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Md. Risalat Huda | Masum Alvi Chowdhury
Let’s take a moment and look back at the journey of Bangladeshi pharmaceutical businesses – and we will find that it was simply fascinating and inspiring. For decades, various aspects of its growth journey have been monitored, analyzed, and reported by numerous research organizations and think tanks.
In writing this report, we considered ourselves interpreters whose job is to analyze and synthesize what we have read and learned and, finally, put things in terms that one can understand. This report does not aim to discover which pharmaceutical company will dominate and for what reasons in the coming decade. Rather, as buy-side analysts, we have put all our efforts to project how this industry may look like in this new decade based on our research and assumptions.
The accelerating pace of change in the pharmaceutical sector
While the industry enjoys superb growth, the demand for modern medications is yet to reach its full potential
The pharmaceutical sector in Bangladesh witnessed a 12.1% CAGR (compounded annualized growth rate) over the last 5 years despite a cramped 4.3% growth in the pandemic-affected year—reaching a market size of BDT 275+ billion as of June 2021. The sector’s growth has been in line with the country’s nominal GDP, and the sector’s contribution to GDP has been around 0.9%. The export market now stands at USD 169.0 million and is expected to cross USD 1.5 billion by the end of this decade. Catapulted by a new set of growth drivers, the industry will possibly grow by 15-16% CAGR for this decade—touching BDT 1.0 trillion by 2030.
Thus far, generic drugs attributed to the industry’s growth—80% of all drugs are generic as Bangladesh enjoys a patent waiver from the TRIPS Agreement by the WTO. However, the industry may have to gradually change this composition as the facility will end by 2033. The competitive landscape will be enthralling as the pharmaceutical firms formulate their respective composition strategies by the end of this decade.
Healthcare Pharma put up the biggest growth story in the last decade with its esomeprazole drug Sergel and a molecule-based salesforce
Source: UCB Asset Research
In the next decade, one of the most crucial drivers for a healthy growth of the pharmaceutical industry will be a shift in demographics. Currently, 17.1% of the population is aged 50 and above. As the population growth has slowed in Bangladesh (1.0% in 2020 vs. 1.2% in 2011), by 2030, more than 40 million people will be aged 50 years and above.
By 2030, 22.4% of all residents in Bangladesh will be 50+ years—who will have more dependency on drugs
Source: Population Pyramid
Consumer spending on healthcare reflects the demand for pharmaceuticals in the country. With people’s rising income levels and changing perception of modern medications, per capita healthcare expenditure in Bangladesh grew 2.7x in the last ten years—from USD 15.8 to USD 41.9.
Nevertheless, this expenditure was not big enough compared to peers. Despite crossing multiple neighboring countries in terms of GDP per capita, Bangladesh still lags behind in healthcare expenditure.
There is ample room for growth in healthcare spending in Bangladesh in this decade. Currently, people hardly avail regular health checkups without any significant symptoms. Such a norm leads to many diseases remaining undiagnosed for a long time. Vietnam, for instance, experienced higher growth in healthcare expenses than that of gross income in the last decade (from 6.0% to 6.4%) due to a shift in perception.
We expect our behavior with modern medicines to shift in this decade, and so will the higher spending on healthcare—leading to a surge in the market for pharmaceuticals.
With people’s changing behavior, Bangladesh might follow Vietnam’s track of an increasing proportion of income spent on healthcare
Source: World Bank
However, the rise in modern medication usage will not be the same for all disease types. Based on people’s changing habits alongside other factors, certain disease classes will induce a higher demand for medicines than others—as we discuss next.
Therapeutic classes experiencing waves of change
Although innovation in molecules has slowed down globally, certain disease classes in Bangladesh may experience healthy growth
A shift in therapeutic classes, a buildup of resistance, and aggressive sales campaigns by pharmaceutical companies propagated a few molecules since 2015
Since 2015, shifts in the market share of the therapeutic classes have indicated a gradual shift of disease types among the people in the country. In recent times, comparatively more patients are taking drugs related to the alimentary tract and metabolism, cardiovascular, respiratory, sex hormones, and blood & blood-forming organs.
The esomeprazole molecule, belonging to the alimentary tract and metabolism class, occupies 7.6% of the overall drug market. The top 2 highest-selling drugs in the country belong to this molecule.
Source: IQVIA
However, this was not always the case. A gradual buildup of resistance to the omeprazole molecule has led to a shift towards esomeprazole drugs. Omeprazole now holds 3.0% of the overall drug market. A similar trend was observed in the past when doctors shifted from pantoprazole to omeprazole for the same reason.
In terms of market share (%), esomeprazole drugs Sergel and Maxpro have been able to surpass the omeprazole drug Seclo to reach the top of the chart
Source: UCB Asset Research
Besides, pharmaceutical companies are focusing more on selling newer molecules instead of older ones. The same was the case for some respiratory drugs as the Montelukast molecule (led by Monas) outperformed the Azithromycin molecule (led by Zimax).
