BANGLADESH鈥橲 pharmaceutical sector has experienced remarkable growth over the past few decades, transforming from a largely import-dependent industry to a thriving sector that meets most of the domestic demand for medicines. The sector is characterised by intense competition among local players, with a mix of large and small manufacturers operating in the market, transforming Bangladesh into one of the leading pharmaceutical markets in South Asia.
Bangladesh produces medicines to meet around 97 per cent of its domestic demand, with local manufacturers supplying a wide range of essential and non-essential drugs. Furthermore, the sector has been increasingly export-oriented, with Bangladeshi pharmaceutical proucts being shipped to more than 150 countries, including regulated markets such as the United States and Europe.
The growth of Bangladesh鈥檚 pharmaceutical sector can be attributed to several policy measures, including the National Drug Policy, the Drugs Control Ordinance 1982 and the patent exemption. While the national policy helped to build domestic manufacturing capacity in the pharmaceutical sector, Bangladesh鈥檚 status as a developing nation granted it a period of patent exemption under the British Patents and Design Act 1911, allowing domestic firms to produce generic versions of patented drugs at reduced costs. Other policy measures that contributed to the growth of this sector include tax incentives and holidays, import duty exemption, research and development support, value-added tax waiver, foreign currency assistance and National Active Pharmaceutical Ingredients and Laboratory Reagents Production and Export Policy introduced in 2018 to encourage API production and provides incentives such as cash incentives for producers who add value to their products.
Bangladesh鈥檚 graduation from the least developed country status in 2026 will significantly hurt this growing industry compared with the apparel sector for several reasons. As a result of this graduation, Bangladesh will lose the Trade-Related Aspects of Intellectual Property Rights transition period, which allowed the country to produce generic versions of patented medicines. This may lead to increased competition from multinational companies and potential loss of market share for local manufacturers. The apparel sector is not heavily reliant on intellectual property protection. While both he sectors are export-oriented, the pharmaceutical sector鈥檚 export may be more vulnerable to changes in international trade agreements and patent laws and may face increased competition from multinational companies, potentially leading to reduced market share and profitability.
The graduation will require Bangladesh to comply with stricter regulatory standards, including good manufacturing practices and good distribution practices. This may necessitate investments in infrastructure and quality control, which will add additional burden to the export-oriented pharmaceutical industry, as the country will no longer be eligible for preferential treatment under certain trade agreements. Furthermore, local manufacturers may face increased competition from multinational companies, potentially leading to market share loss and reduced profitability.
In order to mitigate risks to the pharmaceutical sector associated with the LDC graduation, Bangladesh needs to strengthen its regulatory framework to ensure compliance with international standards, including good manufacturing practices and good distribution practices. The local manufacturers also need to invest in research and development to develop products and stay competitive. This increased investment should be combined with training and capacity-building programmes for local manufacturers to enhance their competitiveness and compliance with international standards. Finally, the government needs to negotiate favourable trade agreements with other countries to maintain preferential market access for Bangladeshi pharmaceutical products.
In conclusion, graduation from the LDC status presents both challenges and opportunities for the pharmaceutical sector in Bangladesh. By strengthening the regulatory framework, investing in research and development and negotiating favourable trade agreements, Bangladesh can mitigate the negative impact and capitalise on the opportunities arising from graduation.
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Dr Ziauddin Hyder is an adviser to the Bangladesh Nationalist Party chairperson and former senior health and nutrition specialist, World Bank Group.
