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Pharmaceutical Industry of
Bangladesh:
Prospects and Challenges
Nazneen Ahmed, Kazi Iqbal, Rizwana Islam, Nahid Ferdous Pabon
Objectives of the study
To understand the current status of the pharmaceuticals industry of Bangladesh in terms of production, export, employment, marketing strategies.
To identify challenges faced by this industry
To understand strength and opportunities
Necessary definitions
Branded generic drugs: produced by a firm by using formula developed by others
Patented drugs: originally developed by the firm itself
Essential drugs: satisfy the priority health care needs (by the WHO) of the population. 400+ medicines. (285 in Bangladesh)
Pharmaceutical Industry of Bangladesh
Market size: $2211 million in 2017 ($1105
million in 2012)
Contribution to GDP: 1.87% (2017)
Meets 97% of domestic demand, exports the
rest
273 registered companies, 217 in operation
Top 10 firms occupies almost 70% of the
market share.
80% generic drugs and 20% patent drugs.Exports to more than 100 countries (e.g USA,
UK, Australia and Africa)
Export volume: $104 million in 2017 ($70
million in 2013)
Depends heavily on imported raw materials
Pharmaceutical Products in Bangladesh
Source: Directorate General of drug administration
Growth of the Pharmaceutical Products
Top 10 Pharmaceutical Industries in Bangladesh
All the top 10 companies are local and they have approx. 70% market share.
Leading companies have major approvals (US FDA, EU GMP, UK MHRA, TGA Australia, ANVISA Brazil etc.)
No MNCs among the top 10.
Main PoliciesPolicy Name Year Purpose Recommendations
Drugs Act 1940 This act was introduced to regulate the
import, export, manufacture, distribution
and sale of standard quality of drugs.
-----------------------------------------
The Drugs
(Control)
Ordinance
1982 The purpose of this ordinance is to control
manufacture, import, distribution and sale
of drugs. To provide administrative and legislative support for ensuring quality of
essential drugs which are relevant to the national health need.
To reduce the price of medicine by ensuring the lowest competitive price.
To eliminate non-essential medicine from the market.
To promote production of local drug and raw materials.
To develop proper drug monitoring and information system to prevent
wasteful misuse and to ensure the proper utilization of the drugs. .
National Drug
Policy
2005 The purpose of this policy is to ensure
adequate supply and availability of good
quality of essential drugs at affordable
prices.
To ensure that the common people have easy access to useful, effective, safe
and good quality essential and other drugs at affordable prices.
National Drug
Policy
2016 well-defined directives for drug safety,
efficacy, rational use, effective drug control
management, production, marketing,
distribution, storage and import-export.
To ensure people can have easy access to safe, effective and good quality
drugs at affordable prices.
To ensure rational and safe use of drugs and proper dispensing.
To achieve self-sufficiency in the manufacture of drugs and raw materials by
providing services and facilities on a priority basis to all local drug
manufacturing industries.
To expand the export of drugs that manufactured in the country.
To establish effective surveillance system of medicines.
Methodology of Sample Survey
Sample frame: 164 firms, members of Bangladesh Aushad ShilpaSamity
35 firms were initially selected purposively keeping the market share and location in mind
26 out of 35 took part in the questionnaire survey
KIIs with industry experts
Survey of Medical Representatives (25 randomly selected)
Summary of the sample
26 firms: Dhaka (22), Chattogram (2), in Barisal (2)
Private ownership: 25, Joint (Domestic + Foreign):1
Years taken to start production: 2.07
Factories per firm: 1.36
Value of fixed asset: 375 crore Taka
Summary of the sample..
