THE pharmaceutical industry in Bangladesh has undergone an impressive transformation. The journey from being led by multinational companies to now local firms meeting 98 per cent of the domestic demand is nothing short of commendable. Along with being the largest white-collar employer in the country, it contributes 1.83 per cent to the national gross domestic product, proving itself a star of the economy. The industry contributes to strengthening the country鈥檚 finances by being the second-largest taxpayer and making exports to 147 destinations worldwide.
While known for both pure and branded generics production, the industry鈥檚 export strength mainly lies in pure generics. The value of the international generic market exceeds the mark of $400 billion. Thus, capturing even 1 per cent of this global industry giant can boost Bangladesh鈥檚 pharmaceutical export earnings to a staggering $4 billion, which can prove to be the green ticket to export diversification. According to data from the Export Promotion Bureau, the total pharmaceutical export earnings in the 2022鈥�23 financial year for Bangladesh was $175.42 million.
听Beneath all this glitter, a few apprehensions stain the narrative. Around two-thirds of Bangladesh鈥檚 average healthcare expenditure, especially medicines, is financed through out-of-pocket sources, far exceeding the global norm. Despite the price of drugs in Bangladesh being at the globally lowest margin, one-fifth of the population remains unable to afford them.
To make matters worse, Bangladesh is set to graduate from its least developed country status in 2026, losing the Trade-Related Aspects of Intellectual Property Rights, TRIPS, waiver at the end of the transition period. As a benefit of this exemption, the country has so far been allowed to locally produce generic versions of branded medicines without the potential penalties of patent infringement. Its expiry will put the affordability of locally produced medicines under a more severe strain. For example, in India, firms started selling medicines for certain diseases at high and unaffordable prices once they started complying with the international patent laws being faced by TRIPS waiver expiry. It is safe to assume that Bangladesh will follow suit.
Bangladesh is heavily import-reliant for its sourcing of active pharmaceutical ingredients, API. More than 90 per cent of its active pharmaceutical ingredients are primarily obtained from countries like India and China. This overdependence is a significant concern in the post-TRIPS regime, as it makes the industry susceptible to supply chain disruptions and price fluctuations. API affordability and availability no longer being in a favourable spot will result in hampering the local production process of medicines.
Furthermore, the generic domestic industry, which has so far been vital to Bangladesh鈥檚 pharmaceutical growth, will no longer be able to flourish due to adherence to international patent laws. The prevention of manufacturing generic drugs inside the country鈥檚 borders may lead to low competition, high prices, and the potential establishment of a multinational corporation鈥檚 monopoly. All these will greatly endanger the prospects of affordable medication, which is a priority for Bangladesh.
Among all these complications, Bangladesh鈥檚 current account balance will take a substantial blow. The added export potency that came as a byproduct of the TRIPS waiver has remarkably bolstered the country鈥檚 current account balance so far. With the impending TRIPS waiver expiry, things are about to take a drastic turn.
Losing the liberty to produce generic versions of branded medicine will significantly reduce the country鈥檚 export competitiveness in the global market. The potential loss of pharmaceutical export earnings will put Bangladesh鈥檚 current account balance under serious threat. If the country wants to avoid such a fate, replicating India鈥檚 case of shifting focus to exporting non-patented drugs can help.
Due to international patent law compliance, the local firms鈥� ability to meet the domestic demand for medicines will also be under threat. Bangladesh will be forced to increase its import dependence, further exacerbating the strain on the current account balance. This will have a series of repercussions. Firstly, a wider current account deficit would devalue the taka, making imports costlier. Such foreign exchange volatility exposes weak macroeconomic fundamentals. Secondly, the prices of goods may go up, bringing forth inflation. As a result, foreign investors will likely start losing confidence in Bangladesh鈥檚 financial stability, resulting in a range of negative developments, including reduced foreign investment and increased capital flight.
To work around these complexities, Bangladesh must adopt a set of comprehensive strategies. First and foremost, the country needs to put its focus on producing its own active pharmaceutical ingredients. India and China鈥檚 success in establishing API industrial parks could be a great model to replicate in Bangladesh. This will immensely help reduce the reliance on imports. Preparations are continuing to make such a park operational in Gazaria, Munshiganj.
Secondly, a universal health coverage policy that includes the costs of medicines could be quite beneficial to the entire population. The implementation of it would greatly help facilitate newer and more efficacious medicines. Similarly, a notable effort at corruption mitigation needs to be made. The utilisation of a digital government resource planner and enterprise resource planning programmes could be excellent means of asserting surveillance and control over corruption in pharmaceutical supply.
Last but not least, cultivating a robust culture of research and development is the key to fostering long-term prosperity and autonomy in this sector. A collaborative atmosphere between universities and private firms is crucial to driving innovation and the creation of new medicines. By heavily investing in research and development, Bangladesh will unlock the potential of devising its own patented medicines, decreasing its reliance on imported pharmaceuticals. To conclude, the impending TRIPS waiver expiry poses challenges, but it can offer growth opportunities if dealt with effectively and with intellect and integrity.
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Imranul Ahsan Moonim and Sana Nawab are bachelor鈥檚 students of economics and social sciences in BRAC University.
