Prospect of Export Oriented Medicine Industry in Bangladesh

Submitted to Dr. Khondoker Bazlul Hoque Professor Department of International Business

Course Title Course No. Date of Submission

: Theory and Practice of International Business : EIB-510 :

Submitted by Md. Ashif Hossain ID: 4045 4th Batch

INTRODUCTION

As a country of Bangladesh, we must think more & more on our exports. Our export has been from garments, which is now under threat So, we must concentrate on other export industries like leather, pharmaceuticals, information technology, mashrooms etc. But in the recent year pharmaceuticals is one of the most progressive industry in Bangladesh. So this industry has a huge prospect in other countries of the world. For this I tried to give a short analysis on leather industry of Bangladesh. Before this I like to thanks to my respective teacher Dr. Khondoker Bazlul Hoque, Professor of Department of International Business.

OBJECTIVES The objectives of this term paper are: 1. To assess Pharmaceutical industry of Bangladesh. 2. To find out worldwide medicine export scenario. 3. To evaluate export prospect of our Pharmaceutical industry.

OVERVIEW The pharmaceutical industry, however, like all other sectors in Bangladesh, was much neglected during Pakistan regime. Most multinational companies had their production facilities in West Pakistan. With the emergence of Bangladesh in 1971, the country inherited a poor base of pharmaceutical industry. For several years after liberation, the government could not increase budgetary allocations for the health sector. Millions of people had little access to essential life saving medicines. In 1981, there were 166 licensed pharmaceutical manufacturers in the country, but local production was dominated by eight multinational companies (MNCs) which manufactured about 75%

of the products. There were 25 medium sized local companies which manufactured 15% of the products and the remaining 10% were produced by other 133 small local companies. All these companies were mainly engaged in formulation out of imported raw materials involving an expenditure of Tk 600 million in foreign exchange. In spite of having 166 local pharmaceutical production units, the country had to spend nearly Tk 300 million on importing finished medicinal products. A positive impact of the Drug (Control) Ordinance of 1982 was that the limited available foreign currency was exclusively utilised for import of pharmaceutical raw materials and finished drugs, which are not produced in the country. The value of locally produced medicines rose from Tk 1.1 billion in 1981 to Tk 16.9 billion in 1999. At present, 95% of the total demand of medicinal products is met by local production. Local companies (LCs) increased their share from 25% to 70% on total annual production between 1981 and 2000. In 2000, there were 210 licensed allopathic drug-manufacturing units in the country, out of which only 173 were on active production; others were either closed down on their own or suspended by the licensing authority for drugs due to non compliance to GMP or drug laws. They manufactured about 5,600 brands of medicines in different dosage forms. There were,

however, 1,495 wholesale drug license holders and about 37,700 retail drug license holders in Bangladesh. Indeed, the foreign currency earnings prospects of the pharmaceutical sector are considered to be no less than the readymade garment (RMG) which is presently the single biggest export earning sector of the country. With steady promotional activities favoring the local pharmaceutical industries, This is the view of experts. these in the near future may overtake the readymade garment sector in export earnings. Reportedly, the country earned the equivalent of 1.3 billion Taka from medicine export in fiscal year 2004-5, Taka 1.84 billion in 2005-6 and Taka 1.94 billion in 2006-7. More than taka 5 billion worth of pharmaceutical products have been exported so far in the current year. From the way medicine export from Bangladesh is picking up, it is projected that export earnings from this sector can rise to some 50 billion Taka in the medium term. The higher earnings show that the pharmaceutical industry has been doing progressively better an upward progression in the export of

medicines is noted . This is no doubt heartening news in the backdrop of the pressing need to diversify export products and earn more from exports to add to the foreign currency reserve . The World Trade Organization (WTO) agreements have created vast opportunities for Bangladeshi medicine producers to substantially increase medicine exports from this country between 2006 and

2016. Bangladesh can export medicines as a least developed country to 49 countries under the WTO agreement without fulfilling patent requirements. Sri Lanka, Pakistan and India - do not have this facility that limit their exports in this field. A Bangladeshi company was invited to export to European markets in the present year. The demand for our medicines in the Middle Eastern and African countries is rising fast. OBSTACLE The government should immediately recognize the merit of accepting and working on the proposals that have been made by the Bangladesh Association of Pharmaceutical Industries (BAPI). The demands are fair and realistic to truly promote the sector. The BAPI has demanded giving of cash incentives to export-oriented pharmaceutical industries. Such incentives are being given to other export-oriented sectors and there is no reason for the pharmaceutical industries with so much export possibilities not to enjoy the same. The pharmaceutical industries would be fully deserving such incentives as the government had officially accorded recognition to them as a thrust sector. But matching this declaration the cash incentives have not followed. Incentives ranging from 10 to 30 per cent are enjoyed by medicine exporters from India, Sri Lanka and China.

The other major demands is for the establishment of a government

operated

central

testing

laboratory

for

export-

oriented

pharmaceutical industries. The laboratory can be very useful in strengthening the reputation of local pharmaceutical products abroad through dependable quality certification. The BAPI has also urged the establishment of an active pharmaceutical ingredients (API) plant. The creation of such a plant will likely much increase the value-addition and competitiveness of locally owned pharmaceutical industries. The making of medicines locally after importing the raw materials adds to costs and time

Present Condition
Shipments of pharmaceutical products bearing made-in-Bangladesh tags grew 6.21 per cent to US$45.67 million in the fiscal year ended in June, overcoming a minus growth of around 16 per cent in the first nine months of the year. Although the figure is eight million dollars short of the target, manufacturers said they came back strongly in the last quarter and posted higher growth at a time when the overall export recorded the slowest growth since the 2002-03 fiscal. The Export Promotion Bureau (EPB) said last financial years shipment was the highest since the country started exporting

medicines in mid-1990s. Last year the country shipped $43 million worth of drugs.

Steps Taken by the Company

The countrys largest drug maker Square Pharmaceuticals last week said it would invest nearly Tk6.00 billion in new production facilities to cater to increasing demand at home and abroad. On Tuesday another leading manufacturer Acme Laboratories said it would build a Tk2.00 billion plant, which would comply British standards, to get a slice of the multi-billion dollars export market. Others including Incepta, Renata, Drug International and Eskayef have already set up new and most-modern facilities in an effort to capture markets abroad. Both can be significantly reduced and the longer term growth and security of the sector can be ensured by building the API plant. The setting up of such a plant involves huge costs. The same may not be afforded presently by one or even several companies in the sector. Government needs to essentially take the initiative in the

matter. The government, the companies, banks and other investors may jointly forge a partnership to mobilize funds for the API plant and to go on jointly owning and operating it after it goes into operation.

Over 200 small, medium and large local and multinational companies meet around 97 percent of the Tk 5,000 crore domestic market demand. According to industry people, some of these companies exported medicines worth nearly Tk 300 crore in 2008, which were Tk 200 crore and Tk 150 crore in 2007 and 2006 respectively. The report given by the Export Promotion Bureau that the companies this year their projected Tk 400 crore. This is not impossible and this target will be increase next year. If the economical condition of the

world will increase there will be a huge chance for Bangladesh to maintain a good medicine export.

Conclusion
From the above discussion we can said that this industry is still rising and have a great prospect in foreign market which is increasing day by day. But to maintain this progress government initiative have to take because only the private investment and industries cannot supply this type of huge demand. From the last few month we can say that readymade garments have been facing huge problems and again the failure of the security given by the government.

References
1.

International Business-Competing in the Marketplace by Charles W.L.Hill www.bangladesheconomy.wordpress.com

2.

3. www.thefinancialexpress-bd.com