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Export potentiality of pharmaceutical goods in bangladesh

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A report on Export potentiality of pharmaceutical goods in bangladesh

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Export potentiality of pharmaceutical goods in bangladesh

  1. 1. A report on: Export Potentiality of Pharmaceutical goods in Bangladesh
  2. 2. Submitted To: Mohammed Sohail Mustafa Course instructor UIU SOBE Submitted By: Name ID Mahbub Mayan 111 111 079 Saidur Rahman Shamrat 111 111 033 Md. Shahaid Jurain Alam 111 121 645 Proma Rahman 111 121 069 Submission Date: 26th August, 2014
  3. 3. Letter of Transmittal November 8, 2000 Mohammed Sohail Mustafa United International University Dhanmondi, Dhaka Subject: Submission of report on “ export potentiality of Pharmaceutical goods in Bangladesh” Sir, Here is the report on export potentiality of Pharmaceutical goods in Bangladesh that you asked us to make for the course International Business. As you will see, there is a high potentiality of exporting of pharmaceutical goods in Bangladesh. We are thankful to all those persons who provided us important information and gave us valuable advices. We would be happy if you read the report carefully and We will be trying to answer all the questions that you have about the assignment. We have tried our label best to complete this assignment meaningfully and Correctly, as much as possible. We do believe that our tiresome effort will help you to get ahead with this sort of venture. In this case it will be meaningful to us. However, if you need any assistance in interpreting this assignment please contact us without any kind of hesitation. Thanking you. Yours obediently, Mahbub Mayan On behalf of the group
  4. 4. Acknowledgment The opportunity that Muhammed Sohail Mustafa Sir has given us was really help full to get much informative. Therefore, we consider myself as a very lucky individuals as we were provided with an opportunity to be a part of it. we am also grateful for having a chance to explore so many knowledge for making this report. Bearing in mind previous I am using this opportunity to express my deepest gratitude and special thanks to the MD of [Company name] who in spite of being extraordinarily busy with her/his duties, took time out to hear, guide and keep me on the correct path and allowing me to carry out my project at their esteemed organization and extending during the training. I express my deepest thanks to [Name Surname], [Position in the Company] for taking part in useful decision & giving necessary advices and guidance and arranged all facilities to make life easier. I choose this moment to acknowledge his/her contribution gratefully. It is my radiant sentiment to place on record my best regards, deepest sense of gratitude to Mr./Ms. [Name Surname], [Position in the Company], Mr./Ms. [Name Surname], [Position in the Company], Mr./Ms. [Name Surname], [Position in the Company] and Mr./Ms. [Name Surname], [Position in the Company] for their careful and precious guidance which were extremely valuable for my study both theoretically and practically. I perceive as this opportunity as a big milestone in my career development. I will strive to use gained skills and knowledge in the best possible way, and I will continue to work on their improvement, in order to attain desired career objectives. Hope to continue cooperation with all of you in the future, Sincerely, Name Surname
  5. 5. Table of Content Table of Contents 1. Introduction ................................................................................................................. 8 2. Pharmaceutical Industry of Bangladesh.......................................................................... 3 i) History ...................................................................................................................... 4 ii) Local Market Overview.............................................................................................. 6 iii) Drug Quality of Bangladesh....................................................................................... 7 3. Multinational Pharmaceuticalsin Bangladesh............................................................... 10 4. Overseas Market......................................................................................................... 12 5. Post WTO Opportunities.............................................................................................. 12 I) Export..................................................................................................................... 13 II) Compulsory Licensing and Contract Manufacturing................................................... 14 III) Joint-Venture Investment Opportunities.................................................................. 14 6. AREAS FOR TAKING IMMEDIATE ACTION...................................................................... 16 I) Investment in Facility and R&D................................................................................. 16 II) API Industrial Park................................................................................................... 16 III) Registration Requirement for Imported Products..................................................... 17 IV) Independent Drug Testing Laboratory(DTL) ............................................................ 17 V) Incentivesfor Export............................................................................................... 18 7. GLOBAL PRESENNCE.................................................................................................... 18 8. EXPORT TREND OF PHARMACEUTICALS FROMBANGLADESH ........................................ 21 9. Human Resources....................................................................................................... 26 10. Trainingand Development......................................................................................... 26 11. Exporting.................................................................................................................. 27 12. Importing................................................................................................................. 31
  6. 6. 13. Foreign Competitions................................................................................................ 31 14. Dumping................................................................................................................... 32 15. CustomerChoice....................................................................................................... 32 16. Researchand Development....................................................................................... 33 17. EXAMPLES OF A FEW LEADING PHARMACEUTICAL INDUSTRIES IN BANGLADESH.......... 35 i) Beximco Pharmaceuticals Ltd.................................................................................... 35 ii) Square Pharmaceuticals Ltd..................................................................................... 36 iii) The ACME Laboratories Ltd..................................................................................... 38 18. Drug Discovery and Drug Development...................................................................... 39 iii) Drug Distribution.................................................................................................... 40 19. PROBLEMS AND PROSPECTS...................................................................................... 43 Problemsof Marketing................................................................................................ 43 Prospectsof Marketing............................................................................................... 43 Problemsof Foreign Competition................................................................................. 43 Prospects of Foreign Competition ................................................................................ 44 Problemsof Export...................................................................................................... 44 Prospects of export..................................................................................................... 44 Problemsof Customer Choices..................................................................................... 45 Prospects of CustomerChoices.................................................................................... 45 Problemsof Power Development................................................................................. 45 20. CONCLUSIONS........................................................................................................... 46 RECOMMENDATIONS...................................................................................................... 46 REFERENCES................................................................................................................... 47
  7. 7. Executive Summary i. The pharmaceutical industry is one of the most technologically advanced sectors currently in existence in Bangladesh. It is the second largest industry which earns foreign currency for Bangladesh after the RMG sector. Among all the LDC countries Bangladesh is the one and only country having quality pharmaceutical technology base with marketing potential and exporting in at least 80 countries. It has grown in the last two decades at a considerable rate. The skills and knowledge of the professionals and innovative ideas of the people involved in this industry are the key factors for these developments. About 300 pharmaceutical companies are operating at the moment. Only 3% of the drugs are imported, the remaining 97% come from local companies. Positive developments in the pharmaceutical sector have enabled Bangladesh to export medicine to global markets. By overcoming the underlying obstacles this sector can develop more and can be an effective exporting sector of Bangladesh. 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. Corruption problem like this is also getting worse day by day and affecting the international trade. Political problem is another problem that Bangladesh is facing right now. Political unrest is hampering the international trade of all the goods in Bangladesh. If the government succeeds in stopping corruption and the political unrest, the Pharmaceutical industry may grow higher than lots of international pharmaceutical giants.
