introduction new

Chapter 1: Introduction

Origin of the Report:

The BBA program conducted by ASA University Bangladesh has offered a course of Strategic Management. As a part of the fulfillment of the course criteria, we have needed to prepare an assignment under the supervision of Md. Abdul Hannan Mia Guest Faculty of Business Administration, ASA University.

Objectives of the Study:

There are some specific objectives behind the preparation of this report. These are given below-

Competitive position of 10 Bangladeshi company To present the current scenario of pharmaceutical industry in

Bangladesh. To find out the major participants of pharmaceutical industry. To evaluate the export import condition of this industry and how this

affect the overall development of Bangladesh.

Scope of the Study:

This report covers data from secondary sources such as website and some articles. We have analysis the overview of pharmaceutical industry in Bangladesh, how pharmaceutical industry contribution to economic development and the export scenario of pharmaceuticals sector in Bangladesh.

Background of the Study:

Pharmaceuticals industry is one of the largest growing sectors in Bangladesh. This sector fulfills our 97% total demand of medicine and its growth gate is near about 34%. So the Pharmaceutical sectors have played significant contribution to economic development in Bangladesh. It has lots of export prospect. We try to find how Pharmaceuticals have played role. So we select this topic and we think that this will create better opportunity for learning.

Methodology of the Study:

To complete this report we used all the data mainly from secondary sources. We have collected Internet based information, articles, blogs and text book of Strategic Management.

Report Preview:

To complete this report we have followed structures that are first we have prepared prefatory part, than report proper which included introductory part, body part and ending part. Then we prepared supplementary part.

Limitation of the Study:

In performing this report we have faced following limitations:

The data collection was full of complexities because Bdjobs.com has limited data in their website.

Time and word limitation is one of the key factors. The report is fully based on Secondary based. If we have opportunity

for primary survey the report will be more attractive.

Chapter 2: Overall Pharmaceutical Industry of Bangladesh

Introduction to the Industry:

The pharmaceutical sector is one of the thrust sectors in Bangladesh. Before Liberation, there was hardly any pharmaceutical enterprise in Bangladesh. After several years of liberation, the government could not increase 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. After the promulgation of Drug Control Ordinance-1982, the development of pharmaceuticals industry has accelerated. The skills and knowledge of the professionals and innovative ideas of the people involved in this industry are the key factors for these developments. Due to recent development of this sector, the country is exporting medicines to global market including European countries and on the top of it; the industry has been supplying about 95 per cent of the domestic demand for medicines. (http://www.pharmadu.net).

There are three drug manufacturing units under control of the Government of Bangladesh. Two of them are in Dhaka and another one is in Bogra. The name of these units is Essential Drug Company Ltd. (EDCL), which is operating as a public limited company under the Ministry of Health and Family Welfare. Essential Drug Company Limited produced medicines worth Tk. 964 million in 2000. The production rate of these companies is also increasing day by day. There are separate vaccines and large volume IV fluids production units under the Institute of Public Health (IPH) located in Dhaka. The medicines and other drugs like- vaccine of both Essential Drug Company Limited and Institute of Public Health are mostly used in government hospitals and institutions.

In recent years, the country has 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.

Current Scenario of pharmaceutical market in Bangladesh:

As stated earlier, the size of the retail market reached BDT 84.0 billion as on 2011 based on IMS report. The report further stated that, retail sales in the domestic market achieved 23.6% growth in 2011 following 23.8% and 16.8% growth in 2010 and 2009 respectively. High growth in the last three years (78.8% cumulative and 21.4% CAGR) meant that the Bangladesh Pharmaceutical market doubled in just over four years. The retail market also crossed USD 1.0 billion in size in 2011. It is one of the fastest growing sectors in the country with an annual average growth rate of 17.2% over the last five years and 13.1% over the last decade.

However, considering that IMS does not include rural market in their survey, the actual size of the market will vary slightly (5%-10%). It is estimated that the retail market represent 90% of the total market; in that respect the total market size (including the rural market) is expected to be over BDT 90.0 billion at present.

