Submitted to

Farzana Akter Lecturer Department of Business Administration East West University

Submitted by
Group Name- ADROIT Section No. : 10 Group MembersName
Md. Abdullah Hel Kafi Adittya Barua Hasan Md. Zahir Sraboni Rahman Taslim Alam Md. Emran Hossain

ID
ID: 2012-1-10-087 ID: 2012-1-10-091 ID: 2012-1-10-005 ID: 2012-1-10-044 ID: 2012-1-13-020 ID: 2011-2-10-051

Date of Submission- 13/012/2013

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Letter of Transmittal

13th December, 2013 Farzana Akter Lecturer Department of Business Administration East West University Subject: Submission of a Report on Review, problems and project of pharmaceutical industry. Mam, With due to respect we hereby state that we are submitting the report on account of my Principles of Finance course under your instruction. we was assigned to prepare this report on Review, problems and project of pharmaceutical industry provided all the necessary instruction and information for preparing this report. The report is based on the topic has helped to acquire knowledge about overall pharmaceutical industry. We tried to give our best possible effort to prepare this report and we hope you will be satisfied. There might be some mistake in my report because my inexperience in the practical market environment which we hope you will be kind enough to overlook them under deliberation. We are cordially thankful to you for giving such opportunity to make the report. We will be honored if this report helps you in future.

Yours Sincerely,
Md. Abdullah Hel Kafi Adittya Barua Hasan Md. Zahir Sraboni Rahman Taslim Alam Md. Emran Hossain ID: 2012-1-10-087 ID: 2012-1-10-091 ID: 2012-1-10-005 ID: 2012-1-10-044 ID: 2012-1-13-020 ID: 2011-2-10-051

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Acknowledgement

At first we would like to thanks Almighty Allah who made us able to finish this report at perfect time. Our next thanks are due Farzana Akter for giving us supports, courage, opportunity to make the report Review, problems and project of pharmaceutical industry. Such a competitive world she helps us to learn about pharmaceutical industry. Without her help it was impossible to make this report in a standard way. We also want to give thanks to our all group members who helped each other to prepare this report.

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Table of Contents Serial no Name of the topics Executive summary Objective of the report Introduction Methodology Page No 5 5 6 6

Strengths and weaknesses of the pharmaceutical sector in 7 Bangladesh Growth potential of pharmaceutical sectors Market players Raw Materials & Source of APIs Availability of Machinery Distribution Channel Drug Regulation Global Export Market Contract Manufacturing Problems Demand for essential drugs Price Control Investors and sources of capital Specific risks of national production Conclusion 9 10 12 13 15 16 19 21 22 25 25 26 26 27

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Executive summary

Pharmaceutical industry is one of the dynamic growing sectors in Bangladesh. It is the second biggest foreign currency earner sector in Bangladesh. Firms in this sector are already expanding into international exports, API (Active Pharmaceutical Ingredient) production, and factory upgrades to improve quality. At the same time, the quality of drugs available domestically varies significantly. Some firms are producing world class quality drugs while others are producing drugs of a lower quality. This report mainly focuses on the review and prospect of Bangladesh pharmaceutical industry. This report aims to find out the overall export prospect, its whole pharma scenario, total foreign markets, current scenario, its machinery, raw materials, barriers etc. on the basis of Bangladesh pharmaceutical industry. If Bangladeshs pharmaceutical firms can improve their cost competitiveness and their quality, they can potentially increase the pharmaceutical sector. Furthermore, exporting provides Bangladesh firms the opportunity to participate in a fully competitive market and creates an incentive for firms to improve both quality and price competitiveness. This study also explores the problems as well as the projects of the industry. It also highlights on how to become more globally competitive. It takes into account two external forces that are impacting Bangladesh. The first is WTOs TRIPS (Trade Related Aspects of Intellectual Property), which grants Bangladesh the right to domestically manufacture pharmaceuticals off-patent. In the long run, however, Bangladesh firms will have to excel based on the price and quality of their drugs. The second force is the rapidly changing international marketplace. Globalization means that the international marketplace is extremely competitive with firms looking for low cost manufacturing sources. In conclusion, the government and industry need to make partnership to build a long term sustainable and internationally competitive industry to meet these challenges and opportunities. The main focus should be on mechanisms to improve the cost and quality of pharmaceuticals manufactured in Bangladesh. Specific recommendations include support for pharmaceutical firms that export, improved quality control, updating the patent law, and investigating API production, contract or toll manufacturing, and the feasibility of a bioequivalence laboratory. Objective of the report

Objectives mean the purpose of the study why we do this study. We have categorized our objectives of the research into two categories one is broad objective, one is specific objective. Broad Objectives: The broad objective of the report is review, problems and project of pharmaceutical industry.

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Specific Objectives: To know about the pharmaceutical industry. Problems and project of pharmaceutical industry. How to puzzle out the problems.

Methodology
This project was completed through in-depth interviews of pharmaceutical industry in Bangladesh. This study focused on the pharmaceutical industry. Bangladeshi pharmaceutical industries are improving the quality and cost of its drugs. Thus, along with the government, they should be actors in tackling these issues. From this report we find the current scenario of pharmaceutical industry in Bangladesh.

Introduction
The pharmaceutical market in Bangladesh is pretty small compared to the population size of the country, mainly because of the lack of spending power of the population. Pharmaceutical spending is also amongst the lowest in the world in per capita terms. Healthcare expenditures consist of only 3.35% of GDP. However, increased awareness of healthcare, increase in per capita income, emergence of private healthcare services and the governments increased expenditure in this sector, together with other factors, have caused the demand to rise in recent years. The sector is also protected from external competition as imports are completely restricted for similar drugs that are manufactured locally. This sector reports provides an overview of the pharmaceutical sector in Bangladesh and highlights the top performers that are listed in the Dhaka Stock Exchange (DSE). Bangladesh pharmaceutical companied focus primarily on branded generic final formulations, mostly using imported APIs (Active Pharmaceuticals Ingredient). Branded generics are a category of drugs, including prescription products, that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name. About 85% of the drugs sold in Bangladesh are generics and 15% are patented drugs - the structure differs significantly from the international market. Branded generic drugs represent about 25% on average of worldwide pharmaceuticals sales; however, given the popularity in emerging markets like China, India and Latin America, branded generic drugs may well dominate the total sales within a decade. Surprisingly, the pharmaceutical sector, which is widely regarded as a hi -tech industry, is the most developed among the manufacturing industries in Bangladesh. Roughly 250 companies are operating in the market. According to IMS, a US-based market research firm, the retail market size is estimated to be around BDT 55 billion, which grew by 16.8% in 2009. The market size in 2008 was BDT 47 billion with a growth of 6.9%. The actual size of the market may vary slightly since IMS does not include the rural market in their survey. However, the deviation is estimated to be not more than 5-10% in either direction. Unfortunately, there is no solid information source in Bangladesh other than IMS. The retail market is about 90% of the total market. In that respect, the total market size is more than BDT 60 billion. One of the fastest growing sectors with an annual average growth rate consistently in the double digits, Bangladeshs pharmaceutical industry contributes almost 1% of GDP. It is the third largest tax paying industry in the country. Bangladeshi pharmaceutical firms focus primarily on branded generic final formulations using imported APIs (Active Pharmaceutical Ingredients). Branded generics are a category of drugs including prescription products that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name. This definition is used by both the FDA and the United Kingdom's National Page | 6

Health Service (NHS). About 80% of the drugs sold in Bangladesh are generics and 20% are patented drugs. The country manufactures about 450 generic drugs for 5,300 registered brands which have 8,300 different forms of dosages and strengths. These include a wide range of products from anti-ulcer ants, flouroquinolones, anti-rheumatic non-steroid drugs, non-narcotic analgesics, antihistamines, and oral antidiabetic drugs. Some larger firms are also starting to produce anti-cancer and anti-retroviral drugs.