The following disease classes will lead drug sales in this decade
A key driver for the growth of the alimentary tract and metabolism class will continue to be the dietary habit of the people. With a 2.7x higher market share compared to the next largest therapeutic class, the alimentary tract & metabolism segment will possibly continue to stay at the top in this decade, too.
However, the cardiovascular system class has been growing the fastest among all disease classes. People are seemingly more prone to diabetes due to poor dietary habits, declining physical activities, and rising stress levels. These will keep pushing the sales of cardiovascular medications.
The respiratory system class is another segment that can get into the top 3 disease classes within this decade. Changing demographics, smoking, air pollution, and obesity will be prime risk factors for chronic lung diseases.
We anticipate a rise in oncological medications since ~200,000 new cancer patients are diagnosed every year. Local manufacturers are already supplying 80% of all oncological drugs. Medications related to lung cancer, mouth cancer, and esophageal cancer may lead the segment in this decade.
The nervous system is another disease class that can grow considering our aging population and accessibility to advanced diagnosis in this decade
Molecule invention slackens, off-patent drugs to hold firm grounds
Adhering to TRIPS may not affect the industry massively, but other flexibilities need to be taken advantage of to keep the growth tale rolling.
In the last two decades, the invention of newer molecules has slowed down. For instance, omeprazole was invented in 1979, and just within 14 years, esomeprazole was patented (1993). In the following 28 years, no new molecule of this group has come out despite massive improvements in technology.
Similarly, there has been a drought of inventions as widely used molecules like paracetamol (first marketed in 1950), metformin (first popularized in 1950 for diabetes), and cefuroxime axetil (discovered in 1987 as an antibiotic) do not have any active patent. It is not certain if molecule invention will speed up in this decade.
One of the most important aspects behind the growth of the pharmaceutical industry of Bangladesh is the exemption from the TRIPS Agreement of the WTO. Bangladeshi pharmaceutical firms will be able to develop generic versions of patented drugs till 2033.
However, 85-90% of all generic drugs that the local pharmaceutical firms produce are off-patent. Without new molecule invention, the creation of new patents has slowed down as well. As a result, even being compatible with the TRIPS Agreement after 2033, the availability and price of generic drugs might remain unaffected.
Nevertheless, the portion of drugs that will remain under patents will face a massive surge in price. Under those circumstances, with proper legislation incorporated into national laws, Bangladesh can utilize some TRIPS flexibilities.
The first way can be the parallel importation of patented drugs (Article 6 of TRIPS); a patented drug is imported from one country (with a lower price of the drug) to another country (with a higher price of the drug) without any approval of the patent owner.
An alternative can be compulsory licensing (Article 31 of TRIPS) where a Government authority or a Court can issue the license to a pharmaceutical company. This allows the company to make certain use of a patented drug without the consent of the patent owner.
Another way can be a Bolar provision (Article 30 of TRIPS) where a pharmaceutical firm is allowed to use the patented drug formula to apply for approval of marketing their generic version as soon as the patent expires. In this case, a permit is issued by the public authorities, and no approval is needed from the patent owner.
Parallel importation is demonstrated here, where Company B imports the patented drug from Country Y and sells it to its own country of operation (Country X). The benefit can be reaped ONLY AND ONLY IF the patented drug is sold at a lower price in Country X compared to Country Y. There is no need of approval from the patent owner (Company A).
Source: UCB Asset Research
Exports growing strong, ready to explore new markets
Pharma companies are targeting diversified markets to capitalize on the global growth opportunities.
Pharmaceutical export from Bangladesh increased 3x in the last decade reaching USD 169 million in FY 2021. While the country made sizeable progress in pharmaceutical export, the real growth story is yet to be written. With strong structural support to overcome challenges in the global market, local pharmaceutical companies will launch multiform strategies to secure a strong position in diversified markets. We expect export to grow at a staggering CAGR of ~24% in this decade touching USD 1.5 billion.
LOCAL PHARMA COMPANIES FACE PRIMARY CHALLENGES IN REGULATORY AND COMPETITIVE ASPECTS
BEXIMCO
Source: UCB Asset Research
Medicine & healthcare delivery channels to undergo pivotal changes.
Private healthcare facilities will grow further along with people’s purchasing powers. Telemedicine is expected to play a major role.
Pharmaceutical products are delivered to consumers through two primary channels- hospitals and pharmacies. Since 2000, the number of public and private hospitals and clinics has tripled with the increase in healthcare expenditure and people’s purchasing power in general. The hospitals have their drug stores to sell drugs to both their resident patients and outpatients. The number of hospitals and clinics will keep rising steadily in this decade, as more and more people can afford private healthcare.
Private healthcare facilities will grow further along with people’s purchasing powers. Telemedicine is expected to play a major role
Source: BBS Survey of private healthcare institutions
As people’s purchasing power has increased, the patients often run abroad to seek better healthcare. An estimated USD 5 billion is spent each year by Bangladeshi medical patients seeking medical services abroad, and half of it is spent in India. This expenditure can reach USD 20 billion by 2030.
