Pharmaceutical Industry of

Bangladesh:

Prospects and Challenges

Nazneen Ahmed, Kazi Iqbal, Rizwana Islam, Nahid Ferdous Pabon

Objectives of the study

To understand the current status of the pharmaceuticals industry of Bangladesh in terms of production, export, employment, marketing strategies.

To identify challenges faced by this industry

To understand strength and opportunities

Necessary definitions

Branded generic drugs: produced by a firm by using formula developed by others

Patented drugs: originally developed by the firm itself

Essential drugs: satisfy the priority health care needs (by the WHO) of the population. 400+ medicines. (285 in Bangladesh)

Pharmaceutical Industry of Bangladesh

Market size: $2211 million in 2017 ($1105

million in 2012)

Contribution to GDP: 1.87% (2017)

Meets 97% of domestic demand, exports the

rest

273 registered companies, 217 in operation

Top 10 firms occupies almost 70% of the

market share.

80% generic drugs and 20% patent drugs.Exports to more than 100 countries (e.g USA,

UK, Australia and Africa)

Export volume: $104 million in 2017 ($70

million in 2013)

Depends heavily on imported raw materials

Pharmaceutical Products in Bangladesh

Source: Directorate General of drug administration

Growth of the Pharmaceutical Products

Top 10 Pharmaceutical Industries in Bangladesh

All the top 10 companies are local and they have approx. 70% market share.

Leading companies have major approvals (US FDA, EU GMP, UK MHRA, TGA Australia, ANVISA Brazil etc.)

No MNCs among the top 10.

Main PoliciesPolicy Name Year Purpose Recommendations

Drugs Act 1940 This act was introduced to regulate the

import, export, manufacture, distribution

and sale of standard quality of drugs.

-----------------------------------------

The Drugs

(Control)

Ordinance

1982 The purpose of this ordinance is to control

manufacture, import, distribution and sale

of drugs. To provide administrative and legislative support for ensuring quality of

essential drugs which are relevant to the national health need.

To reduce the price of medicine by ensuring the lowest competitive price.

To eliminate non-essential medicine from the market.

To promote production of local drug and raw materials.

To develop proper drug monitoring and information system to prevent

wasteful misuse and to ensure the proper utilization of the drugs. .

National Drug

Policy

2005 The purpose of this policy is to ensure

adequate supply and availability of good

quality of essential drugs at affordable

prices.

To ensure that the common people have easy access to useful, effective, safe

and good quality essential and other drugs at affordable prices.

National Drug

Policy

2016 well-defined directives for drug safety,

efficacy, rational use, effective drug control

management, production, marketing,

distribution, storage and import-export.

To ensure people can have easy access to safe, effective and good quality

drugs at affordable prices.

To ensure rational and safe use of drugs and proper dispensing.

To achieve self-sufficiency in the manufacture of drugs and raw materials by

providing services and facilities on a priority basis to all local drug

manufacturing industries.

To expand the export of drugs that manufactured in the country.

To establish effective surveillance system of medicines.

Methodology of Sample Survey

Sample frame: 164 firms, members of Bangladesh Aushad ShilpaSamity

35 firms were initially selected purposively keeping the market share and location in mind

26 out of 35 took part in the questionnaire survey

KIIs with industry experts

Survey of Medical Representatives (25 randomly selected)

Summary of the sample

26 firms: Dhaka (22), Chattogram (2), in Barisal (2)

Private ownership: 25, Joint (Domestic + Foreign):1

Years taken to start production: 2.07

Factories per firm: 1.36

Value of fixed asset: 375 crore Taka

Summary of the sample..