Strengths and weaknesses of the pharmaceutical sector in Bangladesh:

Although the sector has a long way to go, the reasons we are optimistic about the sector can be summarized in Figure 1. We believe that the strengths outweigh the weaknesses.

Strengths In Bangladesh, pharmaceutical is one of the fastest growing sectors. In 2002, the total size of the pharmacy market of Bangladesh was estimated to be US $ 520 Million. With an annual growth rate of 32%, Bangladesh pharmaceutical industry is now heading towards self-sufficiency in meeting the local demand. At present, there are 225 registered pharmaceutical manufacturers in Bangladesh. Bangladesh pharmaceutical industry is the second highest contributor to the national ex-chequer after tobacco and it is the largest white-collar intensive employment sector of the country.The finished formulation manufacturing base of Bangladesh is very strong as most of the pharmaceutical companies have their own manufacturing facilities. Around 95 percent of the total demand of Bangladesh is being met by local manufacturing. The industry lacks the capacity only for some specialized pharmaceuticals, such as vaccines, drugs using recombinant DNA, anti-cancer drugs and anti-retro viral. In order to get a sense of what might potentially be the size
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of the drug market let us consider a simple model. Here we assume that the economy will have an average GDP growth of 6%. The economy will witness an uptrend in healthcare expenditure because of the growing health consciousness and the increased demand for wellness drugs as well as government expenditure. This means that drug and non-drug healthcare expenditure will increase at about the same pace. So, we also assume that the percentage spent on drug as part of total healthcare expenditure will remain similar current level, which is about 28%. These simple assumptions present an impressive growth upside of 83.6% by 2015 with a 6 year CAGR of 10.7%. Recent growth figures have proved to be better than the projection, which demonstrates that the growth prospect of the sector is justified. Today, Bangladesh Pharmaceutical Industry is successfully exporting APIs and a wide range of products covering all major therapeutic classes and dosage forms to 71 countries. Beside regular forms like; Tablets, Capsules & Syrups, Bangladesh is also exporting high tech specialized products like HFA Inhalers, CFC Inhalers, Suppositories, Nasal Sprays, Injectables, IV Infusions, etc. are also being exported from Bangladesh, and have been well accepted by the Medical Practitioners, Chemists, Patients and the Regulatory Bodies of all the importing nations. The packaging and the presentation of the products of Bangladesh are comparable to any international standard and have been accepted bythem. The Pharma Industry of Bangladesh is now on the verge of entering highly regulated overseas markets like USA and Europe. In this connection, several pharmaceutical manufacturers have already made huge investments in their new state of art manufacturing facilities The future of pharmaceutical exports from Bangladesh is bright. After the inclusion of the Doha declaration in WTO / TRIPS Agreement, each and every country belonging to the LDC Category has the option not to opt for pharmaceutical product patent until 2016, which means they can now legally reverse engineer patented products and sell in their markets as well as can export to other LDCs. This creates a huge export opportunities for Bangladesh, because, among all the 50 LDCs, Bangladesh is the only country which had a strong base for the pharmacy manufacturing. Besides direct export operations, there is also a huge opportunity for the Bangladeshi companies to go for the Contract Manufacturing and compulsory licensing. The good news is, the leading pharmaceutical exporters of Bangladesh have already started availing these opportunities.

Weakness: The advantages that TRIPS provide for Bangladesh are somewhat offset by the pace and competitiveness of the Indian and Chinese generic markets. In both the countries, companies can produce drugs at highly competitive pricing, even with higher costs associated with buying patented APIs or paying royalties. Bangladesh will have to rely on the standard business practices of producing the highest quality product at the lowest price to compete on the international market which may be difficult to achieve in the near term. Bangladesh has a competitive disadvantage (when compared to India and China), since the local pharmaceutical industry is not backward-integrated. Most of the APIs have to be imported, and even if the APIs are manufactured in the country, the basic raw materials still have to be imported. As such construction of API Park is not likely to add too high a value in the pharmaceutical manufacturing value chain. This results into higher factor costs, especially in cases where the provider of the API is a competitor in selling the finished product. Building up
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backward-integration for all relevant APIs is also not a realistic option because of scale disadvantages and infrastructure constraints. The reliance on importing API remains to be the only significant threat for the pharmaceutical industry in Bangladesh. There are more weakness in pharmaceutical sectors in Bangladesh. Lack of production facilities: Initial plans exist to develop an API park which should greatly address the industrys infrastructure problem when completed.API production requires expensive water effluent treatment plants and other infrastructure that an API park could provide to firms as a common good. Some firms are still investigating building their own API facilities, mainly because of the slow progress toward establishing the park. Building a functioning API plantwill take approximately 18 months after a site is approved. Lack of scientific knows: Skills to build and run an API plant would have to be imported because they currently do not exist in the country. In the time required to develop skills locally, firms can use consultants from India or China, for example. In addition, because India and China may be consolidating API production due to phasing in TRIPS, a surplus of these skills in the region may result.