Major Players of pharmaceutical market in Bangladesh:

Based on the IMS report for the fourth quarter 2011, Square Pharmaceuticals (DSE: SQURPHARMA) holds the top market share in the retail market - 18.7%, followed by Incepta Pharmaceuticals (INCEPTA) - 9.3%, Beximco Pharmaceuticals (DSE: BXPHARMA) - 8.8%, Opsonin Pharma (OPSONIN) - 5.1% and Renata (DSE: RENATA) - 4.9%. The top five companies held 46.8% market share in 2011, slightly more than their 46.2% market holding in 2010 - indicating cumulative revenue growth in excess of the sector growth. Among the top five, three are listed in DSE – Square, Beximco and Renata.

Top 10 companies held 67.7% of the market in 2011 as shown in chart 1. Growth at par with the entire market meant that there cumulative holding did not change from 2010 level. However, the market share shifted among the top players. SQURPHARMA lost 0.5% market share in the last year (from 19.2% in 2010) while the next four companies gained 1.1% market share in the same period. Growth in local sales of these four companies – INCEPTA, BXPHARMA, OPSONIN and RENATA – was 28.5% in 2011, increasing their market share from 27.0% in 2010 to 28.1% in 2011. Chart 2 in the next page compares the growth rate for the top companies.

Major players in the retail market Rank

Manufacturer Name

Market Value (US$) Dec 2007

Market Share (%) Dec 2007

Market Growth (%) Dec 2007

1 Square 106,853,218 18.03 28.632 Beximco 54,406,039 9.19 4.083 Incepta

Pharma43,672,495 7.37 19.92

4 ACME 31,990,257 5.40 20.065 Eskayef 26,896,796 4.54 22.466 Drug 23,163,408 3.91 -3.91

International7 Aristopharma 23,005,700 3.88 32.748 Sanofi Aventis 22,505,617 3.80 18.919 A.C.I. 22,438,789 3.79 33.0410 Renata 21,531,753 3.63 13.3011 Opsonin

Pharma20,754,444 3.50 2.99

12 Glaxosmithkline

17,159,150 2.90 9.09

13 Orion Lab. 12,789,998 2.16 10.7614 General 10,409,370 1.79 16.7215 Sandoz 101,042,702 1.69 22.3716 Healthcare

Pharma9,552,740 1.61 37.83

17 Ibn Sina 8,288,494 1.40 42.1618 Nuvista

Pharma7,382,732 1.25 5.57

19 Novo Nordisk 6,739,984 1.14 25.7120 Novartis 6,682,644 1.13 29.04

Export Scenario of Pharmaceuticals Sector:Exports are goods and services produced by a firm in one country and then sent to another country (Rugman, 2004). Pharmaceuticals industry is one of the largest growing sectors in Bangladesh. This sector fulfills our 97% total demand of medicine and its growth rate is near about 34%. Pharmaceuticals have lots of export prospect. It is the second biggest foreign currency earner sector in Bangladesh. 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.Foreign Markets:

Bangladesh has exported basic chemicals to many countries like Hong Kong, South Korea, Malaysia and so on. After being successful in exporting basic chemicals, a few leading companies also started registering and exporting their finished formulation in sixty seven other countries, i.e. Australia, Brazil, Canada, Japan, etc. Overall pharmaceuticals companies have export activities in about 72 countries.

International Privilege:

Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement permits Bangladesh to reverse-engineer patented generic pharmaceutical products to sell locally and export to markets around the world. The 1994 WTO agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) requires signatories to implement patent protection for almost all products, including pharmaceuticals (VanDuzer,, 2003). However, article 66 provides LDCs with a breathing space before introducing full product patent protection. Bangladesh is therefore exempt until 2016 from the requirement to observe patent protection on reverse-engineered generic products destined for the local market and also enjoys a range of privileges with regard to exporting such products.

Export Scenario:

Year Earnings

2010 412009 362008 432007 382006 312005 222004 13

As said before pharmaceuticals sector is the 2nd foreign currency earner sector in Bangladesh. 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). Last five years it earns at least $30 million. Last seven years margin are given below:

Export of Bangladesh Pharmaceutical Sector (Million in $)

Export of Bangladesh Pharmaceutical Sector (Million in $)

2004 2005 2006 2007 2008 2009 201001020304050

Earnings

Figure : Export of Bangladesh Pharmaceutical Sector (Million in $)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 pharma market worth 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.1200 export worth $48 million in 2012.