  8. 8. 1. Introduction There are several sectors on which Bangladesh can be proud of and undoubtedly the pharmaceutical sector is one of these sectors, rather it is the sector, which is the second-largest contributor to the government exchequer. There are about 231 companies in this sector and the approximate total market size is about Taka 30,000 million per year of which about 95% of the total requirement of medicines is created by the local companies and the rest 5% is imported. The imported drugs mainly comprise of the cancer drugs, vaccines for viral diseases, hormones etc. In fact, the real growth of local pharmaceutical industries started after the “Drug Control Act” was promulgated in 1982 in Bangladesh to restrict massive import of drugs and to encourage local manufacturing of the same. A lot of multinational companies (MNCs) became unhappy for this development. In Bangladesh, pharmaceutical is now one of the fastest growing sectors. In 2004, the total size of the pharmacy market of Bangladesh was estimated to be Tk. 28,416 Million. With an annual growth rate of about 10%, Bangladesh Pharmaceutical Industry is now heading towards self-sufficiency in meeting the local demand. Bangladesh pharmaceutical industry is the second highest contributor to the national exchequer after garments, and it is the largest white-collar intensive employment sector of the country. There are about 450 generics registered in Bangladesh. Out of these 450 generics, 117 are in the controlled category i.e. in the essential drug list. The remaining 333 generics are in the decontrolled category, The total number of brands /items that are registered in Bangladesh is currently estimated to be 5,300, while the total number of dosage forms and strengths are 8,300. One of the major positive impacts of Drug (Control) Ordinance-1982 is the rapid development of local manufacturing capability. In recent years, the country has
  9. 9. 2 | P a g e achieved large volume of parental products, by which the country becomes- self sufficient; huge volume of these products are also exported to other countries. The development of local manufacturing companies helped to reduce the dependence on the import of raw materials of pharmaceutical products and finished pharmaceutical products. Under the Drug (Control) Ordinance 1982, the Government determines Maximum Retail Prices (MRP) of 117 essential drug chemical substances. This price determination is only for the local producer companies and still now the multinational organizations are determining their price by their own way. For imported finished products, Government determines the fixed percentage of markup, but the (governmental) drug administration could not fix up the MRP in Bangladeshi market. It is interesting to note that, even with withdrawal of price control from many products, prices have not shot up; healthy competition has been keeping the prices within affordable levels. Bangladesh pharmaceutical industry is mainly dominated by domestic manufacturers. Of the total pharmaceutical market of Bangladesh, the local companies are enjoying a market share reaching around 80%, while the MNCs are having a market share of 20%. Out of the top ten pharmaceutical companies in Bangladesh, eight are local pharmaceutical companies, while only two are MNCs. The top two domestic manufacturers, namely Square and Beximco Pharma are having a combined market share of about 25% of the total pharmaceutical market of the country. The Bangladesh Association of Pharmaceutical Industries – BAPI (Bangladesh Aushad Shilpa Samity in Bengali), established in 1972 with just 33 members, has been playing a very vital role for development of this sector. Today, BAPI is a very strong organization having as many as 144 companies (as listed at Annexure-I) as its members. Infrastructure development and the deployment of trained manpower are now perceived as two of the essential prerequisites for the implementation of national pharmaceutical policies (Jayasuriya, 1991). Pharmaceuticals have greatly improved health in developing countries, but many people in developing countries do not obtain even inexpensive pharmaceuticals and little pharmaceutical
  10. 10. 3 | P a g e R&D is oriented towards products needed by developing countries, such as a malaria vaccine and access to existing products could be improved by facilitating differential pricing (Kremer, 2002). It is suggested that under conditions of rapidly changing demand (as found in pharmaceuticals), price-caps could be manipulated and using simulations. The recent acquisition of the German pharmaceuticals and diagnostics company Boehringer Mannheim by F Hoffmann - La Roche illustrates how such huge business transactions meet with trade unions which are completely unprepared (Zeller, 2000). The number of new drugs approved in the United States each year is huge that is readily available, but it is known that no systematic analyses of the long- term patterns of new drug approvals by firm have been reported in the literature (DiMasi, 2000). The United States has a clear edge both in terms of “output”, in other words, the number of new active ingredients for pharmaceuticals, and in terms of “input”, that is, R&D spending of US$ 20 billion on drug development in that country every year (Humer, 2005). ‘The pharmaceutical industry arguably has the worst record of serious corporate crime of any industry, international law evasion rather than outright law violation has been the biggest problem in the industry. Consumer and professional activism and a variety of levels of self- regulation in combination with state, regional, and international regulation are all important to understanding how progress is possible. 2. PharmaceuticalIndustry of Bangladesh The pharmaceutical industry in Bangladesh is one of the most developed hi-tech sectors within the country's economy. In 2000, there were 210 licensed allopathic drug-manufacturing units in the country, out of which only 173 were in active production; others were either closed down on their own or suspended by the licensing authority for drugs due to non-compliance to good manufacturing practices or drug laws. Now about 300 pharmaceutical companies are operating at the moment. The industry 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.
  11. 11. 4 | P a g e 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 this development. Due to recent development of this sector, the industry is exporting medicines to global markets, including the European market. This sector is also providing 97% of the total medicine requirement of the local market. Some of the companies produce insulin, hormones, and anticancer drugs, which were not previously produced in Bangladesh. Leading pharmaceutical companies are expanding their business with the aim to expand into the export market. Recently, a few new industries have been established with high tech equipment and professionals to enhance the strength of this sector. i) History The pharmaceutical sector is one of the thrust sectors in Bangladesh. Before Liberation, there was hardly any pharmaceutical enterprise in Bangladesh (then East Pakistan). After several years of liberation, the government could not increase (in relative terms) budgetary allocations for the improvement of health sector. At that time, most of the people had little access to the essential lifesaving medicines. This sector started to improve from 1980s. The pharmaceutical industry has grown in the last two decades at a considerable rate. Right after liberation war three fourth of the pharmaceutical industries was dominated by multinational companies. The National Drug Policy (NDP) in 1982 and 2005 has major impact in the development and growth of the Bangladesh pharmaceutical industry. The need for NDP was very evident. Almost all the multinational companies were producing simple and non-essential drugs in Bangladesh like vitamins mixture or cough syrups. They used to import their raw materials from abroad at high prices. There was a need for vast quantity of essential, useful and economic drugs in Bangladesh. It was essential and important for Bangladesh to introduce a drug policy for the betterment of national health by availing international standard medicine in lower cost to Bangladeshi people. Precisely, multinational companies were prevented
  12. 12. 5 | P a g e to reduce their unessential drugs production and discouraged to import raw material at high process. Key pointsof National Drug Policyof 1982: rovide administrative and legislative support for ensuring quality of essential drugs which are relevant to the national health need. eliminate non-essential medicine from the market. misuse and to ensure the proper utilization of the drugs. ure GMP and qualified pharmacist in manufacturing companies. As NDP 1982 implemented, most multinational companies sold their business to local pharmaceutical. This fueled to the evolution of the local pharmaceutical sectors. According to the Directorate General of Drug Administration (DGDA) website, the value of the locally produced drug was 175 crore in 1981 that increased to 325 crore by 1985. Essential Drugs’ List: Under the Drug (Control) Ordinance 1982, the Government determines Maximum Retail Prices (MRP) of 117 essential drug chemical substances. This price determination is only for the local producer companies and still now the multinational organizations are determining their price by their own way. The Bangladesh Association of Pharmaceutical Industries – BAPI: BAPI, (Bangladesh Aushad Shilpa Samity in Bengali), established in 1972 with just 33 members, has been playing a very vital role for development of this sector. Today, BAPI is a very strong organization having as many as 144 companies as its members. Drug Regulatory Authorities in Bangladesh A regulatory agency is a public authority or government agency responsible for exercising autonomous authority over some area of human activity in a regulatory or supervisory capacity. An independent regulatory agency is a regulatory agency that is independent from other branches or arms of the government. Two organizations
  13. 13. 6 | P a g e regulate drugs and pharmacies in Bangladesh, one governmental and one semi- government, which are: The Directorate General of Drug Administration (DGDA): DGDA is the drug regulatory authority of Bangladesh, which is under the Ministry of Health and Family Welfare. DGDA regulates all activities related to import and export of raw materials, packaging materials, production, sale, pricing, licensing, registration, etc. of all kinds of medicine including those of Ayurvedic, Unani, and Herbal and Homoeopathic systems. The Pharmacy Council of Bangladesh (PCB): PCB was established under the Pharmacy Ordinance in 1976 to control pharmacy practice in Bangladesh. The Bangladesh Pharmaceutical Society is affiliated with international organizations International Pharmaceutical Federation and Commonwealth Pharmaceutical Association. The National Drug Policy (2005) states that the WHO’s current Good Manufacturing Practices (GMP) should be strictly followed and that manufacturing units will be regularly inspected by the DDA. Other key features of regulation are restrictions on imported drugs; a ban on the production in Bangladesh of around 1,700 drugs which are considered non-essential or harmful; and strict price controls, affecting some 117 principal medicines. ii) Local Market Overview The Bangladesh pharmaceutical marketplace is predominantly a branded generic marketplace. Pharmaceutical firms in Bangladesh can either sell to the private sector pharmacies, to the government and its public health care facilities, or to international organizations operating in Bangladesh (e.g. UNICEF). Bangladesh pharmaceutical industry is mainly dominated by domestic manufacturers. Of the total pharmaceutical market of Bangladesh, the local companies are enjoying a market share reaching around 97%, while the MNCs are having a poor market share.
  14. 14. 7 | P a g e Out of the top ten pharmaceutical companies in Bangladesh, all are local pharmaceutical companies. The top two domestic manufacturers, namely Square and Incepta Pharma are having a combined market share of more than 30% of the total pharmaceutical market of the country. Bangladesh Association of Pharmaceutical Industries (BAPI) was instituted in 1972, since then BAPI playing a pivotal role in shaping up the industry. Association's member include large, medium, small, national and foreign companies who together are responsible for manufacturing 97% of the country's pharmaceutical production. iii) Drug Quality of Bangladesh For generic pharmaceutical products, quality is defined as the generic drug having the same active ingredients as the original formulation and being bioequivalent to the brand name counterpart with respect to pharmacokinetic and pharmacodynamic properties (equivalent absorption rates, elimination rates, and other in vivo effects). By extension, therefore, generics are assumed to be identical to the original product in dose, strength, route of administration, safety, efficacy and intended use. While some Bangladeshi pharmaceutical products on the market are of world-class standards, others are less so. Medical professionals and pharmacists interviewed voiced strong opinions on the quality levels of different brands. Although further comprehensive and systematic analysis is required to assess Bangladesh’s pharmaceutical quality, some anecdotal reports exist of lower quality drugs. The International Centre for Diarrhoeal Disease Research, Bangladesh (ICDDR, B) tested the zinc content in 20 zinc-syrup formulations marketed in Bangladesh. The samples were purchased from local pharmacies in Dhaka. Only two of the tested products contained zinc concentrations within 5% of the stated content. The rest contained zinc, just not enough. The problem could have originated from either poor manufacturing or poor product handling in the distribution channel, because zinc degrades if exposed to light.