The number of registered retail pharmacies in the country is ~150,000. Almost half the retail pharmacies in Bangladesh are not listed in the DGDA registry, and the actual number is well beyond that. While alternative medicines are still used in Bangladesh, the allopathic pharmaceutical products have captured the market so well that ayurvedic, homeopathic, and other alternative solutions have little room for growth in this decade.
The widespread availability of internet connectivity and affordability of internet-enabled devices have expedited the growth of healthcare technology and telemedicine industries. The pandemic helped the healthtech companies to attain a significant number of new subscribers over the past year. Their primary target now would be to retain these customers after the pandemic as well as gain new ones.
While the prospect of healthtech in Bangladesh is promising, the reach of this industry is still pretty low as most people prefer traditional medical treatment. To battle this, healthtech providers will have to use both online and offline solutions to cater to individual customer’s needs. The next decade may see joint ventures between hospitals and healthtech providers to bridge the gap between the human and digital counterparts of the titular system.
Praava Health, Maya, Arogga, CMED, DocTime, Doctor Koi are some of the telemedicine services available in the country; providing services like appointment booking, medical advice, ambulance service, medicine delivery, testing facilities, and medical insurance services
Source: Business Inspection Web
Humans behind the medicine fall short of demand
Number of pharmacists and doctors is not adequate, but the decade will ease the shortage with material improvement in quality.
Inclusion of Grade A clinical pharmacists in hospitals and pharmacies is going to become commonplace in this decade
During the rise of the pharmaceutical industry in the early 2000s, a bachelor’s degree in pharmacy became lucrative to higher education pursuers. Currently, 41 universities and 51 institutes offer graduate, postgraduate, and diploma degrees in pharmacy. An estimated 1,000 pharmacists graduate every year from these institutions, and ~20,000 pharmacist professionals are employed in this sector.
DGHS mandated both government and private hospitals to have clinical pharmacists. The pharmacists will work with the physicians, and provide information on the probable interactions or adverse impacts of the medications. While the top private hospitals in the country are recruiting more and more pharmacists to upgrade their healthcare facilities on demand, none of the government health facilities has any Grade-A clinical pharmacists.
The already ongoing trend of appointing medical pharmacists in private hospitals and DGHS’ efforts to include them in public service indicates a potential of significant increase of these medical professionals in the healthcare sector in this decade.
We expect at least 250,000 MBBS doctors in service by 2030
The number of MBBS holder doctors in Bangladesh is 101,538. Currently, ~10,000 medical students graduate from public and private medical colleges each year.
While the number of public medical colleges and universities is not likely to increase significantly in the next decade, private medical colleges are expected to grow in number. In May 2021, cabinet approved the final draft of Private Medical College and Dental College Act, 2021 to ensure proper governance and administrative discipline in the titular institutions.
There are 27,002 posts for MBBS doctors and 2,915 posts for Grade-B pharmacists in public hospitals, many of which are vacant
Source: Bangladesh National Health Bulletin
As of 2019, there are 6.73 medical physicians per 10,000 people in Bangladesh which is one of the lowest in South Asia
Source: WHO, World Bank
Nature and approach of operations of Medical Delegate Officers are likely to undergo massive modifications in the next decade as molecule-based advertising and promotion of drugs is likely to dominate
The common practice of drug promotion by medical delegate officers in Bangladesh differs from that of other countries. In other markets, MDOs approach pharmacists for recommendations on their companies’ products. In Bangladesh, however, MDOs directly approach the doctors to recommend their drugs to the patients. Their sales targets are assigned based on molecules or regions. For top-tier companies, sales commissions account for 40-50% of their total compensation, while in some non-top-tier companies, it can go up to 100%.
MDOs will play a salient role in the coming days of local pharmaceutical sales. Pharmaceutical companies are focusing on training the MDOs more effectively and specializing them in particular molecules or drug groups. Also, their sales targets are being assigned based on their expertise in molecule-based sales numbers, and this trend will only grow throughout this decade.
Keeping an eye on certain aspects that might play out in the fullness of time
Can the API Park deliver on the expectations?
The active pharmaceutical ingredients industrial park in Munshiganj is expected to start producing raw materials by 2022. Bangladesh currently imports 97% of the API required for pharmaceutical production, and the park is expected to cut this number to 80% by 2032. Even after the park becomes fully operational, the industry will have to import a significant quantity of specialized APIs from overseas, as the local API producers are likely to produce common raw materials. As a result, the industry will still be susceptible to external supply shock risks. Of the 27 companies who are allotted plots in the API park, Acme Laboratories and Healthcare Pharmaceutical will be the first ones to start production. The park can create at least 25,000 jobs initially. Raw material manufacturers will be allowed to retain 40% of their export earnings.
While all this information looks good on paper, how effectively the API park can turn things around for the industry remains unsure. The in-house API production is expected to reduce the cost of production of drugs for the pharmaceutical companies and grant them higher margins on drugs sales; however, due to drug price regulations in Bangladesh, it may be difficult for them to reap the said benefit. The API park is a long-awaited addition since the rise of pharmaceutical industry in this country. The more it can deliver, the better.