Top ten Bangladeshi pharmaceuticals companies total overseas sales in 2010

Top Ten Company

Export Sales (2010) $ Mn.

Top Ten Company

Export Sales (2010) $ Mn.

Square 63.57 Eskayef 22.10

Incepta 54.87 Renata 14.53Beximco 48.17 ACI 13.30Acme 36.20 Aristo pharma 10.70Opsonin 29.70 Drug

International08.36

Source: Data collected from the file of Bangladesh Bureau of Statistics (BBS), 2011

In the export market, growth (presently 9.4%) is expected to stay at an average of 10% upto 2016, as TRIPS relaxation prevails, and present effort towards improving international reach continues. Further, if the present expectations materialize, the API industry can provide another growth opportunity in the export market. Exports presently amount to 5.93% of total size (local + Export) of pharmaceutical market on average. However, exports may contribute more in industry growth in coming periods. Overall, a growth of 14.8% can be expected from our pharmaceuticals industry up to 2016. After 2016, growth pace would depend on whether TRIPS relaxation is extended or not.

Pharmaceuticals ExportWTO Data - Bangladesh Year Value USD Mn (current prices) 2000 2119652 2.12 2001 3957480 3.96 2002 6995071 7.00 2003 6423924 6.42 2004 19534611 19.53 2005 18177105 18.18 2006 26960916 26.96 2007 37740790 37.74 2008 46541954 46.54 2009 45714931 45.71

Table : Pharmaceuticals ExportPharmaceuticals Export

2000 2001 2002 2003 2004 2005 2006 2007 2008 200901020304050

Current Prices

Figure : Pharmaceuticals ExportIf extended, the industry can expect another period of good growth, with more growth coming from exports. However, total growth will be lower than 2011-2016, due to industry size effect, saturation in many product classes locally and rising competition. Therefore, assuming a GDP growth of 5%, alignment of private expenditure on healthcare with GDP, and a stable life expectancy level, 10.1% growth can be expected.

And If not extended, export growth would certainly fall (assumed growth to be 2%), while domestic industry would reach saturation and will depend on demographic variables. In that case, a growth rate of 8.5% can be expected.

Being a part of healthcare sector, growth of pharmaceuticals industry is related to several economic variables. And at present, bangladesh has a quite good outlook on its demographics. GDP growth has been roaming around 6% over last few years. Within 2001-09, average population growth is 1.58%, with the growth rate declining at 1.68% per year. Life expectancy at birth has increased at 0.89% annually, along with poverty level reducing 1.68% each year. Most importantly, healthcare expenditure per capita grew by a 8.7% per year, and private healthcare expenditure grew by 3.16% annually, demonstrating a growing propensity among people for healthcare expenditure.

Pharmaceuticals ImportWTO Data - Bangladesh Year Value USD Mn (current prices) 2000 139700056 139.70 2001 124578340 124.58 2002 137591660 137.59 2003 145064519 145.06

2004 149661640 149.66 2005 147419132 147.42 2006 171527526 171.53 2007 229142923 229.14 2008 293733231 293.73 2009 269029761 269.03

Pharmaceuticals Import

2000 2001 2002 2003 2004 2005 2006 2007 2008 20090

50

100

150

200

250

300

current prices

Source: World Trade Organization

Industry Analysis:

Bangladesh, currently having more than a couple of hundred manufacturing facilities with huge potential in pharmaceutical formulations, is heading on a new path of industry economics for self-reliance. Aiming at minimizing the import dependency on basic drugs, the country's prime concern is about building up of own capability in the manufacturing of active pharmaceutical ingredients(APIs), base materials and other allied industry inputs.

For Industry analysis Michael Porters five forces model is used as a framework to analyze the pharmaceutical industry of Bangladesh.

Competitive Force 1: Rivalry among Existing Firms

There is a fierce competition among the existing firms. Among the various pharmaceutical companies when one of them produces new medicine with same component, existing firms forced to produce same type of medicine to exploit the opportunity.