Growth potential of pharmaceutical sectors: In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors which are contributing in the countrys economy.After the promulgation of Drug Control Ordinance 1982, the development of this sector was accelerated. The professional knowledge, thoughts and innovative ideas of the pharmacists working in this sector are the key factors for this development. Due to recent development of this sector it is exporting medicines to global market including European market. This sector is also providing 97% of the total medicine requirement of the local market.Leading pharmaceutical companies is expanding their business with the aim to expand export market. Recently few new industries have been established with high tech equipment and professionals which will enhance the strength of this sector.The export value of pharmaceuticals, though small, is growing at 50 per cent per year. Exports increased from $8.2 million in 2004 to $28.3 million in 2007 and expanded further in last two of years. The export destinations have now risen from 37, to 72 countries during the period.The inception in the 1950s was small, with a handful local and multinational companies producing medicines in the then East Pakistan. By 1982, many top ranking multinationals established their manufacturing facilities in Bangladesh.Bangladeshs pharmaceutical industry have potential to grow and compete in the international market. Its ability to comply otherwise with the guidelines of quality assurance provides it the competitive advantage. Most companies follow the good manufacturing practice (GMP) standards, set by the UN World Health Organization (WHO).Bangladesh can compete with countries like India, China, Brazil and Turkey in the international export market due to its quality compliance. If enjoys the exemption limit until 2016 under the provisions of the World Trade organization with regard to generic, patients and other related matters. The ability of the Bangladesh industry is otherwise undisputed about achieving excellence.The country exports high-tech specialized products like HFA, inhalers, suppositories, hormones, steroids, oncology, immunosuppressant products, nasal sprays, injectibles and IV infusions. The local pull of demand for medicines set the industry in a second footing.The industry produces quality medicines for millions of people in Bangladesh. Almost self-reliant in pharmaceutical products,
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the industry meets 97 per cent of national demand for medicines.Epidemics like malaria, dengue, cholera and typhoid, no more kill as many people in Bangladesh as they once did. Affordability and availability of medicines contributed to the achievement.Bangladesh tops South Asia with its average life expectancy of 61 years though per capita consumption of medicines is one of the lowest in the region. Over 50 new factories came up in last three years, of which about two dozen took to aggressive marketing. Out of 230 companies, 200, including five multinationals, have their manufacturing facilities.At least 21 companies produce 41 active pharmaceutical ingredients (API). To feed the local industry, more API industries are needed. The recent approval, as was reported in a section of the media, to a 30 billion dollar API industrial park in Munshiganj will inject fresh momentum to the pharmaceutical industry. Bangladesh can save at least 70 per cent of expenditure on raw materials when the API part goes into production.Bangladesh imports 80 per cent of its pharmaceutical raw materials. A good number of skilled professionals from home and abroad are expected to join the industry to enrich its human resources pool. The country can continue to produce patented products until 2016 as per trade related intellectual property rights (TRIPS). The industry is legally permitted to reverse engineer, manufacture and sell generic versions of on-patent pharmaceutical products for domestic consumption as well as for export to other LDCs. It created a big opportunity to make Bangladesh a new chemical entity. Bangladesh can share its long years of experience in pharmaceutical formulation and marketing with the Least Developed Countries (LDCs) and developing ones, who need it. Opportunities have been created in Bangladesh for bioequivalence study, validation report, clinical trials and manufacturing plant audit mechanism.For bio equivalency tests alone in Singapore, Malaysia or in European countries Bangladesh pharmaceutical industry has to spend a lot of money now. These sub-sectors would need more investment in future. The industry created opportunities for foreign direct investment.Over $250 million invested in the sector, has helped modernize and create new facilities.The investment has helped the companies get certification from the international regulatory bodies.Now, Bangladeshi companies are in a situation to export pharmaceutical products to any part of the world.

Market players:

Major Players Based on the IMS report for the fourth quarter 2011, Square Pharmaceuticals (DSE: SQURPHARMA) holds the top market share in the retail market - 18.7%, followed by Incepta Pharmaceuticals (INCEPTA) - 9.3%, Beximco Pharmaceuticals (DSE: BXPHARMA) - 8.8%, OpsoninPharma (OPSONIN) - 5.1% and Renata (DSE: RENATA) - 4.9%. The top five companies held 46.8% market share in 2011, slightly more than their 46.2% market holding in 2010 - indicating cumulative revenue growth in excess of the sector growth. Among the top five, three are listed in DSE Square, Beximco and Renata.

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Others market players: Domestically, Bangladeshi companies including the locally based MNCs produce 95%-97% of the drugs and the rest are imported. Although about 250 pharmaceutical companies are registered in Bangladesh, less than 100 are actively producing drugs. The domestic market is highly concentrated and competitive. However, the local manufacturers dominate the industry as they enjoy approximately 87% of market share, while multinationals hold a 13% share. Another notable feature of this sector is the concentration of sales among a very small number of top companies. The top 10 players control around two-third of the market share while the top 15 companies cover 77% of the market. In comparison, the top ten Japanese firms generated approximately 45% of the domestic industry revenue, while the top ten UK firms generated approximately 50%, and the top ten German firms generated approximately 60%. Square Pharmaceuticals is the stand out market leader with a market share of 19.3% which posted domestic revenue of BDT 11.2 billion in the last four quarters (Apr 09 - Mar 10). Their nearest competitors are Incepta Pharmaceuticals and Beximco Pharmaceuticals with market shares of 8.5% and 7.6%. RespectivelyIncepta and Beximco had BDT 4.9 billion and BDT 4.4 billion in domestic sales for the last four quarters. Although a number of MNCs are operational in Bangladesh market, no MNCs are in the top ten in terms of domestic sales. Current Scenario of Bangladeshi Pharmacy market: In Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors within the country's economy. After the promulgation of Drug Control Ordinance - 1982, the development of this sector was accelerated. The professional knowledge, thoughts and innovative ideas of the pharmaceutical professionals working in this sector are the key factors for these developments. Due to recent development of this sector it is exporting medicines to global market including European market. This sector is also providing 97% of the total medicine requirement of the local market. Leading pharmaceutical companies are expanding their business with the aim to expand export market. Recently few new industries have been established with high tech equipment and professionals which will enhance the strength of this sector. Two organizations, one government (Directorate of Drug Administration) and one semi government (Pharmacy Council of Bangladesh), control pharmacy practice in Bangladesh. The Bangladesh Pharmaceutical Society is affiliated with international organizations International Pharmaceutical Federation and Commonwealth Pharmaceutical Association. According to Bangladesh Pharmaceuticals and Healthcare Report Q1 2011, Bangladesh medicine sales reached Tk 7,000 crore in 2010. Business Monitor International in its latest report (Q1 2011) said Bangladesh has moved up one place to occupy the 14th position in 17 regional markets surveyed in BMIs Pharmaceutical & Healthcare Business Environment Ratings for the Asia region. Still, Bangladesh has a long way to go, the report said. This adjustment now sees Bangladesh placed below Vietnam and above Sri Lanka. Bangladesh's pharmaceutical rating is 40.2 out of 100, a figure that has changed marginally from the previous quarter but remains owerthan the regional average of 53.1. Globally, Bangladesh occupies 67th position in BMIs 83th position.
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The industry players forecast the growth trend would take the sales volume to Tk 10,000 crore in 2011. Square, Beximco, Eskayef, Incepta and Acme are the top five manufacturers by sales and growth rate.

Beximco grew faster than other companies at a staggering 33 percent in 2010 with Tk 523 crore sales. Incepta's sales and growth rate were Tk 665 crore and 31 percent respectively, followed by Acme's Tk 600 crore and 17 percent. Eskayef logged Tk 426 crore in sales and the growth rate was 27 percent, the third highest pace in the year, said a company official. Raw Materials & Source of APIs Bangladesh has a competitive disadvantage when compared to India, since pharmaceutical manufacturing is not backward-integrated. Most APIs have to be imported, and even if the API is manufactured in Bangladesh, the raw materials have to be imported. This generates higher factor costs, especially in cases where the provider of the API is a competitor in selling the finished product. Building up backwards-integration for all relevant APIs is not a realistic option: scale disadvantages and infrastructure constraints are more relevant in the early stages of the value chain, where the products have a strong commodity character. About 80% of the active pharmaceutical ingredients (APIs) are imported as there are only a few local companies (usually the leading ones) that are engaged in manufacturing APIs. However, the number is really small (below 50) compared to the total requirement. These local companies usually run the relatively easier final chemical synthesis stage with API intermediaries, instead of the complete chemical synthesis. For many APIs, the domestic market is too small to justify an API manufacturing plant - the initial investment and the production scale required are high. However, the government has planned to set up an API park to facilitate the production of several APIs for the local manufacturers. The value addition for the backward linkage will not be much as the country will again need to import the basic chemicals for manufacturing APIs. It is estimated that cost of APIs will decrease by about 20% if the API Park is established. The government initially set a target to complete the project by 2012 but realistically, it is unlikely that the manufacturing park will be completed within the stipulated time. Since the APIs are imported, the companies are exposed to exchange rate risk. The local currency depreciated significantly against USD over the last decade as shown in chart 3 in next
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page. However, the local companies were able to contain the manufacturing cost by shifting the import source of APIs to low cost manufacturers. As per discussion with the management of BeximcoPharmaceuticals, China and

India currently accounts for more than two-thirds of the imported raw materials while the remaining materials are imported from Europe; back in 2000, 80% of the APIs were imported from Europe. The decrease in API cost from changing the source off-set most of the adverse movement in the exchange rate.