  15. 15. 8 | P a g e Of eleven drugs UNICEF sent for testing to a laboratory in Australia, two had substandard results. When the manufacturers were informed, one company immediately stopped production until it found the problem—a very good response. The other company however, refused to address the problem, claiming that the test was in error. UNICEF sent the drug for a second testing to a lab in Denmark where the drug was also found substandard. The company still refused to address the issue. Some Bangladeshi firms have invested in quality raw materials, manufacturing processes and environment, and technical know-how. However, a “perverse incentive” exists against upgrading due to the weak regulatory structure. Firms that have invested minimally in quality continue to sell drugs alongside those that have invested substantially. Because of weak regulations, the consumer cannot determine quality differences and select for purchase the superior product. As a result, firms that have invested in quality manufacturing and quality processes are in a sense penalized. Here are the names of the pharmaceutical companies of Bangladesh: Aristopharma -Aventis Bangladesh Ltd
  16. 16. 9 | P a g e on of Novartis) td
  17. 17. 10 | P a g e 3. Multinational Pharmaceuticals in Bangladesh The multinational pharmaceutical companies are working in Bangladesh from a very long time. Nowadays there are still some companies operating here. Here is a table containing top five multinational pharmaceutical companies of Bangladesh. Table: Top Five MNCs Sl. No. Name of The Company Market Size Market Share (%) Growth (%) 1 Novo Nordisk 2,083,257,490 2.05 -5.85 2 Sanofi Aventis 2,032,579,187 2.00 -6.38 3 Glaxosmithkline (GSK) 1,694,068,206 1.67 4.43 4 Novartis 1,373,449,983 1.35 9.16 5 Roche 709,712,519 0.70 8.66 Novo Nordisk: Novo Nordisk manufactures and markets pharmaceutical products and services and was created in 1989 through a merger of two Danish companies dating back to the 1920s. It produces, in particular, diabetes care equipment and medications. Novo Nordisk is also involved with haemostasis management, growth hormone therapy and hormone replacement therapy. Company headquarters are in Denmark, with production facilities in seven countries, and affiliates or offices in 76 countries. It employed approximately 29,000 people globally as of Q4 2009, and marketed its products in 179 countries. It is the largest publicly traded company in the Nordic countries by market capitalization. In January 2012, Novo Nordisk was named as the most sustainable company in the world by the business magazine Corporate Knights. The company makes several drugs under various brand names. Some of them are Levemir, NovoLog, Novolin R, NovoSeven, and Victoza. The Novo Nordisk logo
  18. 18. 11 | P a g e since the year after the company’s foundation has been the Apis bull, one of the sacred animals of ancient Egypt. Sanofi: It is a French multinational pharmaceutical company headquartered in Paris, France, the world's fourth-largest by prescription sales. Sanofi engages in the research and development, manufacturing and marketing of pharmaceutical products for sale principally in the prescription market, but the firm also develops GlaxoSmithKline plc (GSK): GSK is a British multinational pharmaceutical, biologics, vaccines and consumer healthcare company headquartered in Brentford, London. It is the world's fourth-largest pharmaceutical company after Pfizer, Novartis and Sanofi, measured by 2009 prescription drug sales. The company was established in 2000 by the merger of Glaxo Wellcome plc (formed from the acquisition of Wellcome plc by Glaxo plc) and SmithKline Beecham plc (formed from the merger of Beecham plc and SmithKline Beckman Corporation, which in turn was formed by combining the Smith Kline French and Beckman companies). GSK has a portfolio of products for major disease areas such as asthma, cancer, virus control, infections, mental health, diabetes and digestive conditions. It also has a large consumer healthcare division that produces oral healthcare and nutritional products, drinks and over-the-counter medicines, including Sensodyne, Boost and Horlicks. Andrew Witty has been the chief executive officer since May 2008. over-the-counter medication. The company covers 7 major therapeutic areas: cardiovascular, central nervous system, diabetes, internal medicine, oncology, thrombosis and vaccines (it is the world's largest producer of the latter through its subsidiary Sanofi Pasteur). Sanofi is a full member of the European Federation of Pharmaceutical Industries and Associations (EFPIA). The company was formed as Sanofi-Aventis in 2004 by the merger of Aventis and Sanofi-Synthélabo. It changed its name to Sanofi in May 2011. In January 2012, Sanofi announced that they will invest $125 million in Warp Drive Bio to support their cancer research program.
  19. 19. 12 | P a g e 4. OverseasMarket The history of pharmaceutical export from Bangladesh dates back to late 80′s. At that point in time, only one or two pharmaceutical companies of Bangladesh took proactive efforts to initiate export of pharmaceuticals from Bangladesh. Despite the fact that there was no support or incentive from the Govt., these companies with their own initiative started exporting finished formulations to some of the neighboring less regulated overseas markets like Myanmar, Sri Lanka and Nepal. After being successful in these less-regulated markets, in early 90′s few major companies of this country also took initiative to explore some of the more-regulated markets like Russia, Ukraine, Georgia and Singapore. Success in registering and marketing these products in these countries was a major breakthrough for Bangladesh pharmaceutical industries. Today, Bangladesh pharmaceutical industry has successfully started exporting its quality products to about 52 countries across four continents. Although volume wise the amount may not appear to be huge, but most importantly it is growing at a very fast pace. Today, Bangladesh is exporting a wide range of pharmaceutical products covering all major therapeutic classes and dosage forms. Beside regular brands, Bangladesh is also exporting high-tech specialized products like Inhalers, Suppositories, Nasal Sprays, Injectables and Infusions. The product quality, packaging and presentation of the products have been highly appreciated in all of the countries of export destination. 5. Post WTO Opportunities Specifically WTO members to provide copyright rights, covering content producers including performers, producers of sound recordings and broadcasting organizations; geographical indications, including appellations of origin; industrial designs; integrated circuit layout-designs; patents; new plant varieties; trademarks; trade dress; and undisclosed or confidential information. TRIPS also specifies enforcement procedures, remedies, and dispute resolution procedures. Protection and enforcement of all intellectual property rights shall meet the objectives to contribute to the promotion of technological innovation and to the transfer and dissemination of
  20. 20. 13 | P a g e technology, to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligations. According to the WTO’s TRIPS (Trade Related Aspects on Intellectual Property), all signatory parties are bound to implement 20 year product patent protection for pharmaceutical products into their domestic legislation. TRIPS is not a uniform law, but a framework that sets minimum standards for intellectual property protection. Countries must then design legislation to meet its requirements, but there is still significant flexibility. Countries were given the following transition periods: I) Export From January 01, 2005 onwards, huge export opportunities have already been opened for Bangladesh pharmaceutical sector. As a signatory of WTO/ TRIPs, countries like China and India have already implemented ‘Patent Laws’ in their countries and hence, these countries are no longer allowed to export patented drugs from their countries. On the contrary, the situation is just reverse for Bangladesh. As a member of LDCs, Bangladesh has already got the exemption from abiding by the patent laws until January 01, 2016, which is going to open the door to ‘Enormous Export Opportunities’ for the Pharmaceutical Sector of the country. Although, all the 49 LDCs have got this exemption, except Bangladesh all 48 LDCs are basically import based in pharmaceuticals and will not be able to exploit this export opportunity. Bangladesh with its strong manufacturing base in pharmaceuticals is the only country that would really be able to capitalize this opportunity by exporting pharmaceuticals to other LDCs. Needless to mention that, Bangladesh can also ensure huge value addition by pharmaceutical export since the export price is much higher than the local price. For example, in Bangladesh the price of one fluconazole capsule is Tk. 8 whereas fluconazole is exported to Pakistan at a price of Tk. 38. Similarly, the price of paracetamol syrup in Bangladesh is Tk. 13 but it is exported to Russia at a price of Tk. 100.