So, from these findings it can be referred that SK&F uses element for gastric treatment for the medicine Losectil, omeprazolewhile Opsonin is using Ranitidine as their gastric treatment tablet Ranitid.

Competitive Force 2: Threat of New Entrants

Pharmaceutical industry of Bangladesh is a matured industry. This industry has gained vast growth and contributing huge contribution to the economy. In pharmaceutical industry there are many big companies operating their business successfully, like Square, Beximco, Eskayef, Novartis, Opsonin, Incepta, GlaxoSmithKline, Renata, ACI, Acme, IbnSina, Aristopharma, Drug International etc. pharmaceuticals.

So, if there any new pharmaceutical company who will be referred as new entrants will face tremendous competition with these big companies. Though the new entrant has vast amount of investment they may not be able to capture market because they are new and as a medicine company they are not reliable. On the other hand if the new entrant company tries to compete with the existing companies they may have to face the rivalry of the competitors who has vast amount of resources.

Competitive Force 3: Threat of Substitute Products

As we discussed earlier about the Ranitidine and Omeprazole are the same element of gastric related medicines. So, they could be substitute to one another. If one pharmaceutical company can get greater accepting by producing medicine with the element Ranitidine and doctors can refer that medicine widely for its effectiveness, it will be a threat for the other company who produces medicine with Omeprazole.

We can give another example of substitute product threats, like Some people might be allergic to aspirin while others might have medical conditions where the blood thinning properties of aspirin are dangerous. In that case, Paracetamol might be the wiser choice because it does not think the blood. For example, if one has had a blood clot in his leg and is on Coumadin or some other blood thinner, one would not want to take aspirin for a headache because it could over-thin one’s blood and make them more prone to hemorrhage, whereas Paracetamol would be a safe choice. If someone is

allergic to aspirin, Paracetamol would be the headache medication of choice for obvious reasons.

Competitive Force 4: Bargaining Power of Buyers

The pharmaceutical companies of Bangladesh do influence medical practitioners, wholesale and retail distributive shops of pharmaceutical products to promote their own brands. One can infer that anticompetitive/restrictive business practices in the form of unfair collusion among the companies, doctors, and distributive shops are the striking features of this sector.

In this case, real consumers like us do not have much bargaining power. Because every company prices their medicine almost relatively same level and medicine is the most important need for people, they do not have much bargaining power.

Competitive Force 5: Bargaining Power of Suppliers

With regards to raw materials sourcing, the pharmaceutical manufacturers in Bangladesh procure raw materials from various countries namely UK, France, Germany, Japan, Holland, Italy, Denmark, China, Switzerland, Austria, Hungary, India, Ireland etc., In case of raw materials that are locally manufactured, they do not go for import. But Bangladesh is currently not a major manufacturer of raw materials, this is an area that could provide some “niche” opportunities for the Bangladeshi firms down the road.

So, suppliers of raw materials of pharmaceutical companies do not have much bargaining power. Because, pharmaceuticals can switch their supplier if they start to bargain inappropriately.

Competitive Strategy Analysis:

Cost Leadership:

Price and output decisions are in principle taken by the management boards, the drug prices are significantly influenced by the pricing policy of the

government of Bangladesh. Some pharmaceutical firms collude or cooperate among themselves in respect of production of certain products and their pricing. Some comes with some unique medicine and price at low.

As example- French pharmaceutical major Sanofi-Aventis, one of the largest multinational pharmaceutical companies operating in Bangladesh, announced that it had decided to provide its revolutionary anti-cancer drug Taxotere (docetaxel) at an affordable price as a part of the company’s Patient Assistance Programme. The programme has been introduced to enable cancer patients to gain better access to treatments through chemotherapy.

Product Differentiation:

Pharmaceuticals have been producing world class pharmaceutical products following current Good Manufacturing Practice (GMP) as required by the World Health Organization (WHO) in order to improve health, happiness and quality of life.

Bangladeshi Pharmaceuticals have products of different therapeutic classes, each of which occupies a prominent position in the market and the heart of our customers and shareholders. These pharmaceuticals also known for constructive endeavor to innovation that is usually the result of very extensive product testing and market research.

