Pharmaceutical Sector Overview

Date: May 21, 2015

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 (July-January) of the current financial
year (FY'15) (EPB).

Pharmaceutical Sector Overview

Date: May 21, 2015

COMPETITIVE SCENARIO/ MARKET PLAYERS:

Figure (Left): Production of Top 10 companies

Figure (Right): Market Share of the Top 10 companies
Company
SQUARE
INCEPTA PHARMA
BEXIMCO
OPSONIN
PHARMA
RENATA
ESKAYEF
ARISTOPHARMA
A.C.I.
ACME
HEALTHCARE

Market
Size
(BDT
bn)
21.15
11.78
9.56

Market
Share
(%)

Growth
(%)

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
3.09

5.1
4.5
4.5
4.1
4.0
2.7

13.5
12.0
15.7
9.9
14.1
35.4

.
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.
MULTINATIONALS:
Of the total pharmaceutical market, local companies are enjoying a market share reaching around 90%, while
the multinationals are having a 10% share of the medicine-market. Out of the top fifteen pharmaceutical
companies in Bangladesh only two are MNCs. Among the MNCs Sanofi has the highest market share while
Novartis had the highest growth last year (2014).
Market Size
Market Share
Rank
Company
Growth 2014 (%)
(BDT bn)
(%)
12
SANOFI BANGLADESH
2.19
1.94
7.66
14
NOVO NORDISK
2.04
1.81
-1.99
17
GLAXOSMITHKLINE
1.79
1.59
5.93
18
NOVARTIS
1.76
1.56
28.45
20
SANDOZ
1.45
1.28
21.09
25
ROCHE
0.77
0.68
9.02

Pharmaceutical Sector Overview

Date: May 21, 2015

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.
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)

RAW MATERIALS & 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.
TRIPS:
The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is an international agreement
administered by the World Trade Organisation (WTO) that sets down minimum standards for many forms of
intellectual property (IP) regulation applicable to WTO Members. According to this, all signatory parties are
bound to incorcoporate 20-year product patent protection for pharmaceutical products in their domestic
legislation. Currently, the 48 LDCs are not obliged to enact legislation on product patent rights till 2016. Until
then, LDCs can provide no patent protection at all. Some LDCs, however, have implemented full TRIPS patent
protection or expanded TRIPS-plus patent protection in advance of the 2016 deadline. Until 2016, Bangladesh
may:
I.
Export to any country if the drug is not under patent
II.
Export to another LDC or non-WTO country that has not implemented product patent protection
III.
Export to a country where the patent holder has not filed for patent protection for this drug.

Pharmaceutical Sector Overview

IV.
V.

Date: May 21, 2015

Export to a country that has issued a compulsory license for the drug and awarded the production
contract to Bangladesh.
Be the first one to market when a patented drug goes off patent
TRIPS provide Bangladesh pharmaceutical firms with patent-free production rights domestically until
2016 and limited exporting advantage. As long as Bangladesh has to import APIs, they will have to buy
these from firms which are compliant with TRIPS laws and hence will have to pay higher royalty for
these. The major challenge for the expansion of pharmaceutical industry is the expected expiry of
WTO/TRIPS (Trade Related Intellectual Property Rights) agreement in 2016, which provides patent
exemption for pharmaceutical products in Bangladesh as a least developed country (LDC). This may be
less significant now as many of the patents are also going to expire in 2016.

FUTURE OF THE INDUSTRY:

