Industry Report Series

BANGLADESH

September 2015

Size of the
industry was
BDT421.33bn in
Drug 2014.
Consumption Pharmaceutical
will not decrease Industry meet
significantly for almost 97% of
high price The top local demand.
inelasticity. performing
companies in the
industry are
relatively
consistent over
The burden of the years
Domestic market
cronic disease is is growing 20%
growing. to 25% in a year.

Published By
RESEARCH & INNOVATION LAB
Royal Capital Limited
Bangladesh Pharmaceuticals Industry Report 2015

Global Pharmaceuticals Industry

The pharmaceutical market will reach nearly USD 1,100 billion by 2015. Leading emerging countries will
account for 28 % of global spending on pharmaceuticals by 2015 compared to 12 % in 2005. The US share
will decline from 41% in 2005 to 31 % in 2015, while Europe’s share will fall from 27 % in 2005 to 19 % in
2015 because of market saturation and cost increase in domestic market. Patent expiry of some patented
products or aging patented products have eased the generic manufacturers to capture the market with low
price. IMS Health Study forecasts global spending on medicine to increase 30% by 2018 to $1.3 trillion.
Market will shift to the pharmerging countries with a growth rate of 12% to 15% which is almost triple of the
global spending growth.

Key Numbers forecasted for 2016

Total spending USD 1.2 Trillion
Spending on Generics USD 400 to 430 Billion
Developed country spending per person USD 609
Pharmerging country1 spending per person USD 91
Pharmerging spending growth 12% to 15%
Global spending growth 3% to 6 %
Patent dividend USD 106 Billion
Source: IMS Institute for Healthcare Informatics.

GLOBAL PHARMACEUTICAL INDUSTRY R&D INVESTMENTS

Annual R & D spending USD 120 billion Source: International Federation of
Pharmaceutical Manufacturers and
Associations (IFPMA)
Average innovation and developing of USD 1 Billion Source: Tufts University
product cost USD 1.38 Billion Source: IMS
Average cost of creating a new drug USD 5 Billion Source: www.forbes.com
In 2006-2010, the number of new chemical or biological entities
launched on the world market fell to 151 from 211 a decade
earlier.
It is five times greater than the R&D investments of the aerospace Source: IFPMA
and defense industries, 3.75 times more than the chemicals
industry, and 2.5 times more than the software and computer
services industry.
The 10 largest drugs companies control over one-third of this market, several with sales of more than
US$10 billion a year and profit margins of about 30%. Six are based in the United States and four in
Europe. It is predicted that North and South America, Europe and Japan will continue to account for a full
85% of the global pharmaceuticals market well into the 21st century. Companies currently spend one-third
of all sales revenue on marketing their products - roughly twice what they spend on research and
development. (WHO)

1 17 high-growth pharmaceutical markets are now ranked as “pharmerging”.

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Bangladesh Pharmaceuticals Industry Report 2015

PROFIT POTENTIAL IN PHARMACEUTICAL INDUSTRY The 10 largest drugs

companies control over
Distribution margins, which are generally filed by governments, one-third of this market,
and VAT rates differ significantly from country to country. On several with sales of more
average, approximately 34% of the retail price of a medicine than US$10 bn a year and
reverts not to the manufacturer but rather to the distributors profit margins of about
(pharmacists and wholesalers) and the State. 30% (Source: WHO).

Pharmaceuticals Industry of Bangladesh

Pharmaceutical industry of Bangladesh is the result of domestic demand, government
support and intellectual property reverse engineering right under the Agreement on
Trade-Related Aspects of Intellectual Property Rights (TRIPS)of World Trade Domestic
Organization. And the domestic market is growing 20% to 25% in a year. During this market is
period, implementation of good policy has surpassed the increment of production cost by growing
20% to
10%-12%. According to international Business, Monitor the size of the industry was to
25% in a
BDT421.33bn in 2014. Amongst the WTO listed LDCs, pharma industry of Bangladesh is
year
the most sustainable with rapid expansion. The industry meet almost 97% of local
demand as well as a rapidly increasing amount of export year to year. Research and
development is almost nil in pharmaceutical industry of Bangladesh except some generic
product development.
KEY PLAYERS
Due to the branded generic nature of products, companies are usually able to charge a premium price while
enjoying 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.