The markets are segmented and the prices of some widely-used products (such as the aspirin-based pain killer Paracitamol) vary from firm to firm. In most cases, products are differentiated only through packaging – a common feature of imperfectly competitive firms. The drugs are easily available without prescription. A number of pharmaceutical products made in Bangladesh are exported to the neighboring countries.

Corporate Strategy Analysis:

In the pharmaceutical sector there is a category of a large number of small firms that produce only for the domestic market. In the rural area and the countryside the products of small firms cater to the needs of the middle and low income people of society. Large firms make huge investment in R&D and they are the holders of the vast majority of the patents. While the large firms are engaged in developing new medical products to deal with new diseases and/or to deal with old diseases more effectively and thereby maintaining

their patents, the small firms do not maintain very many patents of their own. They are thus involved in competition with other firms on the basis of manufacturing off-patent generic medicines or patent medicines under license. There is a bit of competition among these firms over price, cost efficiency and quality of the products. By making huge R&D investments the large firms maintain patent rights and they exercise significant market power. The whole basis of business is innovation and marketing of new products.

A survey was carried out among the top ten pharmaceutical companies in Bangladesh (Anwar, S.F., 2002). In 1982 there were seven multinational firms and only three local ones among the top ten pharmaceutical companies in Bangladesh. More than 50 per cent of the market share was under the control of top five companies. However, in 1994 Pfizer, SK&F and ICI sold out their operations to domestic entrepreneurs in Bangladesh. It appears that the share of local companies in total production has increased from 25 per cent in 1981 to 49 per cent in 1997. This share was around 39 per cent in 1992. While it is true that the share of the local firms in total production has increased over the years, one cannot draw conclusion that the market has become competitive. It only means that the role of the local firms, in particular that of Beximco and Squaqre, has increased over the years.

Today more than 70 percent of the pharmaceutical business in Bangladesh is done by the national companies. However, there are five multinationals among the top twenty companies in the country. It has been observed that nearly all the life-saving imported drugs and new innovative molecules are distributed by these companies.

Top Pharmaceutical Company of Bangladesh: 2013

Serial Name of Pharma Tk (Crore) Share Growth %

Rank Total Market 7,186 100.00 24.301 SQUARE 1,378 19.18 23.542 INCEPTA PHARMA 650 9.05 32.173 BEXIMCO 620 8.62 40.334 OPSONIN PHARMA 355 4.94 26.095 ESKAYEF 348 4.84 24.826 RENATA 340 4.73 29.637 ACME 319 4.44 17.348 A.C.I. 293 4.08 18.81

9 ARISTOPHARMA 286 3.99 21.6310 DRUG INTERNATIONAL 270 3.75 18.18

A Unweighted Competitive Strength Assessment

KSF/Strength Measure Viyellatex Group

Epyllion Group

Beximco Textiles Ltd

Standard Group

Zaara Composite Textile Ltd.

Quality/product performance

10 10 10 9 8

Reputation/image 10 10 9 8 8Manufacturing capability 9 8 8 7 7Technological skills 10 9 7 6 6Dealer network/ distribution

9 8 8 8 9

New product innovation 7 7 7 6 6Financial resources 8 7 8 7 6Relative cost position 8 7 6 7 8Customer service capability

8 8 8 8 7

Overall strength rating 79 74 71 66 65

14%

14%

27%24%

22%


Viyellatex Group Epyllion Group Beximco Textiles LtdStandard Group Zaara Composite Textile Ltd.

Interpretation: The above figure shows that Quality/product performance rating of square, Insepta and Beximco has height value (12%). Opsonin pharma (11%) second position. And other companies are the follower.

23%

18%23%

18%

18%

Reputation/image

SQUARE INCEPTA PHARMA BEXIMCO OPSONIN PHARMA ESKAYEF

Interpretation: The above figure shows that Reputation/image rating of square, Beximco has height value (12%). A.C.I (11%) second position. And other companies are the follower.

12%

11%

11%

10%

10%

8%11%

10%

10%8%

Manufacturing capability

SQUARE INCEPTA PHARMA BEXIMCO OPSONIN PHARMA

ESKAYEF RENATA ACME A.C.I.