Animal health industry to rise with changing consumption
The animal health industry in Bangladesh is a BDT 30 billion market. 70% of the market share is held by local pharmaceutical companies e.g., Renata, Acme, ACI, Square, Elanco, Opsonin, Eskayef, Navana, Popular, and Incepta. Renata is the market leader. The poultry industry of Bangladesh is a BDT 350 billion market and is the main driver for Renata’s market share growth. The companies mainly produce antibiotics, minerals, vitamins, enzymes, and toxin binders for animals. The COVID pandemic has landed a blow on the meat and dairy production sector. Reportedly, poultry meat and egg production has declined by 40-45% from the previous year while 40% of registered poultry farms have shut down during the year. The cattle industry also faces a crisis as BDT 290 billion worth of livestock are left unsold, and frozen meat import grew to be 2,500 tons in July 2021, much higher than the average volume of 1,000-1,500 tons.
These events are likely to affect the animal health market temporarily. Companies like Incepta and ACI are preparing their facilities to produce animal vaccines, however, as of now, animal vaccines are almost entirely imported from abroad. The local pharmaceutical companies claim that they can meet 90-95% of agrovet demands if they are provided with policy support by DGDA.
With the increase in people’s purchasing power, meat consumption is growing. People from different educational backgrounds are stepping into the livestock and poultry businesses and they are incorporating new business ideas and trends in the industry. As the livestock and poultry industry becomes more organized in this decade, the agrovet and animal health markets are anticipated to grow in tandem.
The present & future of Mental Health
Bangladesh has a severe shortage of mental health specialists and clinics with only 2,000 listed mental health professionals. That boils down to 1.17 mental health professionals per 100,000 people. 2 mental hospitals take resident patients and 70 facilities are attached with hospitals that treat outpatients. The inadequate number of mental health facilities can be attributed to the reluctance of Bangladeshi mental health patients in seeking professional help. An estimated 17% of adults in Bangladesh are suffering from mental illness of various degrees, and 93% of these people do not seek medical attention. The COVID pandemic has also contributed to the added psychological stress on the population in the past year. Anxiety and depressive symptoms account for 34% and 54% of mental health issues. Suicide tendencies were also more prevalent in young people since March 2020 as anxiety about academic life and unemployment caved in.
People’s increasing awareness is expected to give rise to mental wellness practices in this decade. As this issue is still somewhat stigmatized in our country, telemedicine and virtual counseling programs can take the lead, because patients do not have to meet the doctor face-to-face in this way.
COVID Effects: What will stay throughout the decade
Local pharmaceutical companies have shown polished approaches to tackle the COVID pandemic. Beximco has been a frontrunner right from the word go and launched the world’s first generic Remdisivir. Later, Eskayef, Square, Incepta, Healthcare, and Beacon followed suit. Going forward, Beximco launched probable COVID medications—Ivermectin, Favipirapir, Rivaroxaban, and Telmisartan. It also inked a deal with Serum Institute India and the Government of Bangladesh to supply Covidshield vaccines.
In Apr ‘21, Renata announced that it started communicating with different sources to import COVID vaccines. The company already applied to the Ministry of Health to grant permission to import the Moderna and Johnson & Johnson vaccines. However, the outcome is yet to be seen.
In the meantime, Incepta inked a deal with the Government and Sinopharm to produce COVID vaccines. It hopes to start manufacturing the vaccines by Nov ‘21 with a production capacity of 5 million doses/month. On the other hand, Acme Laboratories is rumored to have inked a deal with one of the manufacturers for bottling COVID vaccines in the country.
Apart from vaccines and medicines, the supply of oxygen has become a lifesaver. Linde has started importing 240 tonnes/day. Spectra has also initiated oxygen import from Singapore. Some local steel producers have also entered into this arena—Abul Khayer and GPH are producing 30 and 25 tonnes/day, respectively. KSRM has launched a plant to produce 24,000 m3.
The long-term effects brought in by COVID will perhaps stay throughout the decade. Drugs related to COVID have been added to the antiviral drug squad. Besides, the new oxygen plants will likely continue to operate and additional oxygen supply might be exported.
Bangladesh pharma story to end this decade on a high note
The pharmaceutical sector, one of the most engrossing manufacturing industries in Bangladesh, has shown resistance to uncertainty and continued to grow. Driven by increasing consumer spending, a shift in demography, an awareness of different medications, and a changed approach to acceptance of mental and physical treatment, the pharmaceutical market will possibly reach BDT 1 trillion by 2030. Opportunity to grow in overseas export, use of technology to benefit from remote diagnosis, and new aspects that are yet to experience development will aid in this foreseeable hike in the coming years.
Let’s take a moment and look back at the journey of Bangladeshi pharmaceutical businesses – and we will find that it was simply fascinating and inspiring. For decades, various aspects of its growth journey have been monitored, analyzed, and reported by numerous research organizations and think tanks.
In writing this report, we considered ourselves interpreters whose job is to analyze and synthesize what we have read and learned and, finally, put things in terms that one can understand. This report does not aim to discover which pharmaceutical company will dominate and for what reasons in the coming decade. Rather, as buy-side analysts, we have put all our efforts to project how this industry may look like in this new decade based on our research and assumptions.
