API production for Pharma growth momentum

Production of pharmaceutical raw materials commonly known as APIs (Active Pharmaceutical Ingredients) in the country is indeed a strong indicator of a hugely contributing factor to the growth of the sector. Recent developments do indicate that efforts are afoot to increase production of these vital raw materials, and that there is some noticeable progress too.

A report published in this newspaper the other day says that API production in the past ten years has grown four-fold. However, because of the low base this can be termed moderate at its best. Industry insiders are hopeful that gradual enhancing of the capacity for API production will substantially reduce Bangladesh's over-reliance on imports and augment competitive edge in the global market. They hold that although API production has not grown in keeping with the pharmaceutical sector, local companies are producing high-quality raw materials, on a limited scale, helping the drug industry add value to its products.

Although the country's pharmaceutical sector is often credited -- and rightly so -- for its commendable performance, one of the difficulties deterring its growth is the overwhelming reliance on imported raw materials. Currently, the industry reportedly imports 85 per cent of its APIs that, reportedly, cost the country US$1.3 billion.  Local producers are not in a position to meet more than 10.0 per cent of the industry's needs.

Cutting reliance on imports has been an issue of discussion for sometime now. A project is being implemented to set up an API Industrial Park in Munshiganj. Two other API parks are also being built in Bagerhat and Khulna under private arrangements. A draft API policy designed to incentivise the sector in a meaningful way is awaiting the government's nod. The idea is obviously to boost production of drugs and medicines for domestic consumption as well as exports with low production cost. In all likelihood, this will find the pharmaceutical manufacturers in a position to go for increased production. Now they are seriously constrained by the absence of APIs/raw materials locally, and hence compelled to import those at exorbitant costs.

Sustainability of a highly capital-intensive industry like the pharmaceutical can only be maintained in the long run if backed by smooth and affordable sourcing of raw materials. A great deal of the unrealised potential of the sector is often traced back to the absence of ready stocks locally. It is here that the need for backward linkage is not only important but a prerequisite for desired growth of the industry. According to industry leaders, API production would help the pharmaceutical sector grow its share in the global generic drug market, valued about $400 billion.

The atmosphere for generic drug manufacturing in the country is chiefly characterised by patent waiver that makes Bangladesh a unique place for manufacturing drugs. The landmark decision of the Nairobi Ministerial Conference of the World Trade Organisation (WTO) exempted Bangladesh, like other least developed countries (LDCs), from fulfilling patenting requirements until at least 2033. This means for another 10 years the country's drug manufacturers are free to continue with manufacturing generic products without having to pay hefty licence fees to the patent owners. This, no doubt, is the most reassuring news for Bangladesh's pharma sector. Certainly, the benefit is not just for the local manufacturers but also for foreign investors. It is highly likely that a proactive API policy would attract foreign investors who would be eager to gain from the waiver. Bangladesh's graduation from the LDC league in 2026 is expected not to interfere with the waiver benefit, as following graduation, the country is entitled to continue enjoying the LDC differential treatment for some time more. The government should ensure that adequate preparations, including diplomatic moves, are in place to retain the waiver preference for the timeframe already specified.     

The country's pharma industry today produces enough medicines to make it nearly self-sufficient, meeting 97 per cent of domestic demand. The current annual growth of the sector is estimated to be more than 24 per cent. Local companies export products to 157 countries in Asia, Africa, North America, South America and Europe. Medicine exports rose more than 11 per cent year-on-year to $188 million in 2021-22, data from the Export Promotion Bureau showed. Pharma-makers also think that Bangladesh should focus on potential API markets across the world. The global market is estimated to reach $216 billion in 2027.

There are 240-plus registered pharmaceutical companies in the country, and more than a dozen of them are engaged in manufacturing APIs and a wide range of formulations covering major therapeutic categories. This being the broad scenario, the industry appears to be well set to embrace modern innovations and research on an extensive scale. For this to happen, all that is required is the right push to facilitate production of APIs.

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