Pharmaceuticals: Farming the future

With the Bangladesh's pharmaceutical industry shifting from the back-seat to the steering-wheel, we might have found one of the meaningful pathways towards a higher industrial league. Always a formidable sector, the pharmaceutical industry relied heavily on foreign franchises, both before independence and in the first decade after our liberation. Along with Siemens and Spencer's, Squibb and Bristol Myers, to name but a few of the sturdy companies from abroad then, there also existed a smattering of equally robust purely domestic franchises, like G.A. Company, JACO, Mujibullah, Hoqsons, and so forth. Only with the 1982 Drug Policy did the sector come out of its shell in a spree that further boosted domestic franchises, so much so that by 2016, these franchises are not only in full control of a far more populated country but also ready to spread their wings internationally now that locally patented drugs have begun to find external recognition and consumers. This could mark the "take-off" our economy needs to cross its own Rubicon. At stake is consolidation in a way that hitherto imported ingredients can be locally produced to expand exports and receive patent recognition.

Employing more than 115,000 workers, the industry is worth Tk 113 billion today, according to LightCastle Bangladesh figures, which is 65 times larger when the Drug Policy was adopted in 1982. Domestic producers profited, as their increasing market-share from one-third then to over 90 per cent now indicates. Indeed, since then, allopathic firms have doubled to over 300, and together with ayurvedic, herbal, homeopathic, and unani companies, they sell 22,000 different brands to confront 1,500 types of medication. Sales, on a rebound after the 2014 election, could reach Tk 200 billion by our 50th birthday anniversary, reflecting one of the most technologically advanced sectors in the country, with hormones, insulin, and cancer drugs, among others, under its belt.

Exports, begun recently, have also started to spiral, with double-digit growth since 2014. Though the total value falls just under $45 million now, it is poised to expand, and penetrate all kinds of countries, from developed to less developed, some 80-odd of them.

Exports specialise in active pharmaceutical ingredients (APIs), including HFA inhalers, CFC inhalers, suppositories, nasal sprays, injectibles, IV infusions, and so forth. Although 39 firms export, a smaller group dominates by virtue of its research-and-development (R/D) capacities/capabilities, highlighting our API credentials and infrastructure. Very simply, the API component of a drug becomes the drug itself or upon which other ingredients hang, and is often responsible for up to half the cost of the drug itself. API cultivation reflects enormous research, thus relating universities and laboratories with industry, and a mass market to become and remain viable. Once developed, it must be patented before hitting the market, and be approved by the World Trade Organisation's (WTO's) Trade-related Intellectual Property Rights (TRIPS) regime. This is a huge stumbling block least developed countries (LDCs) face. One of the concessions made for them permitted API production and exports until December 2015 without patent registration (likely to be extended a few more years).

Bangladesh became its own worst enemy by actually fumbling. It did not pay much attention to constructing the 200-acre API park in Munshiganj that the Bangladesh Small and Cottage Industries Corporation (BSCIC) authorised in 2007. This was projected to be the API-hub, bringing together 42 pharmaceutical firms, offering over 25,000 jobs, involving over Tk 2.5 billion of an investment, and building a central effluent treatment plant (CETP), in addition to mobilising progress. Construction was to take four years, but eight have elapsed without any progress (except a very late push in recent months).

One consequence has been to boost imports of drug ingredients when we should be exporting them. Almost 90 per cent of the materials needed for our Tk 113-billion industry have to be imported. That it is a very oligarchic industry complicates the reform structure and future: a few companies can produce key drugs like amoxicillin and impicillin (Beximco, Globe, Square, among them); but over 250 companies of all sizes engage in the market, producing almost $1.0 billion worth of drugs. In 2007, on the eve of the API-park initiation, about 100 companies spent over $200 million to import raw materials, and though all companies together have made the country self-sufficient in medicine, and have helped feed the health infrastructure through over 1,683 hospitals and nursing homes in 2015 (another booming sector that the pharmaceutical industry depends upon), the trade-dependency could turn virulent without an adequate R/D anchor. At about the same time, the $45 million earned from exporting to 70+ countries exposed what might evolve as an unfavourable gap for us the longer the API part remains on the back-burner while the export earnings go straight to the front-burner for purchasing foreign ingredients. Our needs grow larger and more sophisticated in the interim, suggesting that, without an urgent breakthrough now, we might end up in a vicious cycle at our pharmaceutical industry's expense. Novertis, Renata, Square, and Smith-Kline-French have received certification from across Europe, while Beximco has done likewise, not just in Europe, but also the United States. We need not only many more of them, but also more evenly distributed collectively, thereby reiterating the need for an API-park urgently.

An IDLC Finance pamphlet by Salim Afzal Shawon points out how 10 companies dominate the domestic market. Square Pharmaceuticals is at the top with a 19 per cent share, far ahead of the second-placed Incepta, boasting 10 per cent. Beximco, Acme, Opsonin, Eskayef, Renata, ACI, Aristopharma, and Drug International follow, in that order, with a 8.3, 4.5, 4.9, 4.9, 3.2, 4.2, 3.9, and 3.8 per cent share, respectively. That is over half the entire market. On the plus side, they also dominate whatever API production there is in the country, though, in the aggregate, this barely meets 20 per cent of the country's needs. More important, they depict the high developmental level of our pharmaceutical industry, a feature as crucial to capturing markets abroad as it is a reflection of conscientious policy coordination within.

Another article, "Pharmaceutical opportunities in Bangladesh," in another pamphlet, "UK Trade & Investment," found 450 generics/substances registered in the country before the Great Recession (2007-10), 209 of them on an essential list; but the number of brands was more than 20 times that number.

Behind the pharmaceutical growth lies two domestic regulatory bodies and global connections. The Directorate General of Drug Administration monitors trade, registration, licensing, and packaging, while the Pharmacy Council of Bangladesh, established 40 years ago under the Pharmacy Ordinance Act, monitors all pharmacies. Membership in the International Pharmaceutical Federation and Commonwealth Pharmaceutical Association gives our pharmaceutical industry global visibility and legitimacy.

As Shawkat Haider noted in "Dhaka Tribune" (February 13, 2015), if the RMG export tally could move from $1.0 billion in 1992 to $25 billion today, the pharmaceutical industry is capable of registering a similar climb. If it does, unlike the RMG industry, which is labour-intensive, pharmaceuticals could demonstrate our high-skilled and technological capabilities and infrastructure. It is clearly a candidate for that industrial deepening the country will need at the core of its "developed country" claim.

Is it the only one? Another potential candidate, the paper industry, is stymied by even more structural constraints. It is the next to be evaluated.

Dr Imtiaz A Hussain is Professor, International Relations, formerly Universidad Iberoamericana, Mexico City.

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