Pharma industry in dire need of locally produced APIs

Although the country's pharmaceutical sector is often credited -- and rightly so -- for its commendable performance over the years, one of the persistent and pressing challenges hindering its further growth is the overwhelming reliance on imported raw materials, specifically active pharmaceutical ingredients (APIs). Despite the country's strides in medicine manufacturing, the industry's heavy dependence on foreign-sourced APIs remains a structural vulnerability that hampers both sustainability and self-reliance.

Currently, it is estimated that the pharmaceutical industry imports nearly 95 per cent of its API requirements. This translates into an import bill of approximately Tk 45 billion annually, putting considerable pressure on foreign currency reserves and leaving the entire supply chain susceptible to global market disruptions. Local producers, constrained by infrastructural limitations and lack of investment, are not in a position to meet more than 5 per cent of the industry's total API demand. This stark imbalance has long been recognised as a bottleneck in the development of a truly self-sufficient pharmaceutical industry.

Over the past several years, cutting reliance on imported APIs has been a frequent topic of discussion at both policy and industry levels. Yet, tangible progress remained limited until recently. Encouragingly, there has been a renewed drive, both from the government and private sector players, to strengthen backward linkages by boosting domestic API production. This shift in momentum reflects a growing awareness of the strategic importance of indigenous raw material sourcing, not just from an economic perspective but also from the standpoint of national health security.

One of the major initiatives in this regard is the establishment of an API Industrial Park in Munshiganj, which is being implemented as a government project. The park is envisioned as a comprehensive industrial hub with dedicated infrastructure and support services tailored to API manufacturers. Additionally, two more API parks are under development in Bagerhat and Khulna through private sector initiatives, signaling growing investor interest in this critical segment of the pharmaceutical supply chain.

Alongside infrastructural developments, a draft API policy has been prepared and is currently awaiting approval from the government. This policy aims to provide a comprehensive incentive structure, including fiscal benefits, subsidies, and streamlined regulatory processes, to attract both local and foreign investors into the API manufacturing space. If approved and implemented effectively, this policy could serve as a much-needed catalyst for transforming the sector's raw material landscape.

The overarching goal behind these initiatives is to reduce dependence on imports, ensure the smooth supply of essential inputs for drug production, and ultimately bring down production costs. Lower costs would not only make medicines more affordable for the domestic population but also enhance the competitiveness of Bangladeshi pharmaceutical products in international markets. A locally secured supply chain would significantly bolster the industry's export potential, which has been growing steadily in recent years.

It is important to recognise that sustaining a highly capital-intensive industry like pharmaceuticals requires more than just policy tweaks and infrastructural support. A reliable and cost-effective supply of raw materials is essential to maintaining the viability and profitability of the entire sector. Without local API production, manufacturers are forced to rely on volatile international markets, where prices can fluctuate dramatically, and supply chains can be disrupted by geopolitical tensions, pandemics, or trade restrictions.

A great deal of the untapped potential within the pharmaceutical sector can be attributed to this very lack of backward linkage. In fact, the absence of readily available APIs is often cited as one of the foremost limitations to the industry's desired growth. The inability to access necessary inputs locally not only increases production costs but also impedes research and development (R&D) initiatives, which are vital for innovation and quality enhancement.

The need for robust backward linkage has never been more crucial. As the pharmaceutical industry moves towards more complex formulations, biologics, and personalised medicine, the demand for high-quality APIs is set to rise. Ensuring that the country is equipped to meet this demand locally will require coordinated efforts in terms of investment, training, infrastructure development, and regulatory facilitation.

Bangladesh's pharmaceutical sector currently meets around 98 per cent of the domestic demand for medicines, a remarkable feat in itself. The industry's annual growth rate, estimated at over 24 per cent, positions it as one of the fastest-growing sectors in the country. There are currently more than 240 registered pharmaceutical companies operating in the country. Several of these firms have already begun producing APIs and a wide array of drug formulations spanning all major therapeutic categories. This means the base is already in place; what remains is the scaling up of capabilities and enhancing integration with global standards.

With these factors in mind, the industry appears well-poised to embrace cutting-edge innovations and significantly expand its export footprint. However, achieving such aspirations hinges critically on addressing the foundational issue of API availability. Once this key gap is bridged, pharmaceutical manufacturers will find themselves in a far more advantageous position to scale up production, undertake R&D initiatives, and compete globally.

Thus the need to locally produce APIs is not just a matter of economic efficiency -- it is a strategic imperative. If the current momentum is sustained through effective policy implementation, investment, and infrastructural development, the pharmaceutical sector could very well become one of the cornerstones of the country's industrial economy.

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