Availability of Machinery The machinery for pharmaceutical manufacturing does also have to be imported. This places Bangladeshi companies at a cost disadvantage compared with Indian manufacturers who can source the machinery nationally. The leading manufacturers import most of their equipment from Europe or Japan, a fact they claim ensures quality advantages over their Indian competitors. Other manufacturers import machinery e.g. from China or India. Part of the cost may be compensated by export subsidies these countries are giving. However, when competing in international markets, it becomes a question of comparative export subsidizing in these countries: whether machinery exports being more or less subsidized than drug exports. Current Scenario of Pharmaceutical Industry Pharmaceutical sector is technologically the most developed manufacturing industries in Bangladesh and the third largest industry in terms of contribution to governments revenue. The industry contributes about 1% of the total GDP. There are about 250 licensed pharmaceutical manufacturers in the country; however, currently a little over 100 companies are in operation. It is highly concentrated as top 20 companies produce 85% of the revenue. According to IMS, a US-based market research firm, the retail market size is estimated to be around BDT 84 billion as on 2011.

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Based on market share and growth top 20 pharmaceuticals companies are Square, Incepta, Beximco, Acme, Opsonin, Eskayef, Reneta, ACI, Aristopharma, Drug International, Sanofi, Aventis, GlaxoSmithKline, Orion Pharma Ltd., Novo Nordisk, Healthcare Pharm, General, Sandoz, Popular Pharma, Novartis, IbnSina. Having those market leading companies its irony that still Bangladesh has to export basic chemicals to many countries like Hong Kong, South Korea, Malaysia and so on. After being successful in exporting basic chemicals, a few leading companies also started registering and exporting their finished formulation in sixty seven other countries, i.e. Australia, Brazil, Canada, Japan, etc. Overall pharma companies have export activities in about 72 countries. Bangladesh pharmaceutical companied focus primarily on branded generic final formulations, mostly using imported APIs (Active Pharmaceuticals Ingredient). Branded generics are a category of drugs, including prescription products, that are either novel dosage forms of offpatent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name. About 85% of the drugs sold in Bangladesh are generics and 15% are patented drugs - the structure differs significantly from the international market. Branded generic drugs represent about 25% on average of worldwide pharmaceuticals sales; however, given the popularity in emerging markets like China, India and Latin America, branded generic drugs may well dominate the total sales within a decade. Bangladesh manufactures about 450 generic drugs for 5,300 registered brands which have 8,300 different forms of dosages and strengths. These include a wide range of products from anti-ulcerants, flour quinolones, antirheumatic non-steroid drugs, non-narcotic analgesics, antihistamines, and oral antidiabetic drugs. Some larger firms have also started producing anti-cancer and antiretroviral drugs. Domestic manufacturers account for 97% of the drug sales in the local market while the remaining 3% are imported. This is a complete turnaround over from two/three decades back when imports used to dominate the market. The imported drugs include essential live saving drugs and other high quality drugs. The ratio will further increase in favor of the local production as some of the big players are poised to manufacture these high quality drugs in-house in the future.

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As stated earlier, the size of the retail market reached BDT 84.0 billion as on 2011 based on IMS report. The report further stated that, retail sales in the domestic market achieved 23.6% growth in 2011 following 23.8% and 16.8% growth in 2010 and 2009 respectively. High growth in the last three years (78.8% cumulative and 21.4% CAGR) meant that the Bangladesh Pharmaceutical market doubled in just over four years. The retail market also crossed USD 1.0 billion in size in 2011. It is one of the fastest growing sectors in the country with an annual average growth rate of 17.2% over the last five years and 13.1% over the last decade. However, considering that IMS does not include rural market in their survey, the actual size of the market will vary slightly (5%-10%). It is estimated that the retail market represent 90% of the total market; in that respect the total market size (including the rural market) is expected to be over BDT 90.0 billion at present.

