“ With API dependency soaring, 2023 emerges as a paramount juncture for R&D investment in this dynamic market.“
Bangladesh, known for its booming garment industry, is quietly brewing a new storm - a storm of innovation and self-reliance in the pharmaceutical sector. While currently heavily reliant on imported Active Pharmaceutical Ingredients (APIs), the country is witnessing a surge in research and development (R&D) efforts, aiming to transform itself into a pharmaceutical powerhouse.
The API Dilemma
More than 90% of the Active Pharmaceutical Ingredients (API) and raw materials have to be imported, according to LightCaste Partners. In 2023, Bangladesh had to import 46.5 billion worth of raw materials. Although there are 2,804 valid sources for procuring pharmaceutical raw materials, most of the Active Pharmaceutical Ingredients (API)are sourced from India, China, Italy, and Germany. Only 15 local companies of Bangladesh produce around 40 Active Pharmaceutical Ingredients (API). Among them, only Active Fine specializes in APIs manufacturing, and does not produce any finished medicine.
Historical Focus: Bangladesh's pharmaceutical industry traditionally focused on formulating and finishing drugs using imported Active Pharmaceutical Ingredients (API). This model offered quicker entry into the market and capitalized on existing expertise in manufacturing and distribution.
Technological Bottlenecks: Producing complex Active Pharmaceutical Ingredients (API)requires advanced technology and expertise in chemical synthesis, often lacking in Bangladesh compared to established Active Pharmaceutical Ingredients (API) production hubs. Setting up the necessary infrastructure and acquiring skilled personnel can be financially and time-consuming.
Economic Considerations: Producing high-quality Active Pharmaceutical Ingredients (API) requires economies of scale. Bangladesh's current demand for specific APIs might not be large enough to support cost-effective production of some complex molecules.
Regulatory Hurdles: Stringent regulations and quality control standards for Active Pharmaceutical Ingredients (API) pose another challenge. Complying with these requirements can be costly and complex, especially for newcomers in the field.
Intellectual Property Concerns: Many high-value Active Pharmaceutical Ingredients (API)fall under patent protection, limiting Bangladesh's options for production without licensing agreements or developing alternative processes.
Where are we now?
The pharmaceutical industry in Bangladesh, one of the few knowledge-based and it is projected to have a compounded annual growth rate greater than 12% and surpass USD 6 billion during the 2019-2025 period, reported by The Daily Star.
Active Pharmaceutical Ingredients (API) account for 30% of total drug costs in case of small molecules and can go up to 55% for generic products. Currently, Bangladesh meets 98% of the demand for finished-form pharmaceutical products locally. However, more than 90% of the API and raw materials have to be imported. The global Active Pharmaceutical Ingredients (API)market size is projected to reach USD 248.3 billion by 2025 at a CAGR of 5.8%. LightCastle Partners analysis also estimated the market size of APIs in 2017 was around 730 million USD and it is expected to reach around 1,409 million USD by 2025.However, the current Active Pharmaceutical Ingredients (API) production in Bangladesh is minuscule as the country had to import 46.5 billion worth of raw materials. There are 15 local companies in Bangladesh that produce Active Pharmaceutical Ingredients (API). Gonoshasthaya Pharmaceuticals Limited (GPL) alone accounts for about 60% of Active Pharmaceutical Ingredients (API) manufactured locally, mentioned in Development Aid.
Rising R&D:
The Government of Bangladesh is significantly investing in the pharmaceutical sector, with an allocation of around $250 million in the past three years and plans to increase this investment to $1 billion, mentioned in BIDA. This investment emphasizes the importance of research and development (R&D) in this field. Additionally, public-private partnerships, particularly between the Bangladesh Council of Scientific and Industrial Research (BCSIR) and pharmaceutical companies, are playing a crucial role in boosting R&D efforts.
Stereotype:
The perception that Bangladeshi medicine is less effective than medicine from other countries could be considered a stereotype, as it generalizes the entire pharmaceutical industry of Bangladesh based on potentially limited or biased information. It’s important to note that stereotypes often oversimplify or distort reality and may not accurately represent the situation.
In terms of data analysis, the Bangladeshi pharmaceutical industry has made significant strides in recent years:
Quality Control: The Bangladesh National Control Laboratory for medicinal products (NCL) has been recognized as compliant with WHO recommended standards of Good Practices for Pharmaceutical Quality Control Laboratories (GPPQCL). This recognition indicates that the quality of pharmaceuticals produced in Bangladesh meets international standards.
Local Production: Bangladesh meets 98% of the demand for finished-form pharmaceutical products locally. This suggests a significant capacity for local production, which would require adherence to quality standards.
Export Growth: According to a report by Emerging Credit Rating Limited, the export growth of pharmaceutical products is 11.73%, as stated by the Export Promotion Bureau of Bangladesh in 2021. This growth indicates that Bangladeshi pharmaceutical products are accepted and used in other countries, further suggesting that they meet international quality standards.
As for the quality of raw materials used in Bangladeshi medicine, while the country does import a significant amount of raw materials, it’s important to note that these imports are subject to quality checks and regulations. The pharmaceutical industry in Bangladesh is regulated by the Directorate General of Drug Administration (DGDA), which ensures that both imported and locally produced raw materials meet the necessary quality standards.
Reducing Dependency
In 2023, Bangladesh began developing the Active Pharmaceutical Ingredient (API) industrial park in Munshiganj, with an estimated cost of Tk 381 crore. This initiative included a partnership with Ramki Enviro Services Ltd for a CETP project, aiming to complete infrastructural developments by the following year. The park, spread over 200 acres, allocated 45 plots to 27 companies, marking a significant step in enhancing the country's pharmaceutical industry.
According to an article by New Age bangladesh,producers of five API molecules are granted a 100% tax holiday, while those producing three molecules receive a 75% tax holiday. This incentive was extended from 2023 to 2032 for those able to produce API molecules domestically. Additionally, API producers are exempt from Advance Income Tax (AIT) on the import of chemical compounds, both technical grade and chemically pure.
Investing in the Pharma Future
The Bangladeshi government's commitment to pharmaceutical growth is evident in its 2018 API Policy in BIDA, aiming to attract USD 1 billion in investment, reduce import reliance to 80% by 2032, and create 500,000 jobs, supported by the establishment of a dedicated API Park. Leveraging its strength in producing branded generics, Bangladesh is well-positioned to capitalize on the patent cliff and expand its generic and patented drug markets, particularly in LDCs and non-WTO countries, thanks to WTO patent waivers. Additionally, the rising global and local prevalence of Non-Communicable Diseases (NDC), anti-cancer, anti-diabetic, vaccine & insulin, offers significant opportunities for growth in the production of related pharmaceuticals, presenting an attractive investment landscape in the sector.
