pharmaceutical market in Bangladesh remains tiny compared to the population size because of the lack of spending power of the population. Pharmaceutical spending is also amongst the lowest in the world in per capita terms. Healthcare expenditures consist of only 3.4% of GDP. However, the increased awareness of healthcare and the government’s increased expenditure in this sector is causing the demand to increase in this sector. In addition to the demand of therapeutic drugs, the demand for “wellness” drugs such as vitamins and minerals are increasing gradually and the future growth of the sector lies in it. Surprisingly, the pharmaceutical sector, which is widely regarded as a “hi-tech” industry, is the most developed among the manufacturing industries in Bangladesh. Roughly 250 companies are operating in the market. According to IMS, a US-based market research firm, the retail market size is estimated to be around BDT 55 billion, which grew by 16.8% in 2009. The market size in 2008 was BDT 47 billion with a growth of 6.9%. The actual size of the market may vary slightly since IMS does not include the rural market in their survey. However, the deviation is estimated to be not more than 5-10% in either direction. Unfortunately, there is no solid information source in Bangladesh other than IMS. The retail market is about 90% of the total market. In that respect, the total market size is more than BDT 60 billion. Table 1: Health expenditure as a % of GDP
Total expenditure on health as % of GDP
2010 2011 UK 7.0 8.4
USA 13.4 15.7
Japan 7.7 8.0
India 4.4 4.1
Sri Lanka 3.7 4.2
Pakistan 3.0 2.7
Malaysia 3.2 4.4
Thailand 3.4 3.7
Indonesia 2.0 2.2
Bangladesh 2.7 3.4
Source: World Health Statistics 2011.
Table 2: Pharmaceutical sector growth rate
Year Growth Rate
Source: Bangladesh Association of Pharmaceutical Industries (BAPI)
One of the fastest growing sectors with an annual average growth rate consistently in the double digits, Bangladesh’s pharmaceutical industry contributes almost 1% of GDP. It is the third largest tax paying industry in the country. Bangladeshi pharmaceutical firms focus primarily on branded generic final formulations using imported APIs (Active Pharmaceutical Ingredients). Branded generics are a category of drugs including prescription products that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name. This definition is used by both the FDA and the United Kingdom's National Health Service (NHS). About 80% of the drugs sold in Bangladesh are generics and 20% are patented drugs. The country manufactures about 450 generic drugs for 5,300 registered brands which have 8,300 different forms of dosages and strengths. These include a wide range of products from anti-ulcerants, flouroquinolones, anti-rheumatic non-steroid drugs, non-narcotic analgesics, antihistamines, and oral anti-diabetic drugs. Some larger firms are also starting to produce anti-cancer and anti-retroviral drugs.
Strengths and weaknesses of the pharmaceutical sector in Bangladesh
Although the sector has a long way to go, the reasons we are optimistic about the sector can be summarized in Figure 1. We believe that the strengths outweigh the weaknesses.
Figure 1: Strengths and weaknesses of the pharmaceutical sector in Bangladesh
Growth potential of the domestic drug market
In order to get a sense of what might potentially be the size of the drug market let us consider a simple model. Here we assume that the economy will have an average GDP growth of 6%. The economy will witness an uptrend in healthcare...