ARISTOPHARMA DRUG INTERNATIONAL

Interpretation: The above figure shows that Manufacturing capability rating of square, has height value (12%). Beximco, Incepta and ACME (11%) second position. And other companies are the follower.

12%

12%

11%

9%9%9%9%

9%

9%9%

Technological skills




Interpretation: The above figure shows that Technological skills rating of square and Incepta has height value (13%). Beximco (11%) second position. And other companies are the follower.

12%11%

11%

11%12%9%

9%

9%9%

8%

Dealer network/distribution




Interpretation: The above figure shows that Dealer network/distribution rating of square and Eskayef has height value (12%). Beximco and Opsonin pharma (11%) second position. And other companies are the follower.

12%

12%

12%

10%10%10%8%

8%8%

10%

New product innovation




Interpretation: The above figure shows that New product innovation rating of square, Insepta and Beximco has height value (12%). Opsonin pharma, Eskayef, Renata and Drug International (10%) second position. And other companies are the follower.

12%

12%

12%

10%

10%

10%8%

8%8%

10%

Financial resources




Interpretation: The above figure shows that Financial resources rating of square, Insepta and Beximco has height value (12%). Opsonin pharma, Eskayef, Renata and Drug International (10%) second position. And other companies are the follower.

11%

9%

8%

9%11%11%11%

11%

11%

8%

Relative cost position




Interpretation: The above figure shows that Relative cost position rating of square, Eskayef, Renata, ACME, ACI and Aristopharma has height value

(11%). Beximco and Opsonin (09%) second position. And other companies are the follower.

11%11%

11%

11%

10%

10%10%

10%8%

8%

Customer service capability




Interpretation: The above figure shows that Customer service capability rating of square, Insepta, Beximco and Opsonin has height value (11%). Eskayef, Renata, ACME and ACI (10%) second position. And other companies are the follower.

12% 11%

11%

10%10%9%9%

10%

9% 9%

Overall Strength Rating

SQUARE INCEPTA PHARMA BEXIMCO OPSONIN PHARMA ESKAYEF RENATA ACME A.C.I. ARISTOPHARMA DRUG INTERNATIONAL

Interpretation: The above figure shows that overall strength rating of square has height value (12%) and they are the market leader. Insepta and Beximco (11%) second position and they are market challenger. And other companies are the follower.

A Weighted Competitive Strength Assessment

KSF/Strength Measure WEIGHT Epyllion Group

Beximco Textiles Ltd

Standard Group

Zaara Composite Textile Ltd.

Viyellatex Group


0.4 10/2 10/2 10/2 9/1.8 8/1.6

Reputation/image 0.3 10/1 8/0.8 10/1 8/0.8 8/0.8Manufacturing capability 0.05 9/0.9 8/0.8 8/0.8 7/0.7 7/0.7

Technological skills 0.15 8/1.2 8/1.2 7/1.05 6/0.9 6/0.9

Dealer network/ distribution

0.05 9/0.45 8/0.4 8/0.4 8/0.4 9/0.45

New product innovation 0.15 7/1.05 7/1.05 7/1.05 6/0.9 6/0.9

Financial resources 0.1 8/0.8 7/0.7 8/0.8 7/0.7 6/0.6

Relative cost position 0.1 8/0.8 7/0.7 6/0.6 7/0.7 8/0.8

Customer service capability

0.05 8/0.4 8/0.4 8/0.4 8/0.4 7/0.35

Sum of Weight 1

Overall strength rating 8.6 8.05 8.1 7.3 7.1

Chapter 3: Findings and Recommendations

Findings:

The pharmaceutical sector is one of the most improved technology based sector and largest white collar job providers in the Bangladesh. 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. DGDA regulates all activities related to import and export of raw materials, packaging materials, production, sale, pricing, license, registration etc. PCB regulates the practice of Pharmacy throughout Bangladesh and this sector operate under the Drug Control Ordinance - 1982

Although there are about 250 licensed pharmaceutical manufacturers in the country; however, currently a little over 100 companies are in operation. 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. Top 10 companies held 67.7% of the market in 2011 so the performance of other firms is not quite well. Square, Incepta, Beximco, Opsonin, and Eskayef dominate the market.