The accelerating pace of change in the pharmaceutical sector
While the industry enjoys superb growth, the demand for modern medications is yet to reach its full potential
The pharmaceutical sector in Bangladesh witnessed a 12.1% CAGR (compounded annualized growth rate) over the last 5 years despite a cramped 4.3% growth in the pandemic-affected year—reaching a market size of BDT 275+ billion as of June 2021. The sector’s growth has been in line with the country’s nominal GDP, and the sector’s contribution to GDP has been around 0.9%. The export market now stands at USD 169.0 million and is expected to cross USD 1.5 billion by the end of this decade. Catapulted by a new set of growth drivers, the industry will possibly grow by 15-16% CAGR for this decade—touching BDT 1.0 trillion by 2030.
Thus far, generic drugs attributed to the industry’s growth—80% of all drugs are generic as Bangladesh enjoys a patent waiver from the TRIPS Agreement by the WTO. However, the industry may have to gradually change this composition as the facility will end by 2033. The competitive landscape will be enthralling as the pharmaceutical firms formulate their respective composition strategies by the end of this decade.
Healthcare Pharma put up the biggest growth story in the last decade with its esomeprazole drug Sergel and a molecule-based salesforce
Source: UCB Asset Research
In the next decade, one of the most crucial drivers for a healthy growth of the pharmaceutical industry will be a shift in demographics. Currently, 17.1% of the population is aged 50 and above. As the population growth has slowed in Bangladesh (1.0% in 2020 vs. 1.2% in 2011), by 2030, more than 40 million people will be aged 50 years and above.
By 2030, 22.4% of all residents in Bangladesh will be 50+ years—who will have more dependency on drugs
Source: Population Pyramid
Consumer spending on healthcare reflects the demand for pharmaceuticals in the country. With people’s rising income levels and changing perception of modern medications, per capita healthcare expenditure in Bangladesh grew 2.7x in the last ten years—from USD 15.8 to USD 41.9.
Nevertheless, this expenditure was not big enough compared to peers. Despite crossing multiple neighboring countries in terms of GDP per capita, Bangladesh still lags behind in healthcare expenditure.
There is ample room for growth in healthcare spending in Bangladesh in this decade. Currently, people hardly avail regular health checkups without any significant symptoms. Such a norm leads to many diseases remaining undiagnosed for a long time. Vietnam, for instance, experienced higher growth in healthcare expenses than that of gross income in the last decade (from 6.0% to 6.4%) due to a shift in perception.
We expect our behavior with modern medicines to shift in this decade, and so will the higher spending on healthcare—leading to a surge in the market for pharmaceuticals.
With people’s changing behavior, Bangladesh might follow Vietnam’s track of an increasing proportion of income spent on healthcare
Source: World Bank
However, the rise in modern medication usage will not be the same for all disease types. Based on people’s changing habits alongside other factors, certain disease classes will induce a higher demand for medicines than others—as we discuss next.
Therapeutic classes experiencing waves of change
Although innovation in molecules has slowed down globally, certain disease classes in Bangladesh may experience healthy growth
A shift in therapeutic classes, a buildup of resistance, and aggressive sales campaigns by pharmaceutical companies propagated a few molecules since 2015
Since 2015, shifts in the market share of the therapeutic classes have indicated a gradual shift of disease types among the people in the country. In recent times, comparatively more patients are taking drugs related to the alimentary tract and metabolism, cardiovascular, respiratory, sex hormones, and blood & blood-forming organs.
The esomeprazole molecule, belonging to the alimentary tract and metabolism class, occupies 7.6% of the overall drug market. The top 2 highest-selling drugs in the country belong to this molecule.
Source: IQVIA
However, this was not always the case. A gradual buildup of resistance to the omeprazole molecule has led to a shift towards esomeprazole drugs. Omeprazole now holds 3.0% of the overall drug market. A similar trend was observed in the past when doctors shifted from pantoprazole to omeprazole for the same reason.
In terms of market share (%), esomeprazole drugs Sergel and Maxpro have been able to surpass the omeprazole drug Seclo to reach the top of the chart
Source: UCB Asset Research
Besides, pharmaceutical companies are focusing more on selling newer molecules instead of older ones. The same was the case for some respiratory drugs as the Montelukast molecule (led by Monas) outperformed the Azithromycin molecule (led by Zimax).
The following disease classes will lead drug sales in this decade
A key driver for the growth of the alimentary tract and metabolism class will continue to be the dietary habit of the people. With a 2.7x higher market share compared to the next largest therapeutic class, the alimentary tract & metabolism segment will possibly continue to stay at the top in this decade, too.
However, the cardiovascular system class has been growing the fastest among all disease classes. People are seemingly more prone to diabetes due to poor dietary habits, declining physical activities, and rising stress levels. These will keep pushing the sales of cardiovascular medications.
The respiratory system class is another segment that can get into the top 3 disease classes within this decade. Changing demographics, smoking, air pollution, and obesity will be prime risk factors for chronic lung diseases.