Distribution Channel Basically, there are three distribution channel systems in Bangladesh: public hospitals, private hospitals and private pharmacies. Public hospitals source mainly from the stateowned Essential Drugs Company Limited (EDCL), whereas private hospitals and pharmacies source from the private sector. However, public hospitals can also source from private pharmaceuticals through tender bids. As for the private Sector, there is a network of wholesalers, comprising of around 1200 wholesale medicine shops. Whereas small and medium scaled pharmaceutical companies sell to those wholesalers directly from the factory, the large companies usually have a complementing distribution network of their own: from their factories, the drugs are taken to a central depot in Dhaka, then to the zonal depots in the different regions and from there, they are sold both to wholesalers and to retailers through trained sales representatives or distribution assistants. Retail-sales of drugs in Bangladesh are allowed only under direct supervision of a pharmacist registered with the Pharmacy Council of Bangladesh. The licenses for retail pharmacies and for wholesalers are also being controlled by the Drug Administration of Bangladesh. There are close to 76,000 licensed retail pharmacies in the country, and an estimated 125,000 unregistered retail pharmacies. In addition, drugs like antibiotics can also be found in village shops etc. without proper supervision. Whereas the law foresees no OTC drugs, requiring all drugs to be dispensed through a prescription, in fact all medicines are available without any prescription. Bangladeshs drug distribution marketplace is composed of small independent pharmacies. Pharmaceutical firms can sell their products to private sector pharmacies, the government and its public health care facilities, or to international organizations operating in Bangladesh (e.g., UNICEF). Government sales are not as profitable as private sector sales because the government pays less, on consignment, and at times, after considerable delay. Pharmaceutical firms nevertheless still target pubic facilities because doctors become acquainted with the firms drugs
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and then prescribe them in their private practices. And, because drugs are not readily available at public facilities, patients receiving treatment there may still go to a private pharmacy to procure the required drugs. Without these public sector connections, many firms would turn more attention to the private sector. Although there are approximately over 200,000 private pharmacies in Bangladesh, the government lists officially around 76,000 pharmacies. The rest are illegal, without a license or a licensed pharmacist on staff. Pharmacists have varying education levels and many lack adequate training. Most pharmacies are individual shops, though some chains are starting to develop, especially in urban areas. Large pharmacies generally buy medicines according to sales trends, e.g., what sells the most. The medium and small pharmacies generally have affiliation with a medical doctor. Their sales are therefore usually skewed towards that medical professionals preferences. Several brands of each drug, with variable quality levels, are on the market. In urban areas, the pharmacies tend to sell higher quality brands, whereas in more rural areas, pharmacies tend to sell lower quality, lower cost brands. This may be due to a districts local influences swaying brand selection. The pharmacies tend to have brands associated with people who hold power in that district. Those more distant from the city center consume increasingly more indigenous medicines such as ayurvedic and herbal medicines. Indigenous medicine has a sizeable market size of an estimated BDT 10 billion (about 15% of the total market). Majority of the users are from lowincome bracket with little or no education. However, indigenous medicine is a niche market and it is generally not considered as a competitive threat to mainstream medicine. The top twenty pharmaceutical manufacturing firms have established extensive sales and distribution networks. Most pharmacies have 10-50 pharmaceutical firms supplying their medicines daily. Hundreds of medical representatives of top pharmaceutical companies visit pharmacies daily to take drug orders. The success in sales for pharmaceutical companies have become extremely marketing oriented. They usually boost their sales by giving incentives to pharmacies and to doctors in the form of higher commission so that they would recommend their products to patients. On an average, a company incurs 10-15% of their total costs in this process. However, they usually hide these costs in their cost of goods sold. Since Bangladeshi firms produce low cost products, the gross margin actually is more than 60% for most of the companies. But because of this widespread practice, they usually report 45-50% in gross margin. Drug Regulation The Directorate of Drug Administration (DDA), the national drug regulative authority, regulates drug manufacturing, import and quality control of drugs in Bangladesh. It belongs to the Ministry of Health and Family Welfare. The Directorate issues licenses for import of raw materials for different drugs and packed drugs from a selected list to pharmaceutical companies and importers. It also monitors quality control parameters of marketed drugs through an agency called the Drug Testing Laboratory. DDA also
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administers vaccines and the indigenous systems of medicine called Ayurvedic and Unani systems. The Homeopathic system of medicine is not, however, under the regulatory control of the Directorate. There is, in fact, no regulatory body in the country for homoeopathic medicine perhaps for the practical reason that testing and monitoring methods are not standardized because of inadequate scientific understanding of the system. The system, indeed, has attained the status of a handy home remedy in Bangladesh and in other countries where it is practiced. According to executives of leading Bangladeshi drug exporters, administrative barriers to exports have been largely eliminated in close cooperation between the pharmaceutical industry and the Drug Administration. However, in order to export, a drug still has to be licensed in Bangladesh. Prevailing laws regarding drug regulations are as follows: National Drug Policy 1940 Drug Act 1940 Drug Control Ordinance 1982

Drug Act 1940 The Drugs Act, 1940 is a law that regulates the import, export, manufacture, distribution, and sale of drugs in the country. It was originally enacted by the Government of India in 1940 and adopted by the Pakistan Government in 1957 in its modified form. It was adopted in Bangladesh in 1974. This Act seeks to regulate the import of drugs into the country, the manufacture of drugs, as well as sale and distribution of drugs. The Drugs Act permits the import of certain classes of drugs only under the licenses or permits issued by the relevant authority appointed by Government. In contrast to the control of the drugs manufactured in the country, quality requirements on imported drugs are very strictly controlled, thus successfully preventing Indian manufacturers, who could serve the Bangladeshi market at competitive prices, from entering the market. Licenses are also required for the manufacture and for the sale or distribution of drugs in the country. Regular control over manufacturing and sales is exercised by periodic inspection of licensed premises by drug inspectors who are specially appointed under the Act. Surveillance over the standards of drugs is maintained by taking samples from drugs, manufactured or offered for sale, and by testing in the Central Drugs Laboratory. Drug Control Ordinance 1982 The Drug Control Ordinance 1982 is an Ordinance which controls the manufacture, import, distribution, and sale of drugs in Bangladesh. It was promulgated in 1982 as additional to the Drug Act 1940. Through this Ordinance, the Drug Control Committee and the National Drug Advisory Council are constituted. Both gremia consist of a Chairman and a varying number of members appointed by the government according to necessity.

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Under this Ordinance, (i) no medicine of any kind can be manufactured for sale or be imported, distributed or sold unless it is registered with the licensing authority; (ii) no drug or pharmaceutical raw material can be imported into the country except with the prior approval of the licensing authority; (iii) the licensing authority cannot register a medicine unless such registration is recommended by the Drug Control Committee; (iv) the licensing authority may cancel the registration of any medicine if such cancellation is recommended by the Drug Control Committee on finding that such a medicine is not safe, efficacious or useful; (v) the licensing authority is also empowered to temporarily suspend the registration of any medicine if it is satisfied that such a medicine is substandard; (vi) the government may, by notification in the official gazette, fix the maximum price at which any medicine may be sold and at which any pharmaceutical raw material may be imported or sold; (vii) no person is allowed to manufacture any drug except under the personal supervision of a pharmacist registered in the Pharmacy Council of Bangladesh; (viii) no person, being a retailer, is allowed to sell any drug without the personal supervision of a pharmacist registered in any Register of the Pharmacy Council of Bangladesh; and (ix) the government may, by notification in the official Gazette, establish Drug Courts as and when it considers necessary. The National Drug Advisory Council advises the government on the implementation of the national drug policy; on the promotion of local pharmaceutical industries and the production and supply of essential drugs for meeting the needs of the country and on matters relating to the import of drugs and pharmaceutical raw materials. Intellectual Property Legislation Bangladesh is a signatory of the GATT Uruguay Round and World Trade Organization (WTO) agreements, including the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). It is also aleast developed country (LDC) and thereby is exempted by the Doha declaration from implementing patent protection for pharmaceutical patents until 2016. This only holds for countries that have not yet implemented a legislation that provides for such patent protection, though. It is therefore necessary to look at the Bangladeshi law: The Bangladeshi patent law dates from 1911 and was amended in 1985. The responsible government institution is the Ministry of Industries, Department of Patents, Designs and Trade Marks. The patent law is thereby largely the same as in India before adapting to the requirements of TRIPS in 2005. Although there have been disputes about the patentability of pharmaceutical products according to this law, it is reasonable to assume that the interpretation that was chosen in India, namely the patentability of pharmaceutical processes but not of pharmaceutical substances, can also be adopted in Bangladesh. Bangladesh is a member of the World Intellectual Property Organization (WIPO), and adhered to the Paris Convention on Intellectual Property in 1991. Although its intellectual property laws are often considered as outdated and enforcement as being weak, Bangladesh has never been on the US trade representatives "Special 301 Watch List. This List identifies countries that deny what the US trade representative considers adequate and effective protection for intellectual property rights.

