Drugmakers foresee medicine dearth for LC dilemmas

Production of medicines starts taking a knock as ongoing dollar crisis disrupts raw-material import and stokes concerns over supply of some lifesaving drugs used for treating acidity, diabetes, and cancers.
Both industry-insiders and retailers in pharmacies have expressed concern about possible unavailability of the vital drugs unless the central bank takes up the matter immediately.
However, industry sources assured this correspondent that the situation was still under control as the pharmaceutical industry preserves stock of active pharmaceutical ingredients (APIs) for four to six months.
Pharmaceutical-industry representatives have said situation in import of pharmaceuticals, including its packaging materials and APIs, had been under control until October 2023, bar some minor disruptions, but opening letter of credit (LC) being delayed frequently since November onwards.
In a field survey on pharmacies in the capital city, short supply of some medicines has been detected.
Akbar Ali, a salesman at Abdullah Pharmacy in Dhaka's Puranapaltan area, has reported short supply of some medicines and unavailability of a few. .
Jasim Uddin, working at Amanat Pharmacy in Eskaton area, said supply disruptions of some drugs were visible during the last few months, though there is no dearth of most medicines.
"Distributors of medicines told us that delays in import of raw materials are the cause of supply disruption as the pharmaceutical companies couldn't produce medicines in due time," he added.
A radio-oncologist in a government hospital, preferring anonymity, also echoed views of the retailers. He has to prescribe combination drugs to the cancer patients in recent times due to unavailability of some medicines on the local medicine market.
Industry people also acknowledge the supply disruption and request immediate steps of the Bangladesh Bank (BB) in issuing an order for the commercial banks to prioritize the API-import LCs among other products.
They say production of 20 to 30 per cent of drugs may face disruption in the next three-four months if the current crunch situation continued.
Banks used to queue up for import LCs on pharmaceuticals while now the situation has reversed. Pharmaceutical companies now have to request banks for opening LCs for pharmaceuticals' raw materials, they said.
Country's pharmaceutical companies are entirely, 97 per cent to be specific, dependent on API imports.
Not only raw and packaging materials, import of surgical equipment, not having local production, also dropped, creating crisis in operating theatres of different hospitals, physicians said.
Naimul Huda, Executive Director, Finance and Accounts of Incepta Pharmaceuticals Ltd, underscores the necessity for guidelines from the central bank with a list of priority products for import-LC opening.
"Its' a matter of concern if raw materials for medicine face supply disruption as many lives may be threatened for this. Already we are seeing some challenges as the delay in LC opening has created a production setback," he says.
Usually, the company keeps stock of raw materials for four months, but as banks are taking additional one month or more, there would be supply crunch naturally, he adds.
"Supply of raw materials was smooth until October 2023. From the month of November, the pharmaceutical industries are facing the difficulties in LC opening to a great extent."
Incepta's import of raw materials declined 10 to 20 per cent in recent months due to LC dilemmas in banks, he adds.
The company ED has urged prompt BB action to avert future crisis which may appear within three to four months unless proper action comes forthwith.
According BB data until November 2023, import of capital machinery for pharmaceutical sector had dropped nearly 50 per cent (49.69 per cent) in July-November period.
Pharmaceutical industries opened LCs worth US$455.43 million in July-November period against $386.59 million in corresponding period last year for raw materials. Settlement of LCs was $420 million in this period this fiscal year against $410 last FY.
Until this past November, pharmaceutical industries had opened LCs worth $29.89 million against $59.42 million in July-November in FY 2022-23 for importing capital machinery.
However, import volume of raw materials is not available in the data, leaving a gap between LC value and actual import volume.
A senior BB official has said the central bank keeps only data of import value, not volume.
The value of pharmaceutical raw materials increased in the July-November period amid international price spikes, it does not indicate higher import volume.
Mustafa Alim Aolad, Chief Financial Officer of Renata Limited, says they are not facing any production shortfall yet but small pharmaceutical companies may face such difficulties.
He, however, forecasts future uncertainty on import of raw materials for pharmaceutical sector, as other sectors, as ongoing dollar crisis may leave impact eventually.
Professor Ahmedul Kabir, Additional Director-General (DG) of the Directorate General of Drug Administration (DGDA), says the import of APIs remained on the priority list as always.
"We have requested, earlier, removing bottlenecks on import of raw materials for essential drugs on a case-to-case basis, but yet to receive massive complaints in this regard," he adds.
Pharmaceutical companies' representatives have noted that the dollar rate has jumped to 115 from Tk 85, causing a surge in raw-material prices by 39 per cent.
Existing import duty on APIs is aggravating the situation by adding up to the currency-devaluation costs.
They have alleged some of the commercial banks are not following the BB-fixed rates and taking more money in cash or other forms using different means. Such situation has created risk of price hike of medicines, already turning expensive by many accounts of patients.
Mohammad Halimuzzaman, Chief Executive Officer of Healthcare Pharmaceuticals Ltd, says the pharmaceutical companies could be compelled to stop production of some medicines owing to non-adjustment of medicine prices with the escalation in API prices.
"The existing dollar shortage has worsened the situation, putting pharmaceutical industries in more difficulties."
In a market study, the number of pending LC requests in banks has been found piling up following delay in opening letter of credit for import.
Bangladesh imports more than 1,000 of raw materials from China, India and other countries.
Mezbaul Haque, Executive Director of Bangladesh Bank, who is also spokesperson for the central bank, says the pharmaceutical sector may contact the regulator if they face problems but issuance of circular for a single product may not be possible at this stage.
He, however, has assured of asking the banks concerned not to delay LC opening for APIs if the industry-insiders contact the BB on a case-to-case basis.
"So far, supply disruption of APIs has not yet come to our knowledge to take action," he says.

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