenditure per capita grew by a 8.7% per year, and private healthcare
expenditure grew by 3.16% annually, demonstrating a growing
propensity among people for healthcare expenditure.
With a consistent GDP growth rate around 6%, expected population
Growth Scenario 2011-2016
Local Market = 15%
Export Market = 10%
Overall Growth = 14.8%

growth rate 1.55%, Health expenditure per capita growing an an

average rate of 8.7% and continued pattern of increased life expectancy
and poverty reduction, an expected growth of 15% can be expected for
period up to 2016 for the local market.

In the export market, growth (presently 9.4%) is expected to stay at an

average of 10% upto 2016, as TRIPS relaxation prevails, and present
effort towards improving international reach continues. Further, if the
present expectations materialize, the API industry can provide another
growth opportunity in the export market. Exports presently amount to
5.93% of total size (local + Export) of pharmaceutical market on average.
However, exports may contribute more in industry growth in coming
periods.
Overall, an growth of 14.8% can be expected from our pharmaceuticals
industry up to 2016. After 2016, growth pace would depend on whether
TRIPS relaxation is extended or not.
If extended, the industry can expect another period of good growth,
Growth Scenario 2016-2021

with more growth coming from exports. However, total growth will be
lower than 2011-2016, due to indsutry size effect, saturation in many

If TRIPS benefit is extended,

Expected Growth = 10.1%

product classes locally and rising competition. Therefore, assuming a

GDP growth of 5%, alignment of private expenditure on healthcare with

If TRIPS benefit is not extended,

Expected Growth = 8.5%

GDP, and a stable life expectancy level, 10.1% growth can be expected.
And If not extended, export growth would certainly fall (assumed
growth to be 2%), while domestic industry would reach saturation and
will depend on demographic variables. In that case, a growth rate of
8.5% can be expected.

Appendix 1: Pharmaceuticals Trade information

WTO Data - Bangladesh

Pharmaceuticals Export

Pharmaceuticals Import

Source: World Trade Organization

Year

Value

2000

2119652

USD Mn (current
prices)
2.12

2001

3957480

3.96

2002

6995071

7.00

2003

6423924

6.42

2004

19534611

19.53

2005

18177105

18.18

2006

26960916

26.96

2007

37740790

37.74

2008

46541954

46.54

2009

45714931

45.71

2000

139700056

139.70

2001

124578340

124.58

2002

137591660

137.59

2003

145064519

145.06

2004

149661640

149.66

2005

147419132

147.42

2006

171527526

171.53

2007

229142923

229.14

2008

293733231

293.73

2009

269029761

269.03

Appendix 2: Selected Macroeconomic Information

Indicator
Name

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

5.94

5.27

4.42

5.26

6.27

5.96

6.63

6.43

6.19

5.74

GDP per capita

(current US$)

334.77

327.92

326.28

350.10

375.25

393.66

398.17

433.69

497.21

550.85

GDP per capita

(constant 2000
US$)

334.77

346.23

355.29

367.70

384.42

400.94

421.08

441.65

462.40

482.25

GDP per capita

growth (annual
%)

4.04

3.42

2.62

3.49

4.55

4.30

5.02

4.88

4.70

4.29

GDP growth
(annual %)

Poverty
headcount ratio
at national
poverty line (%
of population)
Poverty
headcount ratio
at rural poverty
line (% of rural
population)
Poverty
headcount ratio
at urban poverty
line (% of urban
population)

Population, total

2010

48.90

40.00

31.5

52.30

43.80

35.2

35.20

28.40

21.3

143288578.0

145797298.0

148281341.0

150726249.0

153122039.0

155463091.0

157752512.0

160000128.0

162220762.0

Life expectancy
at birth, total
(years)

62.00

62.68

63.34

63.98

64.59

65.16

65.68

66.15

66.56

Birth rate, crude

(per 1,000
people)

26.39

25.66

24.90

24.13

23.37

22.65

22.00

21.43

20.95

Health
expenditure per
capita (current
US$)

9.45

10.01

10.58

11.59

12.07

13.18

15.04

16.52

18.43

Health
expenditure per
capita, PPP
(constant 2005
international $)

24.54

26.58

27.57

30.99

34.31

39.40

43.25

44.42

47.67

Health
expenditure,
private (% of
GDP)

1.79%

1.87%

1.89%

1.91%

2.09%

2.16%

2.27%

2.28%

2.29%

Health
expenditure,
public (% of
GDP)

1.19%

1.23%

1.14%

1.21%

1.12%

1.24%

1.19%

1.04%

1.06%

Health
expenditure,
total (% of GDP)

Population
growth (annual
%)

2.98

3.09

3.04

3.12

3.21

3.40

3.46

3.32

3.35

1.78

1.74

1.69

1.64

1.58

1.52

1.46

1.41

1.38

GDP (current
US$ mn)

47,124.93

46,987.84

47,571.13

51,913.66

56,560.74

60,277.56

61,901.12

68,415.42

79,554.35

89,359.77

GDP (constant
2000 US$ mn)

47,124.93

49,610.30

51,800.80

54,523.45

57,942.34

61,393.08

65,463.04

69,670.90

73,983.83

78,231.38

Source: World Bank Database

Appendix 3: Pharma market growth across the world (2010)

Global Scenario

6.70%

North America

5.50%

Europe

4.90%

Africo-Asia

15.70%

Latin America

12.50%

Bangladesh

24.58%

Japan

5.90%

Source: IMS

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