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The Industry After 1982 Bangladesh formulated its National Drug Policy (NDP) and established the Drugs Control Ordinance in 1982, to ensure availability, affordability and safety of essential drugs. The Drugs Control ordinance bans certain types of drugs from the market, limits the marketing rights of foreign companies and establishes a price control for both finished drugs and their raw materials: Bans: Combination drugs are only allowed in cases where single drugs are not available or not cost -effective; Sale and manufacturing of drugs with limited therapeutic usefulness (e.g. cough mixtures, throat lozenges) or with abuse potential are prohibited. Foreign Companies: foreign brands are not allowed to be manufactured under license in Bangladesh if similar products are being manufactured in the country. Multinational companies that do not have an own production facility in Bangladesh are not allowed to market their products even if manufactured in the country by toll contract manufacturing (manufacturing by a Bangladeshi company on behalf of the multinational). Price Control: 150 drugs were defined as essential drugs. For those, level prices are fixed for the finished drugs as well as for their corresponding raw materials. No manufacturer can set maximum retail prices for their goods beyond that limit. Changes in these level prices are decided by the Drug Control Committee. Since 1993, the number of price-controlled drugs has been reduced to 117 primary health care drugs. However, currently there are 209 drugs on the essential drugs list. For drugs that do not fall into this Controlled Category, the manufacturer can set their own price, which must, however, be approved by the

Drug Control Committee This resulted in withdrawal of many foreign companies from the market in which they had had a share of around 70% in 1970, and strong growth in local production. This also created a boon for local pharmaceutical manufacturers. According to the Directorate of Drug Administration records, in the year 2002, all the essential drugs were produced locally and about 45% of the local drugs production concerned essential drugs. Locally produced drugs amount to over 80% of the market share and meet over 90% of the local drug demand. There are over 200 licensed pharmaceutical factories in the country, six of them are owned by multinational companies producing about 13% of the local production. 85% of the raw materials used in the local production are imported. Only about 1 % of the locally produced drugs are exported. Global Export Market Due to cost pressures, MNCs increasingly seek to manufacture pharmaceuticals in developing countries. Pharmaceutical contract manufacturing and research services is a large and growing business. Worldwide revenues totaled $100 billion in 2004. With a predicted average annual growth rate of 10.8%, revenues are estimated to reach $168 billion by 2009. Pharmaceutical firms in Bangladesh exported approximately $45.67 million (approximately 0.03% of the estimated global pharmaceutical market revenue) in products to 73 countries during 2008-09. Bangladeshs exports are growing rapidly, as shown in the table below.

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July-June (USD Million) All Export 2005-06 10,526.2

July-June 2006-07 12,177.9 28.2 0.23% 2.51%

July-June 2007-08 14,110.8 43 0.30% 52.75%

July-June 2008-09 15,565.2 45.7 0.29% 6.21%

July-April 2009-10 12,940. 35.4 0.27% 13.39%

Pharmaceuticals 27.5 Pharma % of 0.26% Total YoY Growth for Pharma Source: Export Promotion Bureau

Bangladeshi firms are trying export to the following markets Regulated: Square Pharmaceuticals, the only Bangladeshi pharmaceutical firm accredited in a regulated market, received the UKs regulatory approval in May 2007. The largest barriers to regulated markets are modern manufacturing facilities which come at a cost of at least $50 million, and know-how. Moderately Regulated: Some markets, such as Pakistan, Sri Lanka, Tanzania and Malaysia, are moderately regulated. While countries do not always require stringent certification, a certification from a regulated market signifies quality and provides a firm with a competitive advantage Unregulated: Most Bangladeshi pharmaceuticals are exported to less than fully regulated markets such as Bhutan, Nepal, Vietnam, Myanmar and African countries such as Ivory Coast, Male, etc.

Major Exporters The majority of Bangladeshs pharmaceutical exports are from MNCs such as Sandoz. Sandoz, an MNC operating in Bangladesh, has approximately 25 manufacturing sites globally. Bangladesh is one of its smaller sites. The Bangladeshi manufacturing site is an EU certified plant which produces about 500 million tablets a year and generates about USD 35-40 million in sales. It has been growing rapidly15-18% per yearand is responsible for a significant portion of Bangladeshs pharmaceutical export growth. It imports APIs, acquires packaging domestically, and manufactures final formulations in Bangladesh for export of USD 12 million or for sale to the domestic market ranging from USD 23-28 million. Exporting pharmaceutical products is not accessible for all companies. Each country has its own product regulations, registration requirements, language requirements, cultural preferences, national packaging requirements, and industry protection mechanisms. Sales on the global market are quite
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competitive with firms from around the world vying for business. Furthermore, initiating exports requires a significant investment in money, time and paperwork to register the product in the target country. As generic products are branded in less regulated markets, pharmaceutical firms also need to make significant investments in sales and marketing to create product demand. All these investments are made without a guarantee of future sales. Recent Export of some Bangladeshi Pharmaceuticals Firms:

Company

Export(USD)

Year of Export

Novartis Bangladesh/Sandoz 12,820,162 2004-05 Beximco Pharmaceuticals 1,400,000 2004 Square Pharmaceuticals 1,200,000 2004 Jams Pharmaceuticals 633,721 2000-2004 Jayson Pharmaceuticals 626,546 2004 The Acme Laboratory Co. 600,000 2004 Eskayef Bangladesh 331,876 2004 Aristopharma 305,648 2004-05 Renata 281,788 2004 Navana Pharmaceuticals 240,175 2003-05 Aventis 223,999 2004 ACI 156,392 2004 Essential Drug Co. 124,687 2004 Globe Pharmaceuticals 68,410 2005-06 Most pharmaceutical firms in Bangladesh are family owned. While many have the capacity to export, some do not have the in-house expertise. As a result, only sixteen firms export products. There are no majority exporters, e.g., companies that sell more th an 50% of their output in export markets. Beximco, for example, is one of the leading exporters. Its 2009 exports were about USD 4.0 million or 5.9% of total sales. However, many companies initiated the process of product registration in international markets only in the last few years. The export situation is evolving. For example, Square Pharmaceuticals increased exports by 58% from 2007-08 to 2008-09. Indirect Benefits of Export Bangladeshi firms that export are slightly more productive than non-exporting firms. Some possible reasons for this advantage may be due to: 1. Technological lessons learned from foreign buyers. 2. Exporters improved their own technological capabilities to exploit profitable opportunities in export markets. For example, exporters need to adopt stringent technical standards to satisfy more sophisticated consumers, and/or they are under more pressure to fill orders in a timely fashion and to ensure product quality for export markets which are more competitive than domestic market.

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3. Better firms self-selected to enter export markets for the prestige rather than the effects of exporting necessarily improving the firms. The pharmaceutical industry in Bangladesh has been aggressively investing in infrastructure. Most of the companies invested heavily in the 1990s and the late 2000s most likely to upgrade their facilities to obtain international export certifications. The top ten firms accounted for most of the investments. MNCs can operate in a country in multiple ways, including foreign direct investment (FDI), contract manufacturing, joint ventures and strategic partnerships or licensing. Each arrangement varies in terms of which partner contributes more resources and technical knowledge, which partner assumes more risk, and which partner accrues more benefits and profits.