  21. 21. 14 | P a g e II) Compulsory Licensing and Contract Manufacturing For countries where pharmaceutical patent has come into-effect from January 01, 2005, compulsory licensing is neither a practical nor a feasible option to meet national emergencies. In case of ‘National Emergencies’, it may take 2 to 3 years to get the products through ‘Compulsory Licensing’ because the generic manufacturing company, after getting the permission to manufacture patented products from Drug Authority, have to go through all the processes (e.g. RM sourcing, development-RM procurement, product development, stability studies, commercial RM procurement, production etc.) to introduce the products. In such situation, Bangladesh could be an ideal candidate having all the manufacturing facilities and well developed formulation R&D that could be utilized for immediate manufacturing of the patented life saving molecule using compulsory licensing. Bangladesh has all the infrastructure & facilities to be an ideal place for contract manufacturing. It has state-of-the-art manufacturing facilities, highly educated & skilled human resources, sophisticated & cutting edge quality control laboratories. It can manufacture highest quality products conforming to all international standards like British Pharmacopoeia (BP), United States Pharmacopoeia (USP), European Pharmacopoeia (EP) and any other recognized standards. Equipped with the most advanced technologies & following cGMP standards, Bangladesh Pharmaceutical Industry can cater to any healthcare need of all concerned. Some of the Pharmaceutical manufacturers of Bangladesh have made multimillion dollar investments on new plant and facilities conforming to USFDA standards. They have sufficient production capacity for contract manufacturing. Since Bangladesh has abundant and cheap labor force, the cost of contract manufacturing would be highly favourable compared to any other countries of the world. III) Joint-Venture Investment Opportunities Bangladesh has a very big market for Active Pharmaceutical Ingredients (APIs), excipients and intermediates. Although it is self sufficient in formulation drugs meeting 95% of country’s demand it still depends largely on imported bulk drugs. Around 80% of Bangladesh’s total need of API is being met through import. Under
  22. 22. 15 | P a g e TRIPS agreement Bangladesh will enjoy manufacturing patented drugs until 2016. Since most of the countries of the world will not be able to manufacture patented drugs after 2005, there exists an excellent opportunity for foreign investors in bulk drug manufacturing in Bangladesh. They will be able to cater to growing bulk drug need of Bangladesh as well as 49 such other patent exempted countries of the world. Bangladesh would be an excellent place for investors and relocating R&D set-ups for reverse engineering, specially for those countries who will be restricted to manufacture patented drugs after 2005. Since India and China have very good expertise in API and formulation R&D, they may like to manufacture the APIs outside their countries as they cannot manufacture these ‘patented’ APIs in their countries after 2004. Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customer in return (Kotler, 2005). Marketing is the backbone of all industries. Though pharmaceuticals produce life saving drugs, they also need marketing. But the marketing is to some extent different from other industries. Some major characteristics of marketing sector are given below: • Their distributional channel includes invoice system, own distribution channel. • Medical representatives are the key persons in marketing. • For promotion, the groups such as doctors, surgeons are targeted. • Major promotional strategies include printed promotional materials, physical sample, and clinical materials. • Special incentives are given to the doctors. For example, the doctors are given honeymoon packages, the cost of which is borne by the pharmaceuticals. The field level executives are playing the imperative role for marketing division. Basically, they have taken the responsibility to market the products of their companies. So, the success of a pharmaceutical industry intensively depends on the efficiency and effectiveness of the medical representatives. If an organization wants efficient employees in this section, he should to satisfy these representative.
  23. 23. 16 | P a g e Because of cost advantage, large pharmaceutical companies of highly regulated markets are now going for joint venture projects. They have already signed several contracts with companies of India and China. Bangladesh also has enormous opportunities to go for joint ventures with these large global companies for manufacturing pharmaceutical finished products. 6. AREAS FOR TAKING IMMEDIATE ACTION I) Investment in Facilityand R&D As India, China and all present sources of raw materials are signatory of WTO, it is naturally expected that they will not produce raw materials of patented products from 2005 onwards. Even if they do, they will not be allowed to export. Although as an LDC, Bangladesh is allowed to produce patented products, it is unknown where it will get the Raw Materials/APIs to produce these drugs after 2004. Accordingly, Bangladesh need to immediately invest in bulk drug facilities and sophisticated R&D centers. But the market is too small to make this investment a feasible one. In order to make this venture feasible, tax-free import of all machineries and equipments as well as concessional interest rates in taking loan from banks for investment in bulk drug facilities and in R&D Projects are needed. II) API Industrial Park In Bangladesh, treatment of both solid and liquid wastes is presently being done by individual manufacturers, which elevates the product cost significantly. On the other hand, in India and China, there are public /govt. Incinerators and Effluent Treatment Plants (ETP) to dispose off solid and liquid wastes respectively. So, these countries have very successfully reduced their cost of production in pharmaceuticals. Although Pakistan does not have these export opportunities as revealed by WTO/TRIPs, they are also establishing an Industrial Estate at Lahore, named ‘Sundar Industrial Estate’ comprising 1500 acres of barren land and with combined effluent treatment plant, solid waste disposal system etc.
  24. 24. 17 | P a g e The cost of Raw Materials /APIs as well as Finished Formulations would have become more competitive in the overseas markets, if Bangladesh also had Incinerators and Effluent Treatment Plants (ETP) in the public sector. III) RegistrationRequirement for Imported Products Most of the countries like India, China and Singapore have already upgraded their registration requirement of imported products for all new-comers which is believed to be almost as stringent as the highly regulated markets. These countries are thereby creating barriers to entry for all substandard drugs. Like these countries, Uganda and Tanzania also have upgraded their registration requirements of imported products though their market is mostly depended on imported products. On the other hand registration requirement in Bangladesh for imported products is extremely relaxed. If immediate proper attention is not given, there is a possibility that Bangladesh Pharmaceutical Market will be flooded with substandard and spurious products from the neighboring countries. The manufacturing facilities and documentation of small pharmaceutical companies also needed to be upgraded immediately. IV) Independent Drug Testing Laboratory (DTL) There are two DTL in Bangladesh, one in Dhaka and the other in Chittagong. These two DTLs are always engaged in testing numerous drugs that are being introduced by about 200 pharmaceutical companies operating in the domestic sector. More than that, these facilities are not modern and sophisticated enough to carry out different types of tests as required for export which are becoming more & more stringent day by day. Considering aforementioned scenario, the pharmaceutical manufactures of Bangladesh have been requesting the Government to provide a land for an independent, modem and sophisticated DTL with the facility of Bio-equivalency testing.
  25. 25. 18 | P a g e V) Incentives for Export Since 1990, the Govt. of India has been offering various supports and incentives for export of pharmaceutical finished formulations and APIs. In China, there is huge incentive for pharmaceutical export. On the contrary, in Bangladesh there is no such incentive for pharmaceutical export. As a result, Bangladesh is gradually becoming less competitive in most of the overseas markets where India is operating. Though the Govt. of India was supposed to stop these incentives but in practice they are still continuing with such supports and incentives. The Bangladesh Association of Pharmaceutical Industries (BAPI) feels that to become competitive in the overseas markets, Bangladesh Government should immediately introduce ‘20% Cash Incentives’ for export of pharmaceutical finished formulations and ‘30% Cash Incentives’ for export of Raw Materials/APIs. Despite all these tasks in hand, there are huge export opportunities for Bangladesh in the years to come. Till now, Indian and Chinese export of branded generics is significant that may abruptly be ceased immediately from 2005. If the abovementioned issues can be addressed immediately, there is no reason why Bangladesh would not be able to export pharmaceuticals worth Tk. 20000-25000 crore in next few years. The future is enormous, provided that Bangladesh prepares itself to avail the opportunity. 7. GLOBAL PRESENNCE In early 90’s, few companies took initiatives to export pharmaceuticals from Bangladesh. Because of that pioneering role of these few companies, Bangladesh could fulfill the national aspiration of turning its pharmaceuticals industry into an exporter of quality medicines. Bangladesh has just started its overseas business operation. As it first move towards internationalization Bangladesh entered few overseas markets with the export of basics chemicals. So far Bangladesh exported its basic chemicals to many countries namely, Iran, Hong Kong, South Korea, Malaysia, Taiwan, Vietnam, Thailand & Nepal.
  26. 26. 19 | P a g e After being successful in exporting basic chemicals, few leading companies also started registering & exporting their finished formulations in Sixty Two countries namely: o Australia o Afghanistan o Brazil o Canada o Colombia o Cambodia o Cosovo o Djibouti o Ecuador o France o Germany o Ghana o Hungary o India o Indonesia o Japan o Jordan o Korea o Lebanon o Mexico o Mozambique o Myanmar o New Zealand o Netherlands o Norway o South Africa o Spain o Sweden o Syria o Singapore o Russia o Tanzania o Thailand o Taiwan o Togo o UAE o USA o Venezuela o Zimbabwe o Ukraine o Georgia o Pakistan o Srilanka o Vietnam o Nepal o Kenya o Yemen o Malaysia o Iran o Philippines o Sudan o Bhutan o Hong Kong It is worth that the world renowned hospitals & institutions like KK Women, ChildrenHospital and Raffles Hospital of Singapore, MEDS of Kenya and Zihnnah Hospital of Pakistan are regularly using the pharmaceuticals products of Bangladesh.
