The reported move by the government to encourage the country's pharmaceutical sector by providing generous tax holiday and cash incentive to producers of active pharmaceutical ingredients (API) is no doubt a step in the right direction. A draft API policy, designed to incentivise the sector in a meaningful way, is awaiting government's nod. The idea is obviously to boost production of drugs for domestic consumption as well as exports with lower production cost. In all likelihood, this will find the pharmaceutical manufacturers at ease to go for increased production, who are seriously constrained by the absence of APIs/raw materials locally, and thus compelled to import those at exorbitant costs. The industry currently imports 95 per cent of its raw materials. Because of its overwhelming reliance on imports, it is highly susceptible to external shocks, often unwarranted.
Sustaining a highly capital-intensive industry like that of the pharmaceuticals can only be expected to be viable in the long run if backed by smooth and affordable sourcing of raw materials. A great deal of the unrealised potential of the sector is often traced to the absence of ready-stock locally. It is here that the need for backward linkage is not only important but also a prerequisite for desired growth of the industry.
The policy environment for the country's generic drug manufacturing is chiefly characterised by patent waiver that makes Bangladesh a unique place for manufacturing drugs. The landmark decision, reached at the Nairobi Ministerial Conference of the World Trade Organisation (WTO), exempted Bangladesh like other least developed countries (LDCs), from fulfilling patenting requirements until at least 2033. This means for another 15 long years, the country's drug manufacturers are free to continue with manufacturing generic products without having to pay hefty licence fees to original patent holders. This, no doubt, is the most reassuring news for Bangladesh's pharma sector because although the WTO allowed blanket preferential treatment to all LDCs, none other than Bangladesh is a manufacturer of drugs. Certainly, the benefit is not just for the local manufacturers but also for foreign investors. It is highly likely that a proactive API policy would attract foreign investors who would be eager to gain fruitfully from the waiver.
For quite sometime, the country's pharmaceutical sector has been credited with commendable performance. Its pharma industry today produces medicines almost to the tune of self-sufficiency, meeting around 98 per cent of domestic demand. The current annual growth of the sector is estimated to be more than 24 per cent. There are 240-plus registered pharmaceutical companies in the country, and a good number of them are engaged in manufacturing APIs and a wide range of formulations covering major therapeutic categories. This being the broad scene, the industry is well set to embrace modern innovation and research on an extensive scale. For this to happen all that is required is the right push. The API policy, to be announced soon, will hopefully help the industry rise up to its expectations.