Contract Manufacturing Contract manufacturing is a good business opportunity for Bangladeshi firms, and if well done, it can enable technology transfers to domestic firms. As a result, they can acquire world -class experience in finished dosage manufacturing, APIs or other aspects of pharmaceutical manufacturing. Square Pharmaceuticals, one of Bangladeshs largest pharmaceutical firms, attributes much of its success to what it learned by working with an MNC. Bangladeshi pharmaceutical firms can make several types of contract manufacturing arrangements with MNCs, including: Contract manufacturing with the product intended for export to a regulated market. The current National Drug Policy (NDP) permits this.. The domestic pharmaceutical firm must have a facility accredited by the regulators of an advanced market. Square Pharmaceuticals is one of the very few Bangladeshi firms with a qualified facility. It is currently initiating a contract manufacturing arrangement with a British firm. Contract manufacturing with the product intended for the domestic market. The Drug Control Ordinance (DCO) prohibits foreign firms from selling products in Bangladesh unless they have a manufacturing presence in the country. Thus, Bangladeshi firms can only contract manufacture for domestic distribution with MNCs that already have a presence in Bangladesh. An example of this arrangement is Beximco contract manufactures Ventolin, which is an inhaler for GlaxoSmithKline.

Problems
Problems of Marketing Because of having no sufficient incentives in comparison with their effort, the turnover rate of medical representatives is very high. Most of the time costs of marketing hardly affect the price of the medicine. Professionalism in marketing is not achieved yet in Bangladesh like other developing countries.
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 Lack of proper governmental laws and this implementation the law by the drug administration. Unstable political situation and different types of violence. Effect of globalization that has increased the competition. Smuggled production counterfeit, thats coming from the neighbor countries. Problems of Foreign Competition Foreign competitors have more equipment, technology and plant facilities than that of locally owned firms. Foreign competitors have their own local market so that they can absorb some losses here. Foreign competitors get government help in some cases. Problems of Export Unstable political situation is one of the vital reasons for not achieving the expectation in export. Restriction of Bangladesh bank to remit transfer seriously hampering pharmaceutical export Custom harassment in sending drug sample interrupts export promotion Lack of Bioequivalence tes facility in our country is a major problem of pharmaceutical export Country image and production of substandard or fake drugs by some companies hampering the acceptance of our products to international community. Lack of a modern drug testing laboratory in our country is a major limitation of drug control authority of Bangladesh that also affects pharmaceutical export The regulatory authorities of importing countries are not satis fied with the status, activities and documents of drug administration of Bangladesh. Problems of port (both sea and air) hinder the timely export. Irresponsibility of customs officers is a regular phenomenon which results in increase on the price and cost of medicine. Sometimes competition tends to follow unfair promotional activities. Still now, the products of the pharmaceuticals industries of Bangladesh are not world class.

What may happen in the fate of pharmaceutical export of Bangladesh after 2016?
As a member country of LDC, Bangladesh is enjoying waiver from patent law enforcement which will continue up to 2016. By virtue of this opportunity, our companies can manufacture patented drugs without giving any payment for patent right, thus it is now possible for us to produce any patented drugs at very low price and can export to other countries. For this reason, a Bangladeshi company would offer export price to an LDC much lower than could do a company from India, China or other countries where patent right implemented. In this sense, Bangladesh is passing a golden time for export of patented drugs in other LDCs. Yet, our export price is not as lower as it would be compared to India and China, because Page | 23

we are not yet independent to our raw materials and other materials required for the production of a finished medicine. Still, we have to import more than 95% of active ingredients and excipients of medicines. This is still a great drawback for the achievement of our pharmaceutical export. If patent right is enforced in Bangladesh after 2016, the production cost of medicines will remarkably be increased, thus it would not be possible for us to compete with the offer price of India and China, thus our export market drastically will be reduced, because the pharma market in LDCs will be opened for all and we will have to face great challenges for our existence in global market. But fortunately, if the patent waiver is extended for another 10 years, we can really enjoy the taste of patent exemption at that time because our pharma sector will be almost self-reliable within that period.

Problems of Customer Choices One main problem is in producing rare drugs foreign companies are ahead of us in terms of quality, experience and market share. Most of the time, to purchase the medicinal products is not depending on the customer choice. Customers buy their product according to the prescription of doctors. Problems of Power Development Like other industries, there is a crucial problem faced by the pharmaceutical industries that is power generation problem. They are not getting power according to their demand. Red-Tapism of govt. offices hinders the development of power generation sector, where the government is not taking effective actions. Lack of opportunity to supply the emergency power to smooth continuation of production in pharmaceutical sector. Problems in Quality management Rework is the primary problem caused by poor quality work during a project. Rework means that ones have to do the same work twice because the original effort was not satisfactory. When anyone says the component is complete, the hope is that no more work is needed. However, if there are subsequent errors when the component is tied into the larger application, rework is required. If a solution is of poor quality, the client will not be happy. Some of this unhappiness may be transferred to the support organization. However, if the client has a choice, it may not buy from you again at a later date. In many cases, projects that do not manage quality well end up with a lot of rework, which in turn leads them to miss their deadlines and exceed their budget. This can cause the business value to be delayed, or it may change the value proposition for the entire project. No one likes to work for an organization that has poor processes or produces poor quality solutions. No one likes to work on projects that are missing their deadlines because of rework. People tend to find excitement and challenge in building a solution. However, the teams motivation level will go down when it has to continually repair and rework deliverables that dont work correctly. In addition to poor morale in general, specific costs can include increased absenteeism, higher turnover, and less productivity from the staff.
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Demand for essential drugs: Bangladesh has a strong pharmaceutical industry represented by private enterprises and the stateowned EDCL. Bangladesh is largely self-sufficient with regard to drugs and has no significant drug availability problem. In fact, the availability of drugs has a stronger outreach than the availability of health care professionals. Due to widespread vaccination schemes, successful eradication of leprosy and widespread use of oral rehydration for diarrhea, many of the traditional health problems are minimized and life expectancy has risen to around 65 years comparable to India and Pakistan rather than to African LDCs who mostly have life expectancies below 50. The most important health issues in Bangladesh today are related to maternal health and malnutrition, vitamin and iron deficiency. AIDS, Malaria and TBC are potential health threats. Other important causes of death are cardiovascular diseases, diabetes and cancer. Mental disorders are an important reason for disability. Thus, in line with the statement that there is no significant drug availability problem in Bangladesh, the therapeutic groups do largely reflect the major health issues in the country. Unmet demand: The demand for essential drugs in Bangladesh is largely covered. In accordance with the above, in many cases the cheap availability of essential drugs without adequate health care infrastructure is not without problems. The global need for essential drugs is huge in theory and the actual demand depends to a large extent on financing possibilities and mechanisms, which are difficult to foresee in detail, but the creation and dedication of funds and institutions like e.g. the Global Fund to combat AIDS, Malaria and Tuberculosis, justify a significant growth expectation for the actual demand. It is also to be expected that wherever donor funds are directly used to purchase drugs (as e. g. the Global Fund or the Gates Foundation), the demand will come with such quality requirements that would put a country like Bangladesh with a good track record and a lot of experience at advantage over African LDCs that are only just entering the business of pharma manufacturing. On the other hand, the tendency of traditional donors to budget funding may lead to governments of African LDCs giving preference to lower quality local manufacturers for political reasons, creating high barriers of entry for Bangladeshi manufacturers in these market segments. Diseases that are typically considered developed country diseases like cardiovascular disorders or cancer are also on the rise in many developing countries. However, at present, both adequate diagnosis of these diseases and availability of funding for drug needs are doubtful. Price Control 150 drugs were defined as essential drugs. For those, level prices are fixed for the finished drugs as well as for their corresponding raw materials. No manufacturer can set maximum retail prices for their goods beyond that limit. Changes in these level prices are decided by the Drug Control Committee. Since 1993, the number of price-controlled drugs has been reduced to 117 primary health care drugs. However, currently there are 209 drugs on the essential drugs list. For drugs that do not fall into this Controlled Category, the manufacturer can set their own price, which must, however, be approved by the Drug Control Committee.