  27. 27. 20 | P a g e Today, a large number of Pharmaceuticals manufacturers of Bangladesh like Beximco, Square, Novarties, Opsonin, Acme, Aristopharma, Eskayef, ACI, Renata, Orion, Jayson, Hudosn, etc are involved in export operations. RECENTY EXPORT OF SOME POTENTIAL PHARMACEUTICALS EXPORTERS OF BANGLADESH (Value in US$) Name of the Company Export Year of Export Novarties (Bangladesh) Limited 12,820,162.80 2004 ~2005 Beximco Pharmaceuticals Ltd 1,400,000.00 2004 Square Pharmaceuticals Ltd 1,200,000.00 2004 Jams Pharmaceuticals Ltd 633,721.20 2000~2004 Jayson Pharmaceuticals Ltd 626,546.89 2004 The Acme Laboratories Ltd 600,000.00 2004 Eskayef Bangladesh Ltd 331,876.12 2004 Aristopharma Limited 305,648.34 July 2004 ~ June 2005 Renata Limited 281,788.00 2004 Navana Pharmaceuticals Limited 240,175.74 Sept. 2003 ~ June 2005 Aventis Limited 223,999.00 2004 Advanced Chemical Industries (ACI) Limited 156,392.00 2004 Essential Drugs Company Limited 124,687.50 2004 Globe Pharmaceuticals Limited 68,410.00 2005-2006 Opsonin Pharma Ltd. 34,109.17 2004 Source: Bangladesh Association of Pharmaceutical Industries
  28. 28. 21 | P a g e 8. EXPORT TREND OF PHARMACEUTICALS FROM BANGLADESH The growth of Pharmaceuticals export from Bangladesh during the period 2003/04 ~ 2000/01 is tremendous. The country witnessed a growth of 83.94% in the Pharmaceuticals export in the Fiscal year 2003/04 compare to the export of fiscal 2000/01. Observer believes that the sector will witness a high steady growth in the coming years because of opportunities provided with the LDC from WTO. Bangladesh Export of Pharmaceuticals by Destination 2003/04 2002/03 % Change in FY 2003/04 Compare to FY 2002/03 2001/02 % Change in FY 2002/03 Compare to FY 2001/02 2000/01 % Change in FY 2001/02 Compare to FY 2000/01 Brazil 1,883 1,333 41.26 268 397.39 - Belgium 1,254 - - 57 (100.00) - - Srilanka 899 601 49.58 427 40.75 257 66.15 Myanmar 863 639 35.05 628 1.75 599 4.84 Spain 794 21 3,680.95 8 162.50 - - Pakistan 629 451 39.47 759 (40.58) 875 (13.26) Indonesia 556 207 168.60 30 590.00 - - The Netherlands 547 710 (22.96) 178 298.88 38 368.42 Iran 439 92 377.17 391 (76.47) 167 134.13 Yemen 412 328 25.61 596 (44.97) 489 21.88 Kenya 356 236 50.85 144 63.89 90 60.00 PNG 321 13 2,369.23 13 - - - Singapore 276 35 688.57 20 75.00 1,218 (98.36) Finland 260 1 25,900 - - - - Vietnam 249 243 2.47 457 (46.83) 866 (47.23)
  29. 29. 22 | P a g e Germany 227 4 5,575 - - - - Nepal 189 111 70.27 145 (23.45) 122 18.85 France 146 92 58.70 23 300.00 - - Sweden 129 211 (38.86) - - - - Greece 127 32 296.88 - - - - Liberia 127 - - - - - - South Africa 126 253 (50.20) 172 47.09 171 0.58 Venezuela 124 46 169.57 - - 11 (100.00) Ukrine 123 252 (51.19) 270 (6.67) 5 5,300.00 USA 114 296 (61.49) 792 (62.63) 915 (13.44) UK 111 81 37.04 514 (84.24) - - Afganistan 105 - - - - - - Malaysia 94 59 59.32 45 31.11 67 (32.84) Hongkong 84 182 (53.85) 47 287.23 40 17.50 Japan - 7 (100.00) 26 (73.08) Others 4,416 4,664 (5.32) 3,260 43.07 4,475 (27.15) Total 12,692 9,046 40.31 6,602 37.02 6,900 (4.32) Source: EPB
  30. 30. 23 | P a g e The export of pharmaceutical products over the last three fiscal years (FYs) increased on an average by 20 per cent every fiscal. The products are now being exported to more than ninety countries across the world. The exports stood at $39 million in the FY 2010-11, $48 million in FY12, $60 million in FY13 and $69 million in the last fiscal (FY14), as per statistics of the Export Promotion Bureau (EPB). A market analyst said as Bangladesh is a least developed country (LDC), it could increase its export market share by manufacturing any kind of patented and patent- expired drugs. He said as the developing countries like India, Pakistan and China needed to pay royalty for manufacturing patented drugs due to their 'developing country' status, they "are not our competitor in the international market for the patented products." Apart from enjoying the transitional period under TRIPs agreement in the WTO, "Bangladesh is in a position of paying less in wages and other overhead costs," an exporter said. He said a large local market, drug efficacy, quality and achieving export recognition in highly regulated markets by some leading local firms paved the way for tapping
  31. 31. 24 | P a g e new export destinations and it was already going to more than 90 countries. An official in the EPB said: "Our pharmaceutical export missed the target in the FY14. But we hope it will not happen in the event of the next target." He said the export target for pharmaceutical products for the last fiscal year was $71.78 million. But during the period the exports stood at $69.24 million. It was higher 15.75 per cent than that of the fiscal 2013. The EPB official said: "The new export target for pharmaceuticals may be set by this month and we hope this time exports would exceed the target as already some local firms got regulatory market access permission and new export destinations are explored in African countries." An office bearer of Bangladesh Association of Pharmaceuticals Industry (BAPI) said: "We can't compete in the export market with India, China and other developing countries, as they do have their own raw materials and need not pay duty on raw materials." He said the high cost of raw materials might be reduced if the local manufacturers could produce active pharmaceutical ingredients in the country. He said though it was late, the API Park in Munshiganj might be ready shortly and the manufacturers would be able to set up their API units there. Another leading pharmaceutical company owner said in the European and US markets it was very tough to enhance exports as the product registration process in those countries was time consuming. He said a drug product registration might take three to four years in the EU and US markets. He also said unlike the highly regulated countries the product registration was less
  32. 32. 25 | P a g e complex in the African, Asian and Middle East countries and Bangladeshi products' penetration into those markets already started.
  33. 33. 26 | P a g e 9. Human Resources Human resources are people recruited in the organization and treated as the prime mover and an important element for success of any organization (DeCenzo & Robbins, 2005). The sector consistently creates job opportunities, especially for highly qualified people. Pharmaceutical companies are either directly or indirectly contributing largely towards raising the standard of healthcare and standard of living byenabling local healthcare personnel to gain access to newer products and also to latest drug information. Like other industries, pharmaceutical industry also believes that the human resources are most valuable asset for the organization. Pharmaceutical industry is making considerable investments in attracting and developing competent professional human resources. Pharmaceuticals not only foster entrepreneurship, but also consciously encourage entrepreneurship in their organizational environment. This leads to innovation and creativity transformed into new products, services and new ways of doing things. To get most effort strom human resources, pharmaceutical industries implement programs like decentralization, job enrichment and job rotation. The extent of empowerment enjoyed by people at various levels of the organization enables each employee from the very bottom to the top, to contribute to the overall momentum of the companies. 10. Training and Development Training refers to instruction provided for a current job and has a rather narrow focus and should provide skills that will benefit the organization rather quickly. Development, on the other hand, has a broader scope and may not be focused on either the present or future job but more on the organization’s general long-term needs (Anthony et al, 2003). Pharmaceutical industries are continuously striving to explore the necessary competences of the employees, especially the marketing executives to face the challenges of the competitive environment. They arrange different types of learning programs which are enforcing as a motivation too to upgrade necessary knowledge and skills of their employees. By interviewing the
  34. 34. 27 | P a g e employees of different pharmaceuticals the researcher comes to know that they participated in various training programs that include: Pharmaceutical marketing situation beyond 2005, Company formation, regulatory compliance and company meeting, Industrial control and mechatronics, Continuous improvement and changing behavior, Presentation skills, General guidelines of Standard Operating Procedure (SOP), Sanitation, hygiene and environment control, Maintenance of equipments, calibration and validation, Industrial automation, 11. Exporting Exports are goods and services produced by a firm in one country and then sent to another country (Rugman, 2004). To export products to developed markets, companies must bring their factories into conformance with GMP (Good Manufacturing Process) standards and by this process, the vast majority of Indian pharmaceutical exports went to other developing countries with similar disease profiles and disregard for patent protection (Smith, 2000). Export of pharmaceutical products of Bangladesh is still in infancy. But the rate of establishment of pharmaceuticals industries in private sector is increasing and they have already entered the export market with their finished products. In 2000, Bangladesh imported US$84,000,000 worth of medicinal and pharmaceutical products and had negligible exports and some recent statements by industry representatives suggest that exports will increase in the near future (VanDuzer, 2003). Bangladesh is exporting their pharmaceuticals products to Vietnam, Singapore, Myanmar, Bhutan, Nepal, Sri Lanka, Pakistan, Yemen, Oman, Thailand, and some countries of Central Asia and Africa. It also has a large market in European countries. In Bangladesh, there are about 50 pharmaceuticals companies, who are leading the local market. But all of them are not engaged in exporting. The above figure gives a clear about the market share in export marketing from Bangladesh. Novartis is leader in export marketing. Though Novartis is a foreign organization and they remit their
  35. 35. 28 | P a g e profit to their parent country, they are paying different types of tariffs and taxes to the government of Bangladesh. Since the Doha declaration in WTO / TRIPS Agreement declaration in 2001, our govt. has justallocated land for the proposed central API (active pharma ingredient) facility. Expert said that if you don't have the backward-integrated API or raw material industry, you cannot be competitivein export markets. India is competitive in world market because it has vibrant, world class APImanufacturing capabilities. APIs occupy a significant portion of cost of pharma products, andcheap labor cost is not a huge advantage as it is always publicized by many. Sad but true- we arenowhere near India in terms of skilled manpower or process capabilities, and there is nonoticeable progress to develop the skill set or manpower. Again, the industry is yet to have anybioequivalence testing facility which is mandatory for product registration in developed markets,and there is mounting pressure from even semi regulated markets for such compliance. Theglobal generic drug market is now $130 billion, and US is the market leader with more than $45billion whereas India's presence is strong with $9 billion and ours only $45 million. Bangladesh is now exporting a wide range of pharmaceutical products covering all major therapeutic classes and dosage forms. Beside our regular brands, we are also exporting high-tech specialized products like inhalers, Suppositories, Nasal Sprays, Injectable and infusions. Apart from our overseas retail customers, we are even supplying to world-renowned hospitals and institutions like Raffles Hospital of Singapore, Jinnah Hospital of Pakistan, MEDs of Kenya,SPC of Sri Lanka and KK Women & Children Hospital of Singapore. The product quality, packaging and presentation of our products have been highly appreciated in all the countries were exporting. Export Scenario As said before pharmaceuticals sector is the 2nd foreign currency earner sector in Bangladesh. Last five years it earns at least $30 million. Last seven years margin are given below Export of Bangladesh Pharmaceutical Sector (Million in $).
