Research and Innovation in the Bangladesh Pharmaceutical sector

 

Introduction

Bangladesh, a low middle-income country, developed a burgeoning pharmaceutical sector thanks to its pioneering Drug Policy of 1982.[1] Now it claims a market share of around 98 % of total drug sales compared to 25 % before the National Drug Policy was enacted in 1982. Specialized products like ant-cancer drugs, vaccines and hormonal preparations are imported to meet the remaining demand. According to the Bangladesh Association of Pharmaceutical Industries (BAPI) and Directorate General of Drug Administration (DGDA), approximately 257 licensed pharmaceutical manufacturers (allopathic) are operating in Bangladesh and about 150 are functional[2]. Currently, it is the second-highest contributor to the national exchequer (1.83% to GDP in 2017-’18) after the Readymade Garments industry. The industry is largely protected from external competition and is projected to grow beyond US$ 6 billion by 2025, with an export potential of US$ 450 million.[3] It currently exports to 144 countries including the UK, EU and USA.

 

Current Scenario and R&D vulnerability

Though there are around 150 functional manufacturers, the pharmaceutical market in Bangladesh is highly concentrated and limited to a few big companies. The top ten companies have 70 % of the market share and the top 20 have 78 %. Eighty per cent of the drugs produced are generic and 20% are patent drugs. Bangladesh pharmaceutical sector enjoys the benefits of TRIPs i.e., exempted from patent protection by WTO for an extended period until 2033.

This comfort zone has produced a kind of vulnerability related to investments in R&D, found to be highest in the pharmaceutical sector in Bangladesh consequent on TRIPS agreement[4].  A recent study on the relationship of R&D investments and firm performance concluded that “investors of Bangladesh do not consider R&D expenditure to be a creator of innovation rather they seem to be affected negatively in their assessment of the firm’s financial condition by R&D expenditure”.[5] The study found 80% of the sampled farms below average levels of innovativeness. “The tendency has been to utilise the TRIPS flexibilities to reverse engineer existing products and focus on earning quick money rather than going for long-term investment keeping future strategic interests in the focus”.[6] The top 30 local companies have well-equipped product development (PD) department instead of full-fledged R&D.[7] As pharmaceutical companies shy away from innovativeness, it will become difficult for them simply to rely on producing generic medicines in the long term.

 

Recent developments in R&D in the pharmaceutical sector in Bangladesh

However, the situation is changing fast due to the sector going global and being fiercely competitive, and consequent improvement in investments in R&D by the big manufacturers. As a result of these R&D investments, Bangladesh is now capable of producing specialized delivery products like inhalers, pre-filled syringe injections, lyophilized injections, and dry-powder inhaler and sustained-release formulations. The country has already developed production facilities for tablets, capsules, liquid preparations, dry suspension, injections, ointment/cream, nasal spray and granules in sachets[8].

One other area where strategic R&D investments are taking place is in the production of Active Pharmaceutical Ingredients (APIs). The pharmaceutical sector is dependent on imported raw materials (APIs) mainly from China and India (+other EU countries) as it is mainly involved in the final formulation stage. This has made the sector vulnerable to external shock, the price of medicines being dependent upon the cost of imported raw materials. Development of technology and the manufacturing of pharmaceutical raw materials, especially the APIs, involves sophisticated and advanced level engineering and chemical operations which are largely absent in countries like Bangladesh. As of July 2019, only 15 large companies produced 40 APIs. Among those, Active Fine is the only company which is fully involved in producing API. Ganashastha Pharmaceuticals Limited (GPL) alone accounts for about 60% of the raw materials manufactured in Bangladesh.

To facilitate the local production of APIs in the country, Bangladesh government has come forward to establish an API park in 2008 to accommodate around top 50 pharmaceuticals under a public-private partnership with BAPI.  It is expected that the country can save at least 70% of the import cost of raw material by producing raw material at API Park and make Bangladesh more competitive in the global market. National Board of Revenue (NBR) has exempted 15% VAT to local API producers on imported raw materials and reagents till December 2025 to support the backward linkage of the country’s pharmaceuticals industry².

 

Another aspect of R&D that is getting priority in recent times is the ‘smart innovation’ i.e, use of information technology in the management, development and production of drugs as far as possible. Some of the big companies are already in the process of automation of their management, including the R&D sector. Besides, capacity in biotech labs and facilities has also opened windows of opportunity for innovation of new drugs and processes.

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 Conclusion

Bangladesh’s pharmaceutical sector is at a crossroad. It has got the forward-looking entrepreneurs with an eye on the global market, human resources with necessary skills and business-friendly environment, and WTO/TRIPS advantage until 2033. There are substantial challenges related to capacity development e.g., the establishment of bioequivalence laboratory, regulatory regime and resources for investment. Once these are overcome and combined with strategic investment in R&D, the sector with appropriate nurturing by the policymakers can make a breakthrough in improving equitable access to medicines at affordable cost at home and abroad.

 

Excerpts from a forthcoming study on the topic  

 

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[1] Eurasian J Emerg Med. 2019;18(2): 104-9. DOI:10.4274/eajem.galenos.2019.43765

[2] http://www.bapi-bd.com/bangladesh-pharma-industry/overview

[3] https://www.businesswire.com/news/home/20200721005576/en/Bangladesh-Pharmaceutical-Market-Opportunity-Outlook-to-2025---ResearchAndMarkets.com

[4] A firm-level analysis of the vulnerability of the Bangladeshi pharmaceutical industry to the TRIPS Agreement: Implications for R&D capability and technology transfer. Procedia Economics and Finance 2013;5: 30 – 39. doi: 10.1016/S2212-5671(13)00006-3

[5] https://ideas.repec.org/a/spt/busent/v6y2017i2f6_2_1.html

[6] WTO Decision on TRIPS and Public Health. http://cpd.org.bd/wp-content/uploads/2018/08/Research-Report-2-Rahman-and-Farin-2018_WTO-Decision-on-TRIPS-and-Public-Health.pdf

[7] R&D Status in Pharmaceutical Sector in Bangladesh. https://tinyurl.com/y2ylnsev

[8] https://tinyurl.com/y49cymdr