PRODUCT DESCRIPTIONS
A generic drug is a pharmaceutical product intended to be interchangeable with the original branded product
(which is often patented). In that the generic drug contains the same active substances as the branded product
and thus confers the same health benefits. Generics are considered (by U.S. Food and Drug Administration
(FDA)) identical in dose, strength, route of administration, safety, efficacy and intended use.

High End Generics:

High end generics have very low portion of market in Bangladesh. Mainly MNCs produce these products or
imported. Products price is very high compared to the purchasing power of people. Profit margin is very high
in these products.

Branded Generics:

Most of the pharmaceutical generic products are branded. Some firms such as Square Pharma, Incepta, ACI,
Acme, BeximcoPharma and some others have established high brand reputation for some specific products.
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Bangladesh Pharmaceuticals Industry Report 2015

Low end generic:

This market is highly competitive. Price based competition is very evident here. Low end generics consist of
mainly non-prescription (Over The Counter) drugs.

Some humanitarian organizations as well as some importers play vital role in contract manufacturing. Product
quality and compliance with the contract become critical in that case. International accreditation is required
for contract manufacturing.
PHARMACEUTICAL EXPORT AND IMPORT
Bangladesh
Pharmaceutical export of Bangladesh is very volatile. Export Year Import in us$ Export in us$
depends on number of manufacturing contracts and their
2000 139700056 2119652
quantities. Some pharmaceutical companies export
2001 124578340 3957480
pharmaceutical products in LDC countries. Export increased
by 87% and 77% in 2001 and 2002 respectively. The large 2002 137591660 6995071
shift in export 204.1% was in 2004. Export of 2003 145064519 6423924
pharmaceutical products increased from $ 2.1 million in 2000 2004 149661640 19534611
to $ 42.3 million in 2013 by 18.96 times which is remarkable. 2005 147419132 18177105
The industry has immense potentiality to export generic 2006 171527526 26960916
products in 34 WTO member LDCs with 14 non-member
2007 229142923 37740790
LDCs. Gradual income rise in the LDCs increase purchasing
2008 293733231 46541954
power of the importing countries. In addition, production
cost increase in the developed countries create opportunity 2009 291940783 26960354
for Bangladesh to manufacture in contracts. "Demand for our 2010 388533900 27454492
products is growingevery year and this is largely because we have focused 2011 324107649 48002863
on producing quality products by strictly following international 2012 420567708 36522514
standards," former Eskayef Bangladesh Managing Director A. 2013 447692296 42316855
M. Faruque told.

Export Growth Trend of Pharmaceutical Products

250.0%
200.0%
150.0%
100.0%
50.0%
0.0%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
-50.0%
-100.0%

World BD Asia EU SCA USA

SCA= South and Central America;Source: Export Promotion Bureau, Bangladesh & World Bank.

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Bangladesh Pharmaceuticals Industry Report 2015

HEALTHCARE EXPENDITURE
In 1995, health expenditure per capita was USD 11.15. In 2012 it is USD 26 with an increase of 133%.
Purchasing Power Parity adjusted health expenditure per capita was USD 23.36 in 1995 and USD 67.76 in
2012 with increase of 190% in total.