  36. 36. 29 | P a g e Globally Bangladeshi pharmaceuticals companies were doing a much better business in 2010.Top ten companies have almost reached their expected sales target. According to a June 2010 Business Monitor International (BMI) report, Bangladesh had a domestic pharmacy market worth Year Earnings 2010 41 2009 36 2008 43 2007 38 2006 31 2005 22 2004 13 Export Prospect of Pharmaceuticals Sector in Bangladesh Bus 502: Managerial Communication Tk. 7,000 crore in 2010 and export worth $40.69 million; expert says it could be reached domestic worth Tk. 1000 crore export worth $45 million in 2011 and domestic worth Tk.1200export worth $48 million in 2012. Top ten Bangladeshi pharmaceuticals companies total overseas sales in 2010 given below Barriers 1. High cost of registration for their export items and restriction on transfer of funds for promotional activities. 2. The fixed mark-up system of pricing helped keep the prices of pharmaceutical products low; this made it difficult to cover costs of marketing and distribution. 3. In order to export a drug to a regulated market and to some moderately regulated market, it is mandatory to provide bioequivalence data. At present there is no bioequivalence laboratories exist in Bangladesh and we have to conduct this experiment abroad at a high price.
  37. 37. 30 | P a g e 4. Weaknesses in government policy on pharmaceuticals. 5. Bangladesh is also being deprived of the technology transfer where the major strength of the multinationals lie. 6. Pharmacies are not adequately supervised to ensure the quality of drugs sold there.Sometimes pharmacies are not supervised at all by the DDA because of the inadequatestrength of the drug administration. APIs (Active Pharmaceutical Ingredients): There are massive Scope in the overseas markets. There is no strict registration requirement and promotional costs are also low for API. If we maintain cost effectively in this particular matter; it will be a huge opportunity for us for exporting our raw materials in foreign markets. Bangladesh Pharmaceutical Society is planning to set-up a “Reference Laboratory” for appeal, biopharmaceuticals and pharmaco kinetic analysis and research. They are also seeking foreign participation in developing this laboratory. Opportunities have been created in Bangladesh for bioequivalence study, validation report, clinical trials and manufacturing plant. Top Ten Company Export Sales (2010)$ Square 63.57 Eskayef 22.10Incepta 54.87 Renata 14.53Beximco 48.17 ACI 13.30Acme 36.20Aristo pharma 10.70Opsonin 29.70 Drug International 08.36 Export Prospect of Pharmaceuticals Sector in Bangladesh Bus 502: Managerial Communication audit mechanism. These sub-sectors would need more investment in future. The industry created opportunities for foreign direct investment. Some of the pharmaceutical manufacturers of Bangladesh have made multimillion-dollar investments on new plant and facilities conforming to USFDA and UK-MHRA Standards. They have sufficient production capacity for contract (“Toll”) manufacturing including an abundant and cheap labor force.
  38. 38. 31 | P a g e 1. Support needs to buster export 2. Removal of export barriers. 3. Strengthening of drug administration. 4. Development of independent drug testing laboratory DTL. 5. Development of clinical testing / Bioequivalence centers.5. 6. Establish API Industry Park. 7. Introduce CGMP (Current Good Manufacturing Practice) training.7. 12. Importing Importing is acquiring or purchasing the goods or products which have been made in another country (Skinner & Ivancevich, 2003). Bangladesh is importing the medicinal products from different countries, especially from India. Different organizations of this country are related to import the pharmaceuticals products and raw materials of pharmaceutical industries. Novo and Mediates are importing maximum amount of these types of products. Other organizations are engaging to import the pharmaceuticals products. They are- Sanofi, Aventis, Glaxo Smithkline, Sandoz, Novartis, Roche, Unimed, Servier etc. 13. ForeignCompetitions At the beginning the foreign pharmaceuticals were dominating the market in our country. Still now, Pharmaceuticals industries are facing foreign competition. But our industry is not afraid of this foreign competition. There are many multinational pharmaceutical organizations which have established their plants in Bangladesh and importing their raw materials from abroad. Among these competitors, Roche, Glaxo
  39. 39. 32 | P a g e SmithKline, Novartis are leading. In export market, the Novartis is playing the dominant role. 14. Dumping Dumping is a situation when in which a company sells its products for lower prices than the market price to capture the market share (Griffin & Pustay, 2001). From the top management of the pharmaceutical companies, we got to know the some Indian medicines are sold in the country market at a lower price than Bangladeshi medicines but the medicine of developed countries and their origin country are sold in a competitive price, even in higher price. This creates the barrier to capture the market share by Bangladeshi pharmaceutical industries. Owners of the pharmaceutical companies think that the government should take actions to stop this practice. 15. CustomerChoice Customer is a person who buys the products as well as consumes the products and consumer only consumes the products (Chowdhury, 2000). Pharmaceutical industries are dealing with life saving drugs; here customer choice does not change so rapidly. People may prefer one brand to another. But the medicine may carry the same compound/ same ingredients. Customer choice depends on the customers’ reliance upon the company. For example, Beximco’s Napa, and Glaxo’s Parapirol carry the same compound and used for the same purpose. But, the customer purchases one of them. Customers usually prefer some foreign medicine in case of sensitive problem. However, our local pharmacies do not produce all the sensitive drugs, especially injections. This research also conducted a small survey over the customer of medicinal product and their choices. The sample was taken from different hospitals and pharmacy that came to buy the products.
  40. 40. 33 | P a g e CUSTOMER’S CHOICE OF BRAND NAME Brand Name Respondent (in %) Square 38 Beximco 24 Incepta 16 Glaxo SmithKline 8 Acme 6 SK-F 4 Others 4 Source: Primary data collected by sample survey, 2010. The above chart represents the scenario of customer choice toward the brand name. Most of the customers choose their medicine produced by square pharmaceuticals limited. According to the customer choice, no organization can play dominant role in the market. 16. ResearchandDevelopment Research is defined as the systematic and objective process of gathering, recording, and analyzing data for aid in making decision and development (Zikmund, 2005). Every organization is related to research & development. The organization becomes backdated which is not related to update their product. In pharmaceutical sector, multinational corporations are more concerned about research and development than locally owned companies. The implication is that MNCs will need to find ways to increase their R&D productivity, and it also means that Indian and Chinese firms with relatively novel approaches to product and process development may find opportunities opening up for them, whether through go-it-alone strategies or through co-operative R&D partnerships with MNCs (Grace, 2004). In one model, the primary function of an R&D group is to develop new products In the other model, the primary function of an R&D group is to discover and create new knowledge about scientific and technological topics for the purpose of uncovering and enabling development of valuable new products, processes, and services.
  41. 41. 34 | P a g e Under both models, R&D differs from the vast majority of a company's activities which are intended to yield nearly immediate profit or immediate improvements in operations and involve little uncertainty as to the return on investment (ROI). The first model of R&D is generally staffed by engineers while the second model may be staffed with industrial scientists. R&D activities are carried out by corporate (businesses) or governmental entities. Pharmaceutical’s R&D team is committed to the development and introduction of novel drugs and drugs delivery systems that make them a front- runner in the Pharmaceuticals industries. But budget for the research and development is not sufficient for appropriately doing this task. Research & Development are the main reasons for the progressive consolidation of our industry & fifteen years ago, the ten largest companies commanded 25% of the global market; today their market share is over 50% for concerning R & D (Humer, 2005). The R& D team comprises of highly qualified and trained technical personnel continuously striving for product and process innovation and up gradation. The sincere and relentless effort of the R& D team has taken the company a step further through introduction of high tech Anti-AIDS and Anti-cancer products in the recent years. A good number of APLs are also in the development pipeline to ensure availability of raw materials in the post WTO era. With their continuous investment in R&D and cutting –edge technology, Pharmaceutical is moving forward to meet tomorrow‘s healthcare needs.