According to BOI, this sector is one of the five major contributors to the economic development of Bangladesh. It is the third largest industry in terms of contribution to government’s revenue and contributes about 1% of the total GDP. About 97 per cent internal demand for drugs is fulfilled by the domestic Pharmaceutical industry of the country. This sector contributes to the economic development of Bangladesh by exporting the medicine after meeting the internal demand. But Pharmaceutical industry of Bangladesh depends on foreign country for raw-material and technology.

This industry is the second largest foreign currency earner. Bangladesh has exported basic chemicals to many countries like Hong Kong, South Korea, Malaysia and so on. After being successful in exporting basic chemicals, a few leading companies also started registering and exporting their finished formulation in 67 other countries, i.e. Australia, Brazil, Canada, Japan, etc. Overall pharmaceuticals companies have export activities in about 72 countries. The import of pharmaceutical products grew at 12.9% annually while organic chemical grew at

15.8%. Unlike export data, pharmaceutical and chemical imports have been steady over the last four years as the domestic market has been bullish is the same period.

Conclusion:

Pharmaceutical is the core of Bangladesh’s Healthcare sector, and serves as one of the most important manufacturing industry. With a history since 1950s, the industry has now turned one of the most successful pharmaceuticals manufacturing industry among the developing countries. Presently, the industry meets 97% of local demand and exports to more than 72 countries. The industry has been experiencing robust growth over the last few years. A local industry supporting drug policy and effective regulatory framework, along with TRIPS relaxations are the key reasons for success of the industry. While the industry is achieving self sufficiency, it yet procures 80% of raw materials from abroad. But developments are already taking place, with a number of firms now manufacturing raw materials locally.

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 and newer research products, while at the same time maintaining a healthy competitiveness in respect of most essential drugs.

In addition, an API project has already been undertaken to accelerate the vertical integration within the industry. The industry has been expanding locally and internationally. Local market grew at 23% in 2010, while import reached USD 50 Million landmark. A number of firms got accreditations from USA, UK, Australia etc. developed markets, and are underway toward expansion into the developed markets. Locally, firms are preparing themselves for post 2016 scenario, when TRIPS will be implemented. Almost all the firms are upgrading their facilities and taking up precautions for post

2016 scenario, while aggressively expanding in both local and export markets. While TRIPS and import dependence on raw materials put challenges to the growing sector, prospect of the sector depends largely on the interactions among the players, regulatory bodies and the govt., whether they can meet up the requisites to continue growth of the sector while facing the challenges.

Recommendation:

Since DGDA regulates all activities related to import and export of raw materials, packaging materials, production, sale, pricing, license, registration etc and PCB regulates the practice of Pharmacy throughout Bangladesh. Many participants and some economists see this regulatory action as the barrier to the growth of this sector. But it is also true that, without the government regulation the firms might engage in unhealthy competition so that the price will be unreachable by most of the people of Bangladesh. So, the government needs to eliminate the drawbacks of current policy.

The Top 10 companies held 67.7% of the market share in 2011 but there are about 250 licensed pharmaceutical manufacturers in the country. From the above information we can say that, the performance of other firms is not quite well and even some of these firms 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. So the government can take necessary initiative to encourage the closed firms to restart operation and to maintain the compliance.

The healthcare expenditure as % of GDP for neighboring countries to Bangladesh as well as some other developed countries. Bangladesh is well below in the list of countries in terms of healthcare expenditure

percentage. So the government can increase its initiative to aware the people about healthcare expenditure. Due to unawareness about the healthcare expenditure we affect by the various disease that hampers the total production of the country.

The Pharmaceutical industry of Bangladesh depends on foreign country for raw-material and technology. About 80% of the active pharmaceutical ingredients (APIs) are imported as there are only a few local companies that are engaged in manufacturing APIs. For this reason we can’t enjoy the full advantage of export. So the government can take necessary initiative to produce the majority of raw materials within the country. The government can also take some initiative to expand the export market of pharmaceutical products.

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