CHALLENGES:
Lack of API Support: API/Raw Material Production Plant: The major advancement of Bangladesh
pharmaceutical sector has been occurred only in the production of finished products. Manufacturing
of pharmaceutical products are vastly dependent on imported raw materials, as almost 90% of raw
materials are now being imported. This dependency on imported raw materials is resulting in increased
production cost of the finished products. Ultimately the competition to offer export prize is becoming
tougher, which is one of the major challenges of pharmaceutical sector of Bangladesh. Setting up of a
standardized Active Pharmaceutical Ingredient (API) plant is very essential. Local production of raw
materials will greatly contribute to pharmaceutical export to extend export volume, and also can
potentially contribute to the countrys economy.
Bioequivalence Test Facility: Bioequivalence study of a product is a must for the registration of that
product in many of the moderately regulated and regulated countries of the world. There is no standard
facility for bioequivalence study in Bangladesh. In order to register a product, a pharmaceutical
company has to carry out this test in foreign country by spending of a huge charge. For this reason,
many pharmaceutical manufacturers dont show interest to register their products in foreign countries
that require Bioequivalence study. It is relevant here to mention that BAPI and pharmaceutical
exporters first felt the necessity of having Bioequivalence test facility in our country and they proposed
and demanded to set up a modern Bioequivalence test center to the govt. for the promotion of
pharmaceutical export.
Modern Drug Testing Laboratory: A major limitation of drug control authority of Bangladesh that also
affects pharmaceutical export is unavailability of a modern, well equipped drug testing laboratory (DTL)
with the engagement of sufficient and skilled pharmaceutical scientists. Due to lack of this, our drug
control authority cannot monitor the quality of drugs manufactured by different pharmaceutical
companies in Bangladesh. Moreover, foreign buyers and regulatory authorities raise question about
the status of our drug testing laboratory, the central quality monitoring facilities of drug authority of
Bangladesh.
Regulated Markets: To register pharmaceutical products in regulated markets it requires highly
standardized documents. There are regulations directed by the regulatory authorities of United States
of America, European Union, Australia and Japan along with other highly regulated and semi regulated
countries. To meet all their requirements sophisticated and accredited manufacturing plant,
standardized manufacturing process, proper quality control and above all highly skilled professionals
are required. It is tough to meet all the requirements by small pharmaceutical companies of
Bangladesh.
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.

Pharmaceutical Sector Overview

Date: May 21, 2015

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.

CONCLUDING REMARKS:
The pharmaceutical sector has already been declared as the thrust sector by the government of Bangladesh.
Bangladesh has built a strong baseline and going towards the self-sufficiency for the production of medicine.
Meanwhile, some companies have started to produce vaccine, insulin, anticancer drugs, etc. As the industry is
growing at 11.37% and has a CAGR of 21%, it has a lot to offer given that the government provides incentives &
the investment in R &D increases among the companies. In 2015 alone, patented drugs worth $60bn are going
off patent which opens up opportunities for generic manufacturers around the world. Bangladesh could be
ideally positioned to gain from generic drug opportunities with its cost advantages and skilled manpower, but
we need to address those key challenges faced by the industry in order to gain further competitive advantages
and build presence in the global generics.

COMPARATIVE DATA OF LISTED PHARMACEUTICAL COMPANIES:

Company Name
ACI
ACIFORMULA
ACTIVEFINE
AFCAGRO
AMBEEPHA
BEACONPHAR
BXPHARMA
CENTRALPHL
GLAXOSMITH
IBNSINA
JMISMDL
ORIONPHARM
PHARMAID
RECKITTBEN
RENATA
SQURPHARMA

Market
Price
466.5
205.7
60
59.9
261.6
14
54.2
27.7
1701.1
94.1
159
40.3
276.3
1426.1
888.8
249.6

EPS
(Ann)
7.92
6.80
3.28
3.20
3.08
0.08
4.20
1.97
74.19
4.36
2.48
5.64
8.83
68.56
36.04
10.15

EPS
Growth
34%
137%
-19%
129%
-6%
-20%
10%
6%
8%
7%
39%
58%
150%
14%
14%

P/E

Paid up (mn)

Free Float

MC/SC

58.9
30.25
18.29
18.72
84.94
175
12.9
14.04
22.93
21.58
64.11
7.15
31.3
20.8
24.66
24.6

396
450
994
633
24
2,310
3,679
820
120
225
110
2,340
31
47
530
5,543

25,662,142
15,291,000
84,674,592
38,044,875
808,560
161,676,900
317,161,694
36,897,750
2,170,770
11,828,346
3,697,100
159,166,800
2,232,672
627,008
25,947,222
253,813,582

5%
3%
2%
1%
0%
1%
6%
1%
6%
1%
0%
3%
0%
2%
13%
39%