We anticipate a rise in oncological medications since ~200,000 new cancer patients are diagnosed every year. Local manufacturers are already supplying 80% of all oncological drugs. Medications related to lung cancer, mouth cancer, and esophageal cancer may lead the segment in this decade.
The nervous system is another disease class that can grow considering our aging population and accessibility to advanced diagnosis in this decade
Molecule invention slackens, off-patent drugs to hold firm grounds
Adhering to TRIPS may not affect the industry massively, but other flexibilities need to be taken advantage of to keep the growth tale rolling.
In the last two decades, the invention of newer molecules has slowed down. For instance, omeprazole was invented in 1979, and just within 14 years, esomeprazole was patented (1993). In the following 28 years, no new molecule of this group has come out despite massive improvements in technology.
Similarly, there has been a drought of inventions as widely used molecules like paracetamol (first marketed in 1950), metformin (first popularized in 1950 for diabetes), and cefuroxime axetil (discovered in 1987 as an antibiotic) do not have any active patent. It is not certain if molecule invention will speed up in this decade.
One of the most important aspects behind the growth of the pharmaceutical industry of Bangladesh is the exemption from the TRIPS Agreement of the WTO. Bangladeshi pharmaceutical firms will be able to develop generic versions of patented drugs till 2033.
However, 85-90% of all generic drugs that the local pharmaceutical firms produce are off-patent. Without new molecule invention, the creation of new patents has slowed down as well. As a result, even being compatible with the TRIPS Agreement after 2033, the availability and price of generic drugs might remain unaffected.
Nevertheless, the portion of drugs that will remain under patents will face a massive surge in price. Under those circumstances, with proper legislation incorporated into national laws, Bangladesh can utilize some TRIPS flexibilities.
The first way can be the parallel importation of patented drugs (Article 6 of TRIPS); a patented drug is imported from one country (with a lower price of the drug) to another country (with a higher price of the drug) without any approval of the patent owner.
An alternative can be compulsory licensing (Article 31 of TRIPS) where a Government authority or a Court can issue the license to a pharmaceutical company. This allows the company to make certain use of a patented drug without the consent of the patent owner.
Another way can be a Bolar provision (Article 30 of TRIPS) where a pharmaceutical firm is allowed to use the patented drug formula to apply for approval of marketing their generic version as soon as the patent expires. In this case, a permit is issued by the public authorities, and no approval is needed from the patent owner.
Parallel importation is demonstrated here, where Company B imports the patented drug from Country Y and sells it to its own country of operation (Country X). The benefit can be reaped ONLY AND ONLY IF the patented drug is sold at a lower price in Country X compared to Country Y. There is no need of approval from the patent owner (Company A).
Source: UCB Asset Research
Exports growing strong, ready to explore new markets
Pharma companies are targeting diversified markets to capitalize on the global growth opportunities.
Pharmaceutical export from Bangladesh increased 3x in the last decade reaching USD 169 million in FY 2021. While the country made sizeable progress in pharmaceutical export, the real growth story is yet to be written. With strong structural support to overcome challenges in the global market, local pharmaceutical companies will launch multiform strategies to secure a strong position in diversified markets. We expect export to grow at a staggering CAGR of ~24% in this decade touching USD 1.5 billion.
LOCAL PHARMA COMPANIES FACE PRIMARY CHALLENGES IN REGULATORY AND COMPETITIVE ASPECTS
- Developed markets are comparatively more difficult to penetrate because of strict regulations and monitoring from FDA and other regulatory authorities.
- Numerous policies, intermediaries, and existing drugs from competing countries trim the profit margin for Bangladeshi pharma companies.
- Gaining the trust of the foreign consumers and establishing a robust supply chain in a foreign market through a dependable foreign partner.
- Continuously focusing on prescription drugs rather than OTC drugs as selling the former will result in a higher profitability margin.
BEXIMCO
- Focused on regulated markets of USA and Australia
- Supplying sterile ophthalmic products to developed markets like Europe
- Recently entered the gulf market with several products launched in Kuwait
- Have been Contract manufacturing medicine & equipment for WHO
- Recently received approval from US FDA
- Established Renata Pharmaceutical (Ireland) in 2019 because Brexit rendered their UK front obsolete
- One of the four local pharmas having approval from both US FDA & UK-MHRA
- Recently focused on East African drug market, which is currently worth USD 300 Billion
- Set up factory in Kenya, which will grant them access to TRIPS even after 2032
Source: UCB Asset Research
Medicine & healthcare delivery channels to undergo pivotal changes.
Private healthcare facilities will grow further along with people’s purchasing powers. Telemedicine is expected to play a major role.
Pharmaceutical products are delivered to consumers through two primary channels- hospitals and pharmacies. Since 2000, the number of public and private hospitals and clinics has tripled with the increase in healthcare expenditure and people’s purchasing power in general. The hospitals have their drug stores to sell drugs to both their resident patients and outpatients. The number of hospitals and clinics will keep rising steadily in this decade, as more and more people can afford private healthcare.
