Currently, we need raw materials worth $700 million, which will come down to $200 million after 2024. On the other hand, our export income will be more than $1 billion
During that time, our turnover decreased slightly but the production, marketing and operating costs also dropped by a lot. Furthermore, the government provided various benefits to the industry, including the relaxation of loan repayment rules. As a result, the pharmaceutical companies of the country did not suffer losses.
However, we started facing problems from the beginning of 2021 as the production cost started increasing due to various reasons, including raw material price hikes and increase in freight charges and transportation costs. But medicine sales and prices in the domestic market did not rise compared to that. Still, that did not hurt us much as exports increased.
In 2021, pharmaceutical exports of the country achieved an 11.7% growth. In 2022, the whole world faced a difficult situation with raw material shortages, transport cost hikes and a dollar crisis. As a result, the industry plunged into a crisis. During this period, we became dependent on diesel due to gas shortages. As a result, the primary energy costs increased up to 100%. The import cost has also increased by 25%. However, we have only increased drug prices by an average of 4%.
The reason for not increasing the medicine prices, despite a rise in the production cost, is that we have considered the purchasing power of people in our country.
Market competition is also another cause. We did not morally support the increase in the medicine price in the country as a whole. However, it created a problem in the cash flow and overall profitability of the pharmaceutical companies.
Hopefully, the dollar crisis is now stabilising a little as the Bangladesh Bank has set some rules and regulations. The freight charges are also coming down and the oil market is also becoming normal. Purchasing raw materials is also becoming easier. As a result, we may overcome the crisis in one year.
One of our major possibilities is in export and the pharmaceutical industry of Bangladesh is preparing for this for a long time. Approximately 20 to 22 companies in the sector are spending a lot of money on research and development to boost exports.
The local companies are trying hard to manufacture raw materials at competitive prices. Many companies have already been successful in producing Active Pharmaceutical Ingredients (API) for some products. Incepta can also produce APIs for many products.
In today’s competitive world, the price of medicines is an important factor besides quality. People of Bangladesh now get medicines at a much lower price than in any other country. We are trying to produce raw materials at a lower price than the other companies in the world.
Once we start preparing and marketing APIs, the country’s pharmaceutical industry will reach a different level. We will probably be able to export drugs abroad with our APIs from 2024. It will also reduce our dependence on imports.
Currently, we need raw materials worth $700 million, which will come down to $200 million after 2024. On the other hand, our export income will be more than $1 billion and it will make the pharmaceutical industry a dollar-surplus industry.
Currently, India is the top supplier of raw materials for the pharmaceutical industry. But the country is raising prices slowly. It will create an opportunity for us. We want to enter the international market as a low-cost manufacturer.
We are now meeting 98% of local demand for medicines. After 2024, we will continue to advance in the same way in the international market. After five years, our pharmaceutical industry will enter a different level. We have to start factories and sales centres outside the country to conquer the global market. For this expansion, our government needs to be a little more liberal in terms of providing policy support.
There are strict regulations and restrictions in importing various raw materials, including formalin and acid. Chemicals which are classified as narcotics are subject to more stringent import restrictions. We demand a separate policy for imports in the case of the pharmaceutical industry. Laws should be made to remove the complexities in importing our raw materials.
Besides, the government has to take some policy decisions including leaving the dollar price dependent on the market, reducing the energy and electricity prices, and reducing subsidies.
While everyone is excited about the prospects of our pharmaceutical industry, some are also concerned about the challenges in the post-TRIPS (Agreement on Trade-Related Aspects of Intellectual Property Rights) era.
In this case, the hope is that the patents of most of the products we are exporting now have already expired. As a result, there is nothing to worry about their patents in the post-TRIPS era. However, our concern is about the affordability of medicines in the country.
There is a concern about whether people will get generic medicines at low prices or not. A big initiative has also been started in this regard. The drug administration is providing the necessary legal support in this case. The government is also taking initiatives concerning the infrastructure needed for patents. We are setting up our own API Park. We have also started the kind of preparation we need as producers to face the post-TRIP challenge.
We are taking preparations so that our medicines do not have a big price gap. We will be able to provide many medicines at affordable prices until Bangladesh becomes a developed country in 2041. As a result, even if Bangladesh achieves LDC graduation in 2026, there will be no problem in our pharmaceutical industry.
After the advent of the Covid-19 pandemic in 2020, there have been a lot of discussions about vaccines. Everyone criticised our ability. But the World Health Organization (WHO) has taken an initiative by creating a platform with 14 companies in the world. Incepta has been selected by the WHO as part of this platform.
As a result, if a pandemic occurs in the future or a new vaccine is developed, we will be able to produce it. We will manufacture it using the WHO’s technology and the organisation will conduct clinical trials of our vaccines.
Incepta has installed such technologies for vaccine production that are available in very few countries. We will not face any problems manufacturing vaccines in case of any future pandemic. We will be able to start production as soon as we get the patent.
The author is the chairman and managing director of Incepta Pharmaceuticals