An analysis of what lies ahead post-LDC for Bangladesh’s pharmaceutical industry.
In recent years, Bangladesh’s pharmaceutical industry has emerged as a key player in the global market, with significant contributions to both the domestic economy and international healthcare accessibility. As the country prepares for its transition from a Least Developed Country (LDC) to a developing nation, various challenges and opportunities arise for the pharmaceutical sector.
FROM LDC TO PHARMA LEADER
Bangladesh, an LDC, is on the brink of a significant milestone – graduation from LDC status. This transition, scheduled for 2026, marks a pivotal moment in Bangladesh’s economic journey. Over the years, the nation has made remarkable strides, particularly in its pharmaceutical sector, which has emerged as a key player in the global market.
Bangladesh’s impending graduation from the LDC category signifies a momentous shift in its economic landscape. According to statistical data, Bangladesh’s pharmaceutical industry has experienced substantial growth, boasting a market value of USD 3 billion in 2019, with projections indicating a potential surge to USD 6 billion by 2025. This flourishing sector has played a vital role in meeting the nation’s healthcare needs, with local pharmaceutical companies currently supplying an impressive 98% of the country’s medicinal requirements.
The pharmaceutical industry’s success story in Bangladesh has been underpinned by a conducive policy environment and strategic measures such as the Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver. Leveraging these favourable conditions, Bangladesh has become a leading exporter of medicines among LDCs, with its products reaching over 130 countries worldwide, including lucrative markets like the USA, Australia, and the European Union.
As Bangladesh gears up for LDC graduation, the pharmaceutical industry stands at a crossroads, bracing for potential impacts. The withdrawal of LDC status brings forth a host of challenges and opportunities, particularly in the era of intellectual property rights (IPR) and market access. The expiration of TRIPS waivers post-graduation raises concerns about the production of generic medicines and the introduction of patents, posing both threats and opportunities for local pharmaceutical companies.
BANGLADESH’S PHARMA LEAP
The journey of Bangladesh’s pharmaceutical industry has been shaped by the evolution of its IPR system, which traces its roots back to the colonial era. Bangladesh inherited its patent law from the British government during the colonial period, along with India and Pakistan. The British Patents and Designs Act of 1911 formed the basis of the patent system in all three countries. However, India took a significant step forward in 1970 by abolishing product patents in pharmaceuticals with the introduction of the Patents Act. In contrast, Bangladesh continued to operate under the British-era patent law until more recent developments.
The Department of Patents, Designs, and Trademarks (DPDT) of Bangladesh issued an executive order on 7 January 2008, halting the patenting of pharmaceuticals. This move marked a pivotal moment in the country’s pharmaceutical landscape, as it set up a mailbox system in accordance with the TRIPS scheme. Under this system, patent applications for pharmaceuticals were stored in the mailbox, with the understanding that they would be processed upon Bangladesh’s graduation to developing country status.
Currently, the DPDT, under the Ministry of Commerce, oversees the acceptance and granting of patents in Bangladesh. However, statistics reveal a disparity in the distribution of patents, with a majority being granted to foreigners. Despite this, Bangladesh benefits from TRIPS’ special exemption for LDCs until 2033. This exemption allows the Bangladeshi pharmaceutical sector to produce generic versions of patented drugs for domestic consumption and export, positioning local companies as global players in the pharmaceutical arena.
Furthermore, Bangladesh enjoys significant cost advantages in pharmaceutical manufacturing, thanks to its lower labour costs compared to major generic medicine hubs like India and China. This, coupled with the country’s historically low medicine prices, has propelled Bangladesh’s pharmaceutical industry onto the international stage, making it a key player in the global market.
CHALLENGES POST-LDC GRADUATION
One of the most significant impacts of LDC graduation on the pharmaceutical industry is the potential increase in medicine prices. As Bangladesh transitions to a developing country, it will be required to adhere to stricter IPR regulations, including the recognition of pharmaceutical patents. This means that local companies may no longer be able to produce generic versions of patented drugs, leading to a reduction in competition and a subsequent rise in medicine prices.
The escalation of medicine prices is a concerning prospect, particularly for poorer segments of society. Many essential drugs, including life-saving medications for conditions such as cancer, diabetes, HIV/AIDS, and cardiovascular diseases, may become unaffordable for those who need them most. This could exacerbate health inequalities and contribute to the suffering of vulnerable populations.
Bangladesh enjoys significant cost advantages in pharmaceutical manufacturing, thanks to its lower labour costs compared to major generic medicine hubs like India and China.
Moreover, the increase in medicine prices may also have broader societal impacts. Access to affordable healthcare is crucial for economic productivity and social stability. According to the Bangladesh Bureau of Statistics, healthcare expenditure in Bangladesh accounts for approximately 6.5% of the country’s GDP. Rising healthcare costs could strain household budgets, diverting funds away from other essential needs such as education and nutrition.
Furthermore, the pharmaceutical industry itself may face challenges in adapting to the post-LDC graduation landscape. Local companies, which have primarily focused on producing generic drugs, may need to invest more in research and development to develop new active molecules. This transition could require significant resources and expertise, posing barriers for smaller firms and potentially reducing overall innovation within the industry.
SURVIVAL OF THE NIMBLE
As Bangladesh prepares for its transition from an LDC to a developing nation, strategic initiatives are essential to navigate the challenges posed by this transition. Government intervention is paramount, with a focus on revising patent laws and investing in infrastructure. A significant proportion of patents granted in Bangladesh are held by foreigners, indicating the need for policy reforms to promote domestic innovation. Additionally, investment in modern drug testing laboratories and research facilities is crucial for enhancing the capabilities of the pharmaceutical industry. Statistical evidence reveals that Bangladesh’s pharmaceutical market has experienced substantial growth, with revenue reaching BDT 6,641 crore in FY21-22.
Corporate giants like Square Pharmaceuticals play a pivotal role in this transition, with initiatives such as expanding operations abroad. The data showcases the company’s revenue growth, with a projected revenue of USD 1.5 million from its Kenyan plant in the first year. Furthermore, investment in capacity building, including training programs for local and foreign workers, is vital for sustainable growth.
Local pharmaceutical companies must also adopt strategic measures to tackle the challenges of LDC graduation. Investing in research and development (R&D) is critical as approximately 80% of raw materials are imported highlighting the need for innovation in the industry. Collaboration and partnerships with academia and research institutions can facilitate technology transfer and access to new markets. Capacity-building initiatives focused on talent development are essential for enhancing competitiveness in the global pharmaceutical landscape.
Collective efforts are paramount in addressing the multifaceted challenges of LDC graduation. Collaboration between governments, industry stakeholders, and international organisations is essential for sharing best practices and resources. Advocacy efforts aimed at promoting policies that support the growth of the pharmaceutical industry and raise awareness about the importance of affordable healthcare can drive positive change. With concerted efforts and strategic initiatives, Bangladesh can successfully navigate the challenges of LDC graduation and emerge as a thriving pharmaceutical hub in the post-LDC era.