Moderately large (10): annual turnover <25 crore taka (<40th percentile)

Large firms (9): annual turnover 25 crore-1200 (40th to 74th percentile)

Very large firms (7): annual turnover above 1200 crore (above 74th percentile)

Production

Type of firm

Number of

Branded

Generic

medicine

Number

of

patented

medicine

Essential Medicine

(Total listed in

Bangladesh is 285)

Moderately large firms 115 0 27

Large firms 172 0 61

Very large firms 1008 0 81

All firms 375 0 53

Value of fixed asset (Crore taka)

Type of firm Mean Min Max

Moderately large firms115.3 0.4 774.4

Large firms172.0 11.7 584.2

Very large firms1008.1 84.8 2564.5

All firms 375.3 0.4 2564.5

Turnover and Profit

YearMean annual turnover

(million taka)

Mean annual profit

(million taka)

Profit (% of

turnover)

2014 6620 552.7 8.35

2015 7460 677.3 9.08

2016 6821 629.4 9.23

2017 7100 683.7 9.63

2018 10980 994.7 9.06

Raw Materials (RM): Share of different Sources (%)

Year Domestic RM Foreign RM

(imported)

Foreign RM (from

local suppliers)

Total

2014 21.2 65.4 13.4 100

2015 19.9 67.1 13.0 100

2016 20.2 67.6 12.2 100

2017 19.3 67.4 13.3 100

2018 20.2 65.6 14.2 100

Raw Materials: Import (top 5)

Rank Country No. of sample farms

imported

RM from this country

% of total import

from this country

1 China 25 47

2 India 25 34

3 Germany 13 5

4 France 9 4

4 Italy 9 2

4 Korea 9 6

Export

Export of Pharmaceutical products from Bangladesh

Export: Top 10 destinations of the sample firms

RankCountry

No. of sample firms

exporting to the country

% of Export to the

country

1 Sri Lanka 13 12

2 Myanmar 11 10

3 Afghanistan 10 9

4 Vietnam 9 8

5 Kenya 8 7

5 Cambodia 8 7

6 Philippines 7 7

7 United Kingdom 3 3

8 South Africa 2 2

9 Indonesia 1 1

General chain of a drug

Discovery:2-10 Years

Pre-Clinical:Laboratory and Animal Testing for additional

1-3 years

Clinical Trials: Phase 1: 20-80 healthy patients used to

determine safety and dosage

Phase 2: 100-300 volunteers used to look for efficacy and

side effects

Phase 3: 1000-5000 patient volunteers used to monitor

adverse reaction to long term use

Phase 4: FDA Review/Approval

Phase 5: Additional Post Marketing Testing

Launch of Drugs

Commercial Distribution

Employment In Pharmaceutical Sector

Employment category Gender Employed

persons

Employed

persons

Number Share (%)

Administrative &

managerial

Male 7,427 94.26

Female

452 5.74

Clerical & sales workers Male 22,398 94.80

Female1,228 5.20

Production & related

workers

Male 27,278 79.95

Female6,841 20.05

Working

owner/proprietor/partner

Male 354 89.62

Female41 10.38

Temporary laborer Male 3,886 72.68

Female 1,461 27.32

Total

Male 61343 85.96

Female 10023 14.04

Employment Cost by Category and Sex

Source: SMI 2012

Employment in sample firmsPosition % of total employment

Pharmacist 4

Chemist 2

Biochemist 1

Other Technical 6

Administrative 5

Sales Representatives 19

Medical Representatives 46

Production Related (Non-Technical) 17

Others (Drivers, Office Assistants, Guard etc.) 1

Total 100

Employment: Gender perspectivePosition Male (%) Female (%)

Pharmacist 75.5 24.5

Chemist 86.0 14.0

Biochemist 76.9 23.1

Other Technical 80.6 19.4

Administrative 75.2 24.8

Sales Representatives 67.9 32.1

Medical Representatives 98.9 1.1

Production Related (Non-Technical) 78.4 21.6

Others (Drivers, Office Assistants, Guard

etc.)100 0.0

Total 86.1 13.9

Skill

Average level of skills in a scale of 1 to 10 (perception by the employer)

Position Male Female

Pharmacist 8.8 8.7

Chemist 8.5 7.9

Biochemist 8.3 8.3

Other Technical Employees 8.4 7.8

Administrative Employees 8.2 7.8

Sales Representatives 7.6 7.7

Medical Representatives 7.8 7.5

Production Related (Non-Technical) 7.4 7.2

Others (Drivers, Office Assistants, Guard etc.) 7.3 7.3

Marketing

Where do the pharmaceutical companies sell in the domestic market?