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This resulted in withdrawal of many foreign companies from the market in which they had had a share of around 70% in 1970, and strong growth in local production. This also created a boon for local pharmaceutical manufacturers. According to the Directorate of Drug Administration records, in the year 2002, all the essential drugs were produced locally and about 45% of the local drugs production concerned essential drugs. Locally produced drugs amount to over 80% of the market share and meet over 90% of the local drug demand. There are over 200 licensed pharmaceutical factories in the country, six of them are owned by multinational companies producing about 13% of the local production. 85% of the raw materials used in the local production are imported. Only about 1 % of the locally produced drugs are exported

Investors and sources of capital In Bangladesh, there are several national investors interested in building up pharmaceutical manufacturing: many of the existing pharmaceutical corporations, like Square and Beximco, belong to large conglomerates that have proven the commercial opportunities to invest in pharmaceutical manufacturing plants. Foreign investors have not been particularly interested in setting up manufacturing plants in Bangladesh, notably the investment flow from India, expected by some industry specialist following the Doha declaration, has not materialized so far. When investing in pharmaceutical manufacturing plants, the equity rate used by Bangladeshi investors is significantly higher than the usual equity rate in transnational pharmaceutical companies. The reason lies partly in the comparatively high cost of capital and also in the necessity to group together different banks for financing a large credit sum, since the sum each bank is allowed to lend is usually not sufficient to finance a large drug manufacturing plant. As a result, there is a large number of very small scale manufacturers present in the industry. These manufacturers focus mostly on a handful of basic and essential drugs. Specific risks of national production: The dependence on import of APIs is the main risk, since the providers are also competitors. This has not affected Bangladeshi pharmaceutical manufacturers too much as they concentrated on the national market which was not deemed attractive by their providers. As long as Bangladeshi manufacturers concentrate on developing country markets, they may be able to circumvent this problem by sourcing from developed countries manufacturers who are not targeting these markets. However, this would probably also increase their cost.

Findings:
From this report we find the current scenario of pharmaceutical industry in Bangladesh. What is our strangeness and weakness we can select this. We find our export- import pharmaceutical product and how much money we earn from this industry. We get the top class companies whose contributions are most in our pharmaceutical industry. We get the main problems of our pharmaceutical industry. We find the demand market of pharmaceutical industry. Who are the main investors and where from we get capital. Page | 26

 Risks and return of our pharmaceutical industry. Lacking of this industry.

Conclusion The essential drugs market in Bangladesh is well supplied, and there is no availability problem of essential drugs. The DDA, responsible for the safeguarding of the drug quality through licensing and control, lacks the necessary capacities, equipment (notably test laboratories) and governance to perform all its tasks effectively. WHO is supporting the DDA through capacity building and new test laboratories. Partly due to the failure of the local authorities to provide credible quality certifications, and partly due to their aspiration to increasingly target export markets, leading Bangladeshi manufacturers are already successfully working on obtaining international quality certification for their products and plants, in some cases bringing in experienced experts from MNCs or Indian competitors. 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. However, the Bangladeshi industry has been largely focused on the domestic market until recently. Knowledge about and contacts to the different players in potential export markets are still limited and constitute a key bottleneck to expansion of manufacturing facilities. In terms of cost, Bangladeshi companies can be expected to compete successfully with African players, especially if an international quality standard is required. The ability to compete with Indian and Chinese manufacturers is limited due to the necessity to import machinery and notably the precursor substances. The ultimate competitiveness of Chinese and Indian manufacturers depends on the expected rigor of the TRIPS enforcement, the viability of voluntary or compulsory licensing for Indian and Chinese players, and the amount of license fees they would have to pay, and the competitiveness of Bangladeshi manufacturers will largely depend on the pricing of the raw materials. Still, Bangladesh is probably one of the few LDCs where under the TRIPS agreement new patent protected drugs and APIs can be cost-effectively produced and at high quality. Thus, Bangladesh is a natural candidate to supplement or substitute Indian and Chinese providers to the developing country markets of both finished drugs and APIs, notably in antibiotics, antiulcer ants, anti-hypertensives and anti-depressants. However, the domestic market is large enough to be self-sustaining and lucrative for the domestic players until they become ready to take on the global pharmaceutical market.

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Bibliography
1. Alam, F. (2009) Potential for developing Bangladeshs pharmaceutical sector. The Financial Express, Bangladesh. Published on 21 December 2009. 2. Bangladesh Pharmaceutical Society,www.pharmadu.net (Accessed on 24 November 2013) 3. "Current Scenario of Bangladesh Pharma market - Detail News - BDdrugs.com - First Online drug index of Bangladesh". BDdrugs.com. Retrieved 2013-05-17. 4. Directorate of Drug Administration, www.ddabd.org (Accessed on 24 November 2013) 5. Http://www.thefinancialexpress-bd.com/more.php?news_id=92556 (Accessed on 24 November 2013) 6. National Drug Policy (2005) Directorate of Drug Administration, Ministry of Family Welfare, Government of the Peoples Republic of Bangladesh, www.ddabd.org/download/drugpolicy 2005_eng.pdf (Accessed on 24 November 2013) 7. Novartis Bangladesh Pharmaceutical Marketplace by Mohammad YounusKazi (Accessed on 24 November 2013) 8. Pharmacy Council of Bangladesh, www.ddabd.org (Accessed on 24 November 2013) 9. "Pharmaceutical industry - Business & Industry - Bangladesh Strategic & Development Forum". Bdsdf.org. Retrieved 2013-05-17. 10. Pharmaceutical industry in Bangladesh, http://en.wikipedia.org. (Accessed on 24 November 2013) 11. Pharmaceuticals Sector of Bangladesh, www.assignmentpoint.com (Accessed on 24 November 2013) 12. "The rise of the pharmaceutical sector of Bangladesh",www.pharmadu.net (Accessed on 24 November 2013)

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Appendix A: Abbreviations

APIs DDA EU GDP GMP LDCs OTC TRIPS TRIPS UKMHRA WHO WTO

Active pharmaceutical ingredients Director of Drug Administration European Union Gross Domestic Product Good Manufacturing Practices Least developed countries Over-the-Counter Trade Related Aspects of Inellectual Property Right Trade Related Aspects of Intellectual Property Right United Kingdom Medicines and Healthcare Product Regulatory Agency World Health Organization World Trade Organisation

END

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