  42. 42. 35 | P a g e 17. EXAMPLES OF A FEW LEADING PHARMACEUTICAL INDUSTRIES IN BANGLADESH i) Beximco Pharmaceuticals Ltd. Head Office: 19 Dhanmondi R/A, Road – 7 Dhaka-1205 Tel: 861-9151, 861-9091 Fax: 880-2-861-3888 E-mail: info@bpl.net Beximco Pharmaceuticals Ltd. (BPL) is a member of the Beximco Group – the largest private sector business conglomerate of Bangladesh, comprising 8 divisions and over 22000 employees. BPL, one of the largest pharmaceutical as well as bulk drug manufacturers of Bangladesh started its journey back in 1980 with manufacturing and marketing of licensee products of Bayer AG, Germany and Upjohn Inc. of USA. Beximco Pharma is now manufacturing and marketing various types of pharmaceutical finished formulations covering almost all major therapeutic classes, dosage forms and strengths. Currently, BPL is producing and marketing 106 products with 172 strengths. It is into various therapeutic classes, with major emphasis on i) Antibiotics, ii) Antiulcerants and Antacids iii) Cardiovascular Drugs, iv) NSAIDs, v) Analgesics and Antipyretics, vi) Vitamins and Iron Supplements, vii) Antidiabetics, viii) Antifungals, ix) Asthma Prophylactics and Bronchodilators and x) Nasal Decongestant and Anti-inflammatory Drugs. Apart from producing tablets, capsules, syrups, suspensions, solutions, drops, creams, ointments, gel etc., currently the company is also into specialized products like i) Inhalers, ii) Nasal Sprays and iii) Suppositories. In addition to local market, BPL’s export activities are there in nineteen countries of three continents- Asia, Europe and Africa. For its outstanding export performance,
  43. 43. 36 | P a g e BPL received Bangladesh’s highest award for export, the National Export Trophy, Gold in 1994-’95. BPL is the first pharmaceutical company in Bangladesh to receive such an award. BPL was also awarded National Export Trophy Gold for two consecutive years 1998-1999 & 1999-2000. BPL is the record three times winner of this national highest recognition for export. BPL’s commitment is to always offer the best, both in product quality and services to its customers. Quality is the measure of excellence in the field of pharmaceutical products. BPL feels that it has an incalculable social liability of providing safe, efficacious and highest quality drugs. Equipped with the latest & the most advanced state-of-the-art technologies BPL team is committed to serve its customers. Through the highest quality drugs BPL has succeeded in gaining the confidence & trust of doctors & patients all over the country. BPL has transformed its activities, culture, style and philosophy to meet the demands of the new millennium. Business diversifications that are strategically important for a sustained growth are results of its vision of the future. Several new bulk drug facilities are being developed to backward integrate their high volume products. A USFDA standard multi-million dollar pharmaceutical formulation plant is nearing completion. This would be one of the most modern plants in this region. ii) Square Pharmaceuticals Ltd. Square Centre 48, Mohakhali C/A Dhaka-1212 Tel: 882-7733, 882-7729-38 Fax: 880-2-885-9704 E-mail: isaac@squaregroup.com SQUARE today symbolizes a name – a state of mind. But its journey to the growth and prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship company, is holding the strong leadership position in the pharmaceutical industry of Bangladesh since 1985 and is now on its way to becoming a high performance global player. Square Pharmaceuticals Limited (SPL) is the largest pharmaceutical company in Bangladesh and it has been continuously in the 1st position among all national and multinational companies since 1985. It was established in 1958 and converted into a
  44. 44. 37 | P a g e public limited company in 1991. The sales turnover of SPL was more than Taka 5 Billion (US$ 90 million) with about 15% market share (April 2003 – March 2004) having a growth rate of about 16%. - Tablets : (Total Dosage Form = 110 Nos.) Non-Coated (plain, chewable, dispersible, vaginal) Coated (sugar coated, film coated, enteric coated) Sustained/Extended Released (coated, non – coated) Capsules : (Total Dosage Form = 35 Nos.) Granulated Material filled Pellets Filled Suppositories : (Total Dosage Form = 06 Nos.) Suppocire based Injections : (Total Dosage Form = 32 Nos.) Vials containing Dry Powder for Injections Small Volume Liquid Parenterals Liquids : (Total Dosage Form = 25 Nos.) Oral Syrups (Sugar based, Non-Sugar based) Oral Suspensions Topical Liquids Spray, Drops, Ointment, Cream and Powder : (Total Dosage Form = 42 Nos.) Small Volume Sterile Eye & Ear Drops Small Volume Nasal Drops & Sprays Topical Ointments & Creams Topical Antibiotic Powder Oral Dry Powders : (Total Dosage Form = 30 Nos.) Dry Suspensions (Antibiotic & Anti Infectives) Dry Syrups (Antibiotics) Dry Powder Inhalers : (Total Dosage Form = 08 Nos.)
  45. 45. 38 | P a g e Partial Filled (Premix) Capsules for Respiratory Tract Application with a Device MeteredDose Inhalers : (Total Dosage Form = 05 Nos.) Pressurized Canisters for Oral use with an Actuator The Chemical Division of Square started commercial production in 1995. From the year 1997 it started it’s full-fledged production and marketing to all top pharmaceuticals within the country including Aventis Pharma, Novartis Bangladesh Ltd., Glaxo Smith Kline, ACI Ltd., Reckitt & Colman, Beximco Pharmaceuticals Ltd., The Acme Laboratories Ltd, Eskayef Bangladesh Ltd., Opsonin Chemicals, Renata Ltd., Essential Drugs Co. Ltd. etc. with good reputation and loyalty. Square started exporting finished pharmaceutical formulations since 1987. And it is the pioneer in pharmaceutical export from Bangladesh. Square offers more than 200 molecules in over 350 formulations, from its 2 WHO GMP-compliant manufacturing plants. iii) The ACME Laboratories Ltd. Head Office: 46, Satmasjid Road, Dhanmondi Dhaka-1209 Tel: 811-8692-6 Fax: 880-2-811-3188 E-mail: acmeexpo@bangla.net The ACME Laboratories Ltd. is the second largest manufacturer and exporter of Human, Herbal and Animal Health Pharmaceutical Products in Bangladesh. Her Certifications include:
  46. 46. 39 | P a g e 18. Drug Discoveryand Drug Development i) Drug Discovery: Drug discovery is the process by which potential drugs are discovered or designed. In the past most drugs have been discovered either by isolating the active ingredient from traditional remedies or by serendipitous discovery. Modern biotechnology often focuses on understanding the metabolic pathways related to a disease state or pathogen, and manipulating these pathways using molecular biology or biochemistry. A great deal of early-stage drug discovery has traditionally been carried out by universities and research institutions. ii) Drug Development: Drug development refers to activities undertaken after a compound is identified as a potential drug in order to establish its suitability as a medication. Objectives of drug development are to determine appropriate formulation and dosing, as well as to establish safety. Research in these areas generally includes a combination of in vitro studies, in vivo studies, and clinical trials. The amount of capital required for late stage development has made it a historical strength of the larger pharmaceutical companies. In pharmaceutical sector, multinational corporations are more concerned about research and development than locally owned companies. The implication is that MNCs will need to find ways to increase their R&D productivity, and it also means that Indian and Chinese firms with relatively novel approaches to product and process development may find opportunities opening up for them, whether through go-it-alone strategies or through co-operative R&D partnerships with MNCs. Pharmaceutical’s R&D team is committed to the development and introduction of novel drugs and drugs delivery systems that make them a frontrunner in the Pharmaceuticals industries. But budget for the research and development is not sufficient for appropriately doing this task. Research & Development are the main reasons for the progressive consolidation of our industry & fifteen years ago, the ten largest companies commanded 25% of the global market; today their market share is over 50% for concerning R & D. The R& D team comprises of highly qualified and trained technical personnel continuously striving for product and process innovation and up gradation. Often, large multinational corporations exhibit vertical integration, participating in a broad range of drug discovery and development, manufacturing and quality control,
  47. 47. 40 | P a g e marketing, sales, and distribution. Smaller organizations, on the other hand, often focus on a specific aspect such as discovering drug candidates or developing formulations. Often, collaborative agreements between research organizations and large pharmaceutical companies are formed to explore the potential of new drug substances. More recently, multi-nationals are increasingly relying on contract research organizations to manage drug development. The sincere and relentless effort of the R& D team has taken the company a step further through introduction of high tech Anti-AIDS and Anti-cancer products in the recent years. A good number of APLs are also in the development pipeline to ensure availability of raw materials in the post WTO era. With their continuous investment in R&D and cutting –edge technology, Pharmaceutical is moving forward to meet tomorrow‘s healthcare needs. iii) Drug Distribution Bangladesh’s drug distribution marketplace is composed of small independent pharmacies. This structure combined with an under-regulated industry, few firms manufacturing pharmaceuticals, and companies competing to sell branded generics based on brand names provides ample opportunity for the sale of low-quality drugs at higher prices. And this partly explains why the quality of drugs available for sale varies significantly in Bangladesh. A visit to four pharmacies in Dhaka and ten pharmacies in the bordering Gazipur, Narayanganj, Keranigonj and Manikgonj districts reveal that pharmacies sell from 200-22,000 types of medicines each. Each type of medicine has one to twenty five possible brands. Large pharmacies reported buying medicines according to sales trends – e.g. what sells the most. Medium and small pharmacies reported being linked with a medical doctor and thus sales are usually skewed towards that medical professional’s preferences. Most pharmacies are individual shops, though some chains are starting to develop, especially in urban areas. On average, each pharmacy visited has 10-50 pharmaceutical firms that supply them medicines on a daily basis.