Major Buyers of

Medicines

No. of Observations (all

26 Companies)

% (out of 26 Companies)

Private Pharmacies 25 96.15

Private Hospital 19 73.08

Doctors (Hospitals &

Programs)

12 46.15

NGOs 6 23.08

Donor Agency 6 23.08

Others 10 38.46

Marketing: Major StrategiesMajor Advertising Strategies % of responses

Reach doctors through MRs 36.92

Reach pharmacies through MRs 18.46

Company to hospital contract 12.31

Tender 9.23

Campaigning in different organizations 7.69

Company to doctor contract 6.15

Advertisements (TVs, magazines, posters,

leaflets, social media etc.)

4.62

Others 4.62

Marketing: Expenditure by the sample firms

Year Expenditure (% of annual turnover)

2014 28.45

2015 28.89

2016 27.51

2017 28.55

2018 29.36

Marketing Strategies of the Medical Representatives (MRs)

MRs report to the Area Manager (AM)

Targets:

a) Amount of sales

b) Number of photograph of prescription paper (send to the AM through Messenger/WhatsApp)

How do MRs influence doctors?

a) Brief doctors about the superiority of the drug

b) Gifts to doctors in different forms

Price of medicine

Pricing: Top 5 Determinants

Rank Determinants % of responses

1 value of imported raw 29.33

2 government policy 24

3 product quality 14.67

4 domestic market competition 13.33

5 marketing cost 10.67

Pricing: VariationType of firm Unit price

Azithromycin 500mg tablet

Moderately large firms 25.43

Large firms 26.55

Very large firms 28.32

Omeprazole 20 mg capsule

Moderately large firms 3.77

Large firms 3.07

Very large firms 3

Ciprofloxacin 500 mg tablet

Moderately large firms 9.93

Large firms 7.67

Very large firms 11.62

Capacity utilization rate

Capacity utilization rate: Year 2018

Type of firm Mean

Moderately large firms42.8

Large firms46.2

Very large firms36.5

Technological changes in last 5 yearsCases Total

Cases=25

% Comment

New Machine Bought in the Last 5

years

24 96 24 (96%) out of 26 firms answered in the affirmative

that they bought new machines in the last 5 years. One

of the firms didn’t respond to the question.No New Machines Bought in the last

5 years

1 4

Total

Cases=24

%

New Machines replacing the older

ones

7 29.17 From all the 24 firms buying new machines, 17 (71%)

firms did so to add new method in the production

process and the remaining 7 (29%) firms did that to

replace the older ones in their places.

New Machines adding New Method

of Production

17 70.83

Total

Cases=14

%

New Machines Replacing the older

ones Completely

6 42.86 Out of all the 24 firms buying new machines, 14 firms

replied to the question asked about to what extent did

the new machines replace the older ones and among

them 43% claimed complete replacement and 57%

claimed to have got partial replacement of the

machines.

New Machines Replacing the older

ones Partially

8 57.14

Strength-Weakness-Opportunities-Threat (SWOT) analysis

SWOT analysis: Strength

Rank Strength % of responses

1 Product quality is good 19.38

2 Long experience 13.95

2 Demand will not fall 13.95

3 Current reputation of the company 13.18

4 Skilled worker 12.40

SWOT analysis: Weakness

Rank Weakness % of responses

1 Lack of capital 17.92

2 Limited marketing opportunities 16.98

3 Gas related problems 16.04

4 Electricity related problems 10.38

5 Lack of skilled worker 9.43

Export: Major problems faced

Rank Problems related to Export % of Responses

1 Bureaucratic Complexity 19.74

2 Importers' Quality Control Policy 15.79

3 Policy of the country's importers 10.53

4 Tax, VAT is More 9.21

4 Customs Issues 9.21

SWOT analysis: Future Opportunity

Rank Opportunity % of responses

1 Raw materials will be more available 12.7

2 Loan with low interest will be available 10.32

2 Foreign markets will expand 10.32

3 Gas related problems will be resolved 8.73

4 Infrastructure will be developed 7.94

4 taxes, levy etc. will be reduced 7.94

SWOT analysis: Future Threat

Rank Threat % of responses

1 LDC graduation and TRIPS obligations 12.7

1 Lack of raw materials 12.7

2 Amount of taxes, levy etc. may increase 11.11

3 Lack of adequate finance 9.52

3 Government policies and institutions 9.52

Thank you