Govt looks to ramp up API production for burgeoning pharma sector
Bangladesh, a laggard in the production of raw materials for the $3 billion pharmaceuticals industry, has made a four-fold jump in the manufacturing of active pharmaceutical ingredient (API) in the last decade to meet growing demand.
But the current API production is still minuscule as the country needs to import $1.3 billion worth of raw materials every year for the pharmaceuticals sector.
Drug-makers have to step up efforts to make more raw materials locally as the over-reliance on the imports is not viable because the supply chain could face disruption and the price may witness volatility, said industry people.
Besides, it would not allow pharmaceutical companies to bring down the cost of raw materials and thus, the price of medicines.
Although the API production has not grown in keeping with the pharmaceutical sector, local companies have been producing high-quality raw materials on a limited scale, helping the drug industry add value to their products.
Ten local companies, including Eskayef, Square, Beacon and Beximco, produce APIs, said SM Shafiuzzaman, secretary-general of the Bangladesh Association of Pharmaceutical Industries (BAPI), which represents about 250 local drug makers.
"Local production can at best meet 10 to 15 per cent of the annual demand for the raw materials from the pharmaceutical sector," he said.
The government is setting up an API industrial park in Munshiganj to fill the void, cut reliance on foreign markets and save foreign currency.
The park has been developed on 200 acres of land in the adjoining Dhaka-Chattogram Highway under Gazaria upazila at the cost of Tk 330 crore. It took around 12 years to build the estate after the government undertook the project in 2008.
"If the API park can become fully functional, it would cater to 50 to 60 per cent of the demand," Shafiuzzaman said, adding that Bangladesh would not be able to manufacture all the APIs due to patent issues.
The country imports APIs mainly from China and India.
Local API production can give Bangladesh two advantages. First, it will decrease the cost of locally manufactured drugs and add to the cost advantage in exports.
Second, APIs can be exported too. The global API market size is worth $135 billion. "So, there is a huge investment opportunity," Shafiuzzaman said.
Pharmaceuticals companies currently produce APIs worth Tk 1,950 crore, up from about Tk 500 crore a decade ago, according to Monjurul Alam, director for global business development at Beacon Pharmaceuticals.
"There is a huge potential for investment in API manufacturing," he said.
If APIs are produced in sufficient quantities, local companies will be able to purchase those immediately, which will reduce the lead time of production as well, said Alam.
The BSCIC allotted 40 plots to investors. But work for establishing manufacturing facilities are currently ongoing for only five companies.
It remains to be known when all of the investors will be able to start setting up their facilities amidst the economic slowdown brought about by the pandemic.
This is because the Bangladesh Small and Cottage Industries Corporation (BSCIC) does not hand over no-objection certificates if payments against plots are due, said Shafiuzzaman, the association secretary-general.
Without the certificates, banks will not provide the loans medium and small companies need to set up the facilities, he said.
As a result, only the big investors will be able to start manufacturing operations, Shafiuzzaman said.
All the major pharmaceuticals companies, including Eskayef, Square, Incepta, Globe, Opsonin and Beximco, took plots at the API park.
"The plots are ready for API facilities to be set up as the BSCIC has put in place all utility services," said Md Mostaaq Hasan, chairman of the BSCