Pharmaceutical Industry in Bangladesh
By: Andrew • Research Paper • 4,383 Words • June 6, 2010 • 4,623 Views
Pharmaceutical Industry in Bangladesh
1) PHARMACEUTICAL INDUSTRY ANALYSIS
1.1 Industry Background:
The total industry can broadly be classified into two categories. Theses are
a) Patent Medicines
b) Generic Medicines
Patent medicines are the products that are invented by the company, who have their own research team working on their own laboratories. These products are patented for many years to enjoy the monopoly market. After years of business the formulation is sold in the market so that others can go into mass production.
Generic medicines are the products that are produced in mass scale. These are marketed by several companies under different brand name, where the formulation of this product is almost same. Prices of the products are under this category are competitive. Bangladesh mainly concentrates on this category, as labor cost is one of the lowest in the world.
1.2 Growth & Trends:
The growth potential of pharmaceutical industry is enormous. As urban population is increasing and people are getting educated, they are now more concerned about healthcare. So the demands of medical products are rising. In Bangladesh unhygienic conditions and poor health maintenance plans provide vast scope for the pharmaceutical firms to sell their products. On the other hand, the constant natural disasters provide opportunities to pharmaceutical companies to boost its sales. The industry is growing the protection of national Drug Policy 1982. But after the GATT regulation, changes are bound to take place. Furthermore, the trend & growth of this industry tends to be positive as the demand of medicines is rising, which have mentioned earlier.
Bangladesh is prone to tropical diseases, and this leads to a high demand for pharmaceutical goods. Because of this and the poor health and hygiene situations, a steady growth in the pharmaceutical sector is possible. Demand is positively related to the changes in disposable income. Assuming that income per capita will continue to increase, it may be predicted that the demand for pharmaceuticals will also continue to rise.
Dhaka is the largest contributor, with nearly 35% market share. Chittagong and Sylhet follow with 26% market share each. Khulna has a much smaller share of 14%, but it has an immense growth potential because of the higher value sales per chemist.
Dhaka also has the highest per capita expenditure on drugs. Studies have shown that people in urban areas tend to consume more pharmaceutical products compared to people living in rural areas.
Urbanization is steadily increasing in Bangladesh, as more and more people move in from rural areas to live in Dhaka and the other cities. Because of the increased frequency in natural disasters, people prefer to live and work in cities other than in villages. This bears a direct impact on the volume of sales of the pharmaceutical companies. As more people are living in relatively developed areas, the demand for medicine is also rising. This provides a great opportunity for the companies to increase their sales.
1.4 Imported Raw Materials:
The risk for the sector is, basic chemicals that are used as raw materials, need to import for most of the cases. Large pharmaceutical companies like Beximco, Square and Gano Shastho have taken up ventures to produce basic chemicals, though they yield lower margin in spite of high demand. In order to remain healthy in the long run, the sector needs support from the government in production of basic chemicals. Highly regulated drug policy & price control mechanisms imposed by the government require that raw material components produced locally may not be imported. 90% of the raw materials are imported from different international suppliers through sight DC (L/C) and deferred DCs. Average stockholding period is 165 days. Trade cycle is 120 days if (sales: 95% on cash basis & 5% on 30 days credit basis and 80% of 90% imported RM are on deferred basis). Trade cycle 240 days if (sales 100% on 60 days credit and 90% import on sight basis); Trade cycle 156 days if (sales on 30-90 days credit and 70% import on DPC basis/30% on sight).
There is tremendous potential for the export of medicine from Bangladesh to become a growing, booming business. The pharmaceutical sector has a large potential market abroad. Drugs produced in the country commands high demand in the foreign markets as the sector maintains high