Private healthcare facilities will grow further along with people’s purchasing powers. Telemedicine is expected to play a major role
Source: BBS Survey of private healthcare institutions
As people’s purchasing power has increased, the patients often run abroad to seek better healthcare. An estimated USD 5 billion is spent each year by Bangladeshi medical patients seeking medical services abroad, and half of it is spent in India. This expenditure can reach USD 20 billion by 2030.
The number of registered retail pharmacies in the country is ~150,000. Almost half the retail pharmacies in Bangladesh are not listed in the DGDA registry, and the actual number is well beyond that. While alternative medicines are still used in Bangladesh, the allopathic pharmaceutical products have captured the market so well that ayurvedic, homeopathic, and other alternative solutions have little room for growth in this decade.
The widespread availability of internet connectivity and affordability of internet-enabled devices have expedited the growth of healthcare technology and telemedicine industries. The pandemic helped the healthtech companies to attain a significant number of new subscribers over the past year. Their primary target now would be to retain these customers after the pandemic as well as gain new ones.
While the prospect of healthtech in Bangladesh is promising, the reach of this industry is still pretty low as most people prefer traditional medical treatment. To battle this, healthtech providers will have to use both online and offline solutions to cater to individual customer’s needs. The next decade may see joint ventures between hospitals and healthtech providers to bridge the gap between the human and digital counterparts of the titular system.
Praava Health, Maya, Arogga, CMED, DocTime, Doctor Koi are some of the telemedicine services available in the country; providing services like appointment booking, medical advice, ambulance service, medicine delivery, testing facilities, and medical insurance services
Source: Business Inspection Web
Humans behind the medicine fall short of demand
Number of pharmacists and doctors is not adequate, but the decade will ease the shortage with material improvement in quality.
Inclusion of Grade A clinical pharmacists in hospitals and pharmacies is going to become commonplace in this decade
During the rise of the pharmaceutical industry in the early 2000s, a bachelor’s degree in pharmacy became lucrative to higher education pursuers. Currently, 41 universities and 51 institutes offer graduate, postgraduate, and diploma degrees in pharmacy. An estimated 1,000 pharmacists graduate every year from these institutions, and ~20,000 pharmacist professionals are employed in this sector.
DGHS mandated both government and private hospitals to have clinical pharmacists. The pharmacists will work with the physicians, and provide information on the probable interactions or adverse impacts of the medications. While the top private hospitals in the country are recruiting more and more pharmacists to upgrade their healthcare facilities on demand, none of the government health facilities has any Grade-A clinical pharmacists.
The already ongoing trend of appointing medical pharmacists in private hospitals and DGHS’ efforts to include them in public service indicates a potential of significant increase of these medical professionals in the healthcare sector in this decade.
We expect at least 250,000 MBBS doctors in service by 2030
The number of MBBS holder doctors in Bangladesh is 101,538. Currently, ~10,000 medical students graduate from public and private medical colleges each year.
While the number of public medical colleges and universities is not likely to increase significantly in the next decade, private medical colleges are expected to grow in number. In May 2021, cabinet approved the final draft of Private Medical College and Dental College Act, 2021 to ensure proper governance and administrative discipline in the titular institutions.
There are 27,002 posts for MBBS doctors and 2,915 posts for Grade-B pharmacists in public hospitals, many of which are vacant
Source: Bangladesh National Health Bulletin
As of 2019, there are 6.73 medical physicians per 10,000 people in Bangladesh which is one of the lowest in South Asia
Source: WHO, World Bank
Nature and approach of operations of Medical Delegate Officers are likely to undergo massive modifications in the next decade as molecule-based advertising and promotion of drugs is likely to dominate
The common practice of drug promotion by medical delegate officers in Bangladesh differs from that of other countries. In other markets, MDOs approach pharmacists for recommendations on their companies’ products. In Bangladesh, however, MDOs directly approach the doctors to recommend their drugs to the patients. Their sales targets are assigned based on molecules or regions. For top-tier companies, sales commissions account for 40-50% of their total compensation, while in some non-top-tier companies, it can go up to 100%.
MDOs will play a salient role in the coming days of local pharmaceutical sales. Pharmaceutical companies are focusing on training the MDOs more effectively and specializing them in particular molecules or drug groups. Also, their sales targets are being assigned based on their expertise in molecule-based sales numbers, and this trend will only grow throughout this decade.
Keeping an eye on certain aspects that might play out in the fullness of time
Can the API Park deliver on the expectations?
The active pharmaceutical ingredients industrial park in Munshiganj is expected to start producing raw materials by 2022. Bangladesh currently imports 97% of the API required for pharmaceutical production, and the park is expected to cut this number to 80% by 2032. Even after the park becomes fully operational, the industry will have to import a significant quantity of specialized APIs from overseas, as the local API producers are likely to produce common raw materials. As a result, the industry will still be susceptible to external supply shock risks. Of the 27 companies who are allotted plots in the API park, Acme Laboratories and Healthcare Pharmaceutical will be the first ones to start production. The park can create at least 25,000 jobs initially. Raw material manufacturers will be allowed to retain 40% of their export earnings.