  48. 48. 41 | P a g e For example, Beximco Pharmaceuticals has 1,200 people visiting pharmacies daily to take orders for drugs. None of the pharmacies visited will keep restocking any medicine that they consider a slow item. Small pharmacies report of keeping a medicine for a maximum period of six months. Although there are approximately 300,000 private pharmacies in Bangladesh, the government has only 26,000 pharmacies officially listed. The rest are illegal pharmacies as they have no license / licensed pharmacist on staff. Pharmacists have varying levels of education and many lack adequate training. For example, while the four large urban pharmacies visited each had one professional pharmacist (with four years of coursework), two of the medium-sized pharmacies visited had one person trained for one year along untrained coworkers working as pharmacists. Rural pharmacists can have high school graduates with approximately two weeks training. The Bangladesh Pharmacist Society is currently implementing the first phase of a three-phased program to improve the skills of pharmacists. The three-phased program should be complete in seven to eight years. While about 95% of the consumers in big pharmacies visited purchase medicines with a prescription, as few as 50% of people in medium and small pharmacies visited have a prescription. If people don’t have a prescription, they either come in and ask for a specific drug or come in and describe their ailment to the pharmacist who then makes a diagnosis and recommends a drug on the spot. Popular products include antibiotics of various levels, pain-killers, and gastric remedies. People purchase one to ten tablets or capsules at a time. The amount purchased depends more on the financial capacity of the consumer than on the required dose of medicine. There are several brands of each drug on the market with variable levels of quality. In the urban areas, the pharmacies visited tended to sell the higher quality brands whereas in more rural areas, the pharmacies visited tended to sell lower quality, lower cost brands. The political sway of the district also influenced the selection of brands as pharmacies tended to have brands associated with people who had power in that district. Medium and small pharmacies reported stocking cheaper drugs as the consumers cannot purchase expensive medicines. Pharmacies further away from the center of the city also had increasingly more ayurvedic and herbal medicines.
  49. 49. 42 | P a g e Key Points Regarding Drug Discovery and Development: It takes 10–15 years to develop a medicine or vaccine. The research-based pharmaceutical industry currently spends over USD 135 billion on R&D per year. In 2011, 35 new pharmaceuticals were launched, out of more than 3,200 compounds in development. In 2007–2011, the number of new chemical or biological entities launched on the world market fell to 149 from 196 a decade earlier. It costs an average of USD 1.38 billion to develop a single drug. In 2011, 5 of the 10 leading global R&D firms were pharmaceutical companies By the time a medicinal product reaches the market, an average of 12-13 years will have elapsed since the first synthesis of the new active substance. The cost of researching and developing a new chemical or biological entity was estimated at €1,172 million ($ 1,506 million in year 2011 dollars) in 2012 On average, only one to two of every 10,000 substances synthesized in laboratories will successfully pass all stages of development required to become a marketable medicine.
  50. 50. 43 | P a g e 19. PROBLEMS AND PROSPECTS Problemsof Marketing i. Because of having no sufficient incentives in comparison with their effort, the turnover rate of medical representatives is very high. ii. Most of the time costs of marketing hardly affect the price of the medicine. iii. Professionalism in marketing is not achieved yet in Bangladesh like other developing countries. iv. Lack of proper governmental laws and this implementation the law by the drug administration. v. Unstable political situation and different types of violence. vi. Effect of globalization that has increased the competition. vii. Smuggled production counterfeit, that’s coming from the neighbor countries. Prospects of Marketing i. Marketing system is improving in this sector and proper marketing may help a firm to achieve the aim. ii. For free and fair competitions marketing can play a major role. iii. Marketing can be regarded one of the most important weapons to face the challenges of open market economy. Problemsof Foreign Competition i. Foreign competitors have more equipment, technology and plant facilities than that of locally owned firms. ii. Foreign competitors have their own local market so that they can absorb some losses here. iii. Foreign competitors get government help in some cases.
  51. 51. 44 | P a g e Prospects of Foreign Competition i. Foreign competitions made the country firms more eligible to face challenges that arose after the year 2005. ii. Pharmaceuticals industries will become more efficient in producing medicine which may save our lives. iii. The local firms will not face any rigorous problem in foreign countries as they are accustomed in competition with foreign firms. Problemsof Export i. Unstable political situation is one of the vital reasons for not achieving the expectation in export. ii. Problems of port (both sea and air) hinder the timely export. iii. Irresponsibility of customs officers is a regular phenomenon which results in increase on the price and cost of medicine. iv. Sometimes competition tends to follow unfair promotional activities. v. Still now, the products of the pharmaceuticals industries of Bangladesh are not world class. Prospects of export i. Competition is increasing the quality of medicinal products. ii. For surviving in the future, competitive environment is necessary. iii. Competition reduces monopolistic attitude of the firms. As a result, the customers will be benefited by getting quality products. iv. Export brings foreign currencies for the country which is helpful for the reserve of the country.
  52. 52. 45 | P a g e Problemsof Customer Choices i. One main problem is in producing rare drugs foreign companies are ahead of us in terms of quality, experience and market share. ii. 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. Prospects of Customer Choices i. By increasing quality, more customers as well as market share can be absorbed. ii. By producing rare drugs at home, the country can save its foreign exchange. iii. By extensive promotional activity, customer choice can be driven. Problemsof Power Development ii. 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. iii. ‘Red-Tapism’ of govt. offices hinders the development of power generation sector, where the government is not taking effective actions. iv. The political unrest of the major parties are also hindering the development.
  53. 53. 46 | P a g e 20. CONCLUSIONS The per capita consumption rate of medicine in Bangladeshi people is one of the lowest in the world. However, the industry has been a key contributor to the Bangladeshi economy since independence. Pharmaceutical industry is growing at an expected rate with the development of healthcare infrastructure and increase of health awareness and the purchasing capacity of people. Healthy growth is likely to encourage the pharmaceutical companies to introduce newer drugs on newer research products, while at the same time maintaining a healthy competitiveness in respect of most essential drugs. If the government succeeds in stopping corruption and the political unrest, the Pharmaceutical industry may grow higher than lots of international pharmaceutical giants. But of course, the technological improvement is must. RECOMMENDATIONS The proposed suggestions may help the pharmaceutical industries to reduce the problems in different areas. These are as follows: • The medical representative’s turnover is not adequate and equitable. So, the organizations can take measures to increase the salary for the medical representatives. • Advertising cost should be reduced and this is necessary to make the marketing people aware of their profession. • The local pharmaceutical companies should produce quality product by using the updated equipment and raw materials, which can help them to acquire the market share. • Pharmaceutical companies should produce world class medicine which may increase the demand for Bangladeshi drug in the world market. • Industry should make the people aware of the local products and with that they should ensure the quality medicine to earn confidence.
  54. 54. 47 | P a g e • Pharmaceutical companies may take the initiative to generate the power for continuous supply of electricity. • The pharmaceutical companies should not violate the law imposed by the government, which can hamper the trust of the people of the country. • Organizations should produce their product in a hygienic environment and maintain the highest standard. • Government should take measures or formulate some clear–cut rules to restrict the foreign pharmaceutical organizations to practice the concept of dumping in this country. REFERENCES  Abbott T. A. (1995), “Price regulation in the pharmaceutical industry: Prescription or placebo?” Journal of Health Economics, Volume 14, Issue 5, December 1995, pp. 551-565.  Anthony W.P., Perrewe P.L., Kacmar K.M. (2003), “Human Resource Management: A Strategic Approach” Third Edition, The Dryden Press, Harcourt Brace College Publishers, pp. 322-338  Shamsul Huda Export of pharmaceutical products up by 20 per cent Publish : 19 Jul, 2014

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