The Pharmaceutical sector is one of the most developed among the manufacturing industries in

Bangladesh, although it is still small compared to other comparable sectors. The increase in awareness
about healthcare, higher income and increasing government expenditure have resulted in higher demand
for medicine.
The Drug Policy of 1982 has helped the industry grow by 65 times from BDT 1730 million to BDT 113
billion now, according to IMS report of 2014. In 2000 there were 173 active and licensed allopathic drugmanufacturing units in the country, while the figure now stands at 300 now.
According to the Directorate General of Drug Administration (DGDA), there are currently 200 active
allopathic companies in Bangladesh. About 22,000 brands of drugs are sold which cover 1500 types of
medication. There are 1495 wholesale drug license holders and about 37700 retail drug license holders.
The industry meets 98% of the demand for medication in the country and can be considered to be selfsufficient.
The sector employs 1,15,000 workers and between 2013 and 2014, the growth stood around 11.37%.
According to IMS Health, annual pharmaceutical sales in the local market may reach BDT 160 billion
within 2018.

Figure 1 Local Sales (Source: IMS /4th quarter report data visuals by EBL Securities)

Export scenario
The industry is also exporting abroad. Currently, formulations are exported to 92 countries around the
world. The major destinations for Bangladeshi medicines are Myanmar, Sri Lanka and Kenya, while nearly
50 countries import Bangladeshi medicines regularly. The growth in exports has averaged over 10% from
2010 to 2014. In 2015, the exports was over $ 41.17 million. Pharmaceutical companies are trying to
export to regulated, unregulated and moderately regulated markets.

Figure 2 Exports (Source: IMS /4th quarter report data visuals by EBL Securities)

Domestic competition
The domestic market is highly concentrated and competitive. The local manufacturers dominate the
industry capturing market share of 90%. While the multinationals cater to the remaining demand.
According to IMS Health, the top 10 companies hold 68.5% market share, the top 20 hold 85.73%, and
the top 31 hold 94.1%, while the remaining 169 companies shared 5.9% among them.
Square Pharmaceuticals led the industry with a market share of 19.21%. Incepta and Beximco took 2 nd
and 3rd positions with market shares of 10.42% and 8.47% respectively.

Figure 3 Top 10 companies (Source: EBL Securities Ltd)

MNCs

Although a number of MNCs are operational in Bangladesh market, no MNCs are in the top ten in terms
of domestic sales. Out of the top fifteen pharmaceutical companies in Bangladesh, only two players are
MNCs. Among the MNCs, Sanofi has the highest market share while Novartis has the highest growth as
of 2014.

Figure 4 Top MNC pharmaceutical companies (Source: EBL Securities Ltd)

Backward integration
Due to lack of backward integration, the sector is at a competitive disadvantage, as pharmaceutical
players still have to import 90% of raw materials from 98 indenters around the world. Most APIs or their
raw materials have to be imported from countries like China, India, Korea & Italy. This generates higher
factor costs which can be up to 30-40% of the cost of medicine. The API Park which was supposed to be
established has been delayed due to various problems like rise in production cost, slow gas connection
and slow handover. The manufacturers are also concerned about their capability to shift their entire
production in the API Park. For many APIs, The domestic market is too small to justify an API
manufacturing plant other than the reduction of cost. Although the companies have the technical
knowledge to produce APIs, there is not enough demand in the market. This means that once the API
Park is established, we would need to export the additional products abroad. Export channels need to be
set up now.

TRIPS
According to the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), all
signatories are bound to incorporate 20 year product patent protection for pharmaceutical products in their
domestic legislation. Currently, total 48 LDCs, including Bangladesh, are not obliged to enact legislation
on product patent rights till 2016. TRIPS provided Bangladesh pharmaceutical firms with patent free
production rights domestically until 2016 and limited exporting advantage. A major challenge to the
current scenario could have been the expiry of the agreement. But on November 6, 2015, the TRIPs
council meeting approved extension of the transition period for pharmaceutical products for least
developed countries till 2032. Bangladesh secured additional protection for LDCs, including additional
waiver as well as the previous waiver.

Conclusion

The ability of the Bangladeshi drug industry to manufacture drugs for all kinds of needs is beyond doubt.
While some manufacturers are already able to produce world class quality drugs, others would require
considerable assistance to be able to reach that target. Bangladesh is a natural candidate to supplement

or substitute other international manufacturers to the developing country markets of both finished drugs
and APIs. In order to maximize growth, the pharmaceutical players need to set their sight in the global
market.