While all this information looks good on paper, how effectively the API park can turn things around for the industry remains unsure. The in-house API production is expected to reduce the cost of production of drugs for the pharmaceutical companies and grant them higher margins on drugs sales; however, due to drug price regulations in Bangladesh, it may be difficult for them to reap the said benefit. The API park is a long-awaited addition since the rise of pharmaceutical industry in this country. The more it can deliver, the better.
Animal health industry to rise with changing consumption
The animal health industry in Bangladesh is a BDT 30 billion market. 70% of the market share is held by local pharmaceutical companies e.g., Renata, Acme, ACI, Square, Elanco, Opsonin, Eskayef, Navana, Popular, and Incepta. Renata is the market leader. The poultry industry of Bangladesh is a BDT 350 billion market and is the main driver for Renata’s market share growth. The companies mainly produce antibiotics, minerals, vitamins, enzymes, and toxin binders for animals. The COVID pandemic has landed a blow on the meat and dairy production sector. Reportedly, poultry meat and egg production has declined by 40-45% from the previous year while 40% of registered poultry farms have shut down during the year. The cattle industry also faces a crisis as BDT 290 billion worth of livestock are left unsold, and frozen meat import grew to be 2,500 tons in July 2021, much higher than the average volume of 1,000-1,500 tons.
These events are likely to affect the animal health market temporarily. Companies like Incepta and ACI are preparing their facilities to produce animal vaccines, however, as of now, animal vaccines are almost entirely imported from abroad. The local pharmaceutical companies claim that they can meet 90-95% of agrovet demands if they are provided with policy support by DGDA.
With the increase in people’s purchasing power, meat consumption is growing. People from different educational backgrounds are stepping into the livestock and poultry businesses and they are incorporating new business ideas and trends in the industry. As the livestock and poultry industry becomes more organized in this decade, the agrovet and animal health markets are anticipated to grow in tandem.
The present & future of Mental Health
Bangladesh has a severe shortage of mental health specialists and clinics with only 2,000 listed mental health professionals. That boils down to 1.17 mental health professionals per 100,000 people. 2 mental hospitals take resident patients and 70 facilities are attached with hospitals that treat outpatients. The inadequate number of mental health facilities can be attributed to the reluctance of Bangladeshi mental health patients in seeking professional help. An estimated 17% of adults in Bangladesh are suffering from mental illness of various degrees, and 93% of these people do not seek medical attention. The COVID pandemic has also contributed to the added psychological stress on the population in the past year. Anxiety and depressive symptoms account for 34% and 54% of mental health issues. Suicide tendencies were also more prevalent in young people since March 2020 as anxiety about academic life and unemployment caved in.
People’s increasing awareness is expected to give rise to mental wellness practices in this decade. As this issue is still somewhat stigmatized in our country, telemedicine and virtual counseling programs can take the lead, because patients do not have to meet the doctor face-to-face in this way.
COVID Effects: What will stay throughout the decade
Local pharmaceutical companies have shown polished approaches to tackle the COVID pandemic. Beximco has been a frontrunner right from the word go and launched the world’s first generic Remdisivir. Later, Eskayef, Square, Incepta, Healthcare, and Beacon followed suit. Going forward, Beximco launched probable COVID medications—Ivermectin, Favipirapir, Rivaroxaban, and Telmisartan. It also inked a deal with Serum Institute India and the Government of Bangladesh to supply Covidshield vaccines.
In Apr ‘21, Renata announced that it started communicating with different sources to import COVID vaccines. The company already applied to the Ministry of Health to grant permission to import the Moderna and Johnson & Johnson vaccines. However, the outcome is yet to be seen.
In the meantime, Incepta inked a deal with the Government and Sinopharm to produce COVID vaccines. It hopes to start manufacturing the vaccines by Nov ‘21 with a production capacity of 5 million doses/month. On the other hand, Acme Laboratories is rumored to have inked a deal with one of the manufacturers for bottling COVID vaccines in the country.
Apart from vaccines and medicines, the supply of oxygen has become a lifesaver. Linde has started importing 240 tonnes/day. Spectra has also initiated oxygen import from Singapore. Some local steel producers have also entered into this arena—Abul Khayer and GPH are producing 30 and 25 tonnes/day, respectively. KSRM has launched a plant to produce 24,000 m3.
The long-term effects brought in by COVID will perhaps stay throughout the decade. Drugs related to COVID have been added to the antiviral drug squad. Besides, the new oxygen plants will likely continue to operate and additional oxygen supply might be exported.
Bangladesh pharma story to end this decade on a high note
The pharmaceutical sector, one of the most engrossing manufacturing industries in Bangladesh, has shown resistance to uncertainty and continued to grow. Driven by increasing consumer spending, a shift in demography, an awareness of different medications, and a changed approach to acceptance of mental and physical treatment, the pharmaceutical market will possibly reach BDT 1 trillion by 2030. Opportunity to grow in overseas export, use of technology to benefit from remote diagnosis, and new aspects that are yet to experience development will aid in this foreseeable hike in the coming years.