80 Nominal and PPP adjusted Health Expenditure

US $ Per Capita
60
40
20
0
200 200 200 200 200 200 201 201 201
4 5 6 7 8 9 0 1 2
Per capita health expenditure 12 13 14 16 19 22 24 27 26
Per capita health expenditure PPP
33 37 42 47 51 57 60 67 68
adjusted

SOURCE: WORLD B ANK

EXTENSION OF TRIPS BEYOND 2016

Article 66.1 of TRIPS is explicit that the TRIPS Council has an obligation to grant extensions to the
transition period if it receives a duly motivated request from an LDC. As word extensions (plural) is used
in Article 66.1, there is no limit to the number of extensions that can be
granted to LDCs. Although the TRIPS Agreement does not command
No limit in extension any particular procedure or format to request for extension. Therefore, it
will be sufficient if the request complies with the general rules of
of transition period
procedure and the practice of the Council for TRIPS for formal
communication. LDCs can make the request individually or as a group
(frequently joint request is done). What constitutes a “duly motivated”
request needs to be clarified. There is no specific definition of the phrase in the TRIPS Agreement other
than ordinary English meaning.

THE POTENTIAL RESULT OF FAILURE TO RENEW TRANSITION PERIOD BEYOND 2016

If the transitional arrangements for LDCs with respect to pharmaceuticals and test data end in January 2016,
there will be a significantly more complex situation regarding the availability and pricing of medicines
compared to the situation that obtained in 2001 when the Doha
Drug price will increase for
Declaration was adopted.
loyalty giving.
At the present time, there are few WHO prequalified generic
Drug consumption will not
manufacturers of antiretroviral medicines that are located in LDCs.
decrease significantly for
high price inelasticity.
While the treatment situation has obviously improved since the Doha
Declaration & the need remains great. There is a real danger that if the
Bangladesh does not get a further extension, the progress that has been made to improve access to generic
brands will be vastly hampered in the short term and in the long term but it can be minimized with integrated
efforts.
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Bangladesh Pharmaceuticals Industry Report 2015

BANGLADESH INITIATIVES TO EXTEND TRIPS BEYOND 2016

Trade officials from Bangladesh in Geneva, along with other least-developed countries (LDCs), have already
made a plea with the WTO high-ups for allowing them to produce patented drugs until 2026 to help poor
people with affordable treatment options.

Highlights of the position paper sent by Ministry of Commerce for extending waiver of TRIPS up to 2026:

 Bangladesh will have to pay high royalties for  Under patent protection, prices of
patented pharmaceutical products manufacture. essential vaccines for AIDS, tuberculosis,
 Poverty with high density of population 26% of polio, measles, diphtheria and tetanus will
which is living below poverty line. be very out of affordability.
 Per-capita spending on health is currently about  LDC members of the WTO continue to
US$17 per year, public sector contributes 30%, face massive health challenges from
civil society contributes 6% and remaining 64% is communicable and non-communicable
out of pocket expenditures. diseases.
 Bangladesh is hugely benefited by TRIPS  Under TRIPS agreement multinational
Agreement which made medicines accessible and companies have offered any remarkable
affordable. Bangladesh is probably the cheapest facility for technology transfer.
source of medicines in the world.  No patent infringement occurred in
 Government Health Insurance is not available LDCs who are producing medicines
here or affordable by the government of mostly for domestic consumption and
Bangladesh. within the LDCs.
 Bangladesh has to build infrastructure to  Some 22 LDCs cannot produce drugs
implement patent protection. even paracetamol.

FUTURE TREND RESHAPING THE PHARMACEUTICAL MARKETPLACE

o The burden of chronic disease is growing.

o The boundaries between different forms of healthcare are blurring (hospital care → primary care →
self-care).
o Policy-makers and players are increasingly influencing doctor prescription patterns.
o More focus on prevention rather than treatment.
o Pay-for-performance schemes are on the rise.
o The regulators are becoming more risk-averse approving innovative medicines (in fear of side effect
issues).
------------------ End of Report ---------------

This report is published on September 21, 2015 by Research and Innovation Lab
Royal Capital Limited, Dhaka Bangladesh.
All data and information contained herein are collected from Bangladesh Bank, The Financial Express, The Daily Star, and RIL’s
own storage and resources RIL cannot ensure the accuracy of the data and information except for its own resources.
Expectations are based on available data and information and hence in no way guarantee the future. Reproduction, quoting,
or using any data or information from this report must credited and cited properly. For further query on this report or on RIL’s
other reports please contact at email: [email protected]

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