Moderately large (10): annual turnover <25 crore taka (<40th percentile)
Large firms (9): annual turnover 25 crore-1200 (40th to 74th percentile)
Very large firms (7): annual turnover above 1200 crore (above 74th percentile)
Production
Type of firm
Number of
Branded
Generic
medicine
Number
of
patented
medicine
Essential Medicine
(Total listed in
Bangladesh is 285)
Moderately large firms 115 0 27
Large firms 172 0 61
Very large firms 1008 0 81
All firms 375 0 53
Value of fixed asset (Crore taka)
Type of firm Mean Min Max
Moderately large firms115.3 0.4 774.4
Large firms172.0 11.7 584.2
Very large firms1008.1 84.8 2564.5
All firms 375.3 0.4 2564.5
Turnover and Profit
YearMean annual turnover
(million taka)
Mean annual profit
(million taka)
Profit (% of
turnover)
2014 6620 552.7 8.35
2015 7460 677.3 9.08
2016 6821 629.4 9.23
2017 7100 683.7 9.63
2018 10980 994.7 9.06
Raw Materials (RM): Share of different Sources (%)
Year Domestic RM Foreign RM
(imported)
Foreign RM (from
local suppliers)
Total
2014 21.2 65.4 13.4 100
2015 19.9 67.1 13.0 100
2016 20.2 67.6 12.2 100
2017 19.3 67.4 13.3 100
2018 20.2 65.6 14.2 100
Raw Materials: Import (top 5)
Rank Country No. of sample farms
imported
RM from this country
% of total import
from this country
1 China 25 47
2 India 25 34
3 Germany 13 5
4 France 9 4
4 Italy 9 2
4 Korea 9 6
Export
Export of Pharmaceutical products from Bangladesh
Export: Top 10 destinations of the sample firms
RankCountry
No. of sample firms
exporting to the country
% of Export to the
country
1 Sri Lanka 13 12
2 Myanmar 11 10
3 Afghanistan 10 9
4 Vietnam 9 8
5 Kenya 8 7
5 Cambodia 8 7
6 Philippines 7 7
7 United Kingdom 3 3
8 South Africa 2 2
9 Indonesia 1 1
General chain of a drug
Discovery:2-10 Years
Pre-Clinical:Laboratory and Animal Testing for additional
1-3 years
Clinical Trials: Phase 1: 20-80 healthy patients used to
determine safety and dosage
Phase 2: 100-300 volunteers used to look for efficacy and
side effects
Phase 3: 1000-5000 patient volunteers used to monitor
adverse reaction to long term use
Phase 4: FDA Review/Approval
Phase 5: Additional Post Marketing Testing
Launch of Drugs
Commercial Distribution
Employment In Pharmaceutical Sector
Employment category Gender Employed
persons
Employed
persons
Number Share (%)
Administrative &
managerial
Male 7,427 94.26
Female
452 5.74
Clerical & sales workers Male 22,398 94.80
Female1,228 5.20
Production & related
workers
Male 27,278 79.95
Female6,841 20.05
Working
owner/proprietor/partner
Male 354 89.62
Female41 10.38
Temporary laborer Male 3,886 72.68
Female 1,461 27.32
Total
Male 61343 85.96
Female 10023 14.04
Employment Cost by Category and Sex
Source: SMI 2012
Employment in sample firmsPosition % of total employment
Pharmacist 4
Chemist 2
Biochemist 1
Other Technical 6
Administrative 5
Sales Representatives 19
Medical Representatives 46
Production Related (Non-Technical) 17
Others (Drivers, Office Assistants, Guard etc.) 1
Total 100
Employment: Gender perspectivePosition Male (%) Female (%)
Pharmacist 75.5 24.5
Chemist 86.0 14.0
Biochemist 76.9 23.1
Other Technical 80.6 19.4
Administrative 75.2 24.8
Sales Representatives 67.9 32.1
Medical Representatives 98.9 1.1
Production Related (Non-Technical) 78.4 21.6
Others (Drivers, Office Assistants, Guard
etc.)100 0.0
Total 86.1 13.9
Skill
Average level of skills in a scale of 1 to 10 (perception by the employer)
Position Male Female
Pharmacist 8.8 8.7
Chemist 8.5 7.9
Biochemist 8.3 8.3
Other Technical Employees 8.4 7.8
Administrative Employees 8.2 7.8
Sales Representatives 7.6 7.7
Medical Representatives 7.8 7.5
Production Related (Non-Technical) 7.4 7.2
Others (Drivers, Office Assistants, Guard etc.) 7.3 7.3
Marketing
Where do the pharmaceutical companies sell in the domestic market?
Major Buyers of
Medicines
No. of Observations (all
26 Companies)
% (out of 26 Companies)
Private Pharmacies 25 96.15
Private Hospital 19 73.08
Doctors (Hospitals &
Programs)
12 46.15
NGOs 6 23.08
Donor Agency 6 23.08
Others 10 38.46
Marketing: Major StrategiesMajor Advertising Strategies % of responses
Reach doctors through MRs 36.92
Reach pharmacies through MRs 18.46
Company to hospital contract 12.31
Tender 9.23
Campaigning in different organizations 7.69
Company to doctor contract 6.15
Advertisements (TVs, magazines, posters,
leaflets, social media etc.)
4.62
Others 4.62
Marketing: Expenditure by the sample firms
Year Expenditure (% of annual turnover)
2014 28.45
2015 28.89
2016 27.51
2017 28.55
2018 29.36
Marketing Strategies of the Medical Representatives (MRs)
MRs report to the Area Manager (AM)
Targets:
a) Amount of sales
b) Number of photograph of prescription paper (send to the AM through Messenger/WhatsApp)
How do MRs influence doctors?
a) Brief doctors about the superiority of the drug
b) Gifts to doctors in different forms
Price of medicine
Pricing: Top 5 Determinants
Rank Determinants % of responses
1 value of imported raw 29.33
2 government policy 24
3 product quality 14.67
4 domestic market competition 13.33
5 marketing cost 10.67
Pricing: VariationType of firm Unit price
Azithromycin 500mg tablet
Moderately large firms 25.43
Large firms 26.55
Very large firms 28.32
Omeprazole 20 mg capsule
Moderately large firms 3.77
Large firms 3.07
Very large firms 3
Ciprofloxacin 500 mg tablet
Moderately large firms 9.93
Large firms 7.67
Very large firms 11.62
Capacity utilization rate
Capacity utilization rate: Year 2018
Type of firm Mean
Moderately large firms42.8
Large firms46.2
Very large firms36.5
Technological changes in last 5 yearsCases Total
Cases=25
% Comment
New Machine Bought in the Last 5
years
24 96 24 (96%) out of 26 firms answered in the affirmative
that they bought new machines in the last 5 years. One
of the firms didn’t respond to the question.No New Machines Bought in the last
5 years
1 4
Total
Cases=24
%
New Machines replacing the older
ones
7 29.17 From all the 24 firms buying new machines, 17 (71%)
firms did so to add new method in the production
process and the remaining 7 (29%) firms did that to
replace the older ones in their places.
New Machines adding New Method
of Production
17 70.83
Total
Cases=14
%
New Machines Replacing the older
ones Completely
6 42.86 Out of all the 24 firms buying new machines, 14 firms
replied to the question asked about to what extent did
the new machines replace the older ones and among
them 43% claimed complete replacement and 57%
claimed to have got partial replacement of the
machines.
New Machines Replacing the older
ones Partially
8 57.14
Strength-Weakness-Opportunities-Threat (SWOT) analysis
SWOT analysis: Strength
Rank Strength % of responses
1 Product quality is good 19.38
2 Long experience 13.95
2 Demand will not fall 13.95
3 Current reputation of the company 13.18
4 Skilled worker 12.40
SWOT analysis: Weakness
Rank Weakness % of responses
1 Lack of capital 17.92
2 Limited marketing opportunities 16.98
3 Gas related problems 16.04
4 Electricity related problems 10.38
5 Lack of skilled worker 9.43
Export: Major problems faced
Rank Problems related to Export % of Responses
1 Bureaucratic Complexity 19.74
2 Importers' Quality Control Policy 15.79
3 Policy of the country's importers 10.53
4 Tax, VAT is More 9.21
4 Customs Issues 9.21
SWOT analysis: Future Opportunity
Rank Opportunity % of responses
1 Raw materials will be more available 12.7
2 Loan with low interest will be available 10.32
2 Foreign markets will expand 10.32
3 Gas related problems will be resolved 8.73
4 Infrastructure will be developed 7.94
4 taxes, levy etc. will be reduced 7.94
SWOT analysis: Future Threat
Rank Threat % of responses
1 LDC graduation and TRIPS obligations 12.7
1 Lack of raw materials 12.7
2 Amount of taxes, levy etc. may increase 11.11
3 Lack of adequate finance 9.52
3 Government policies and institutions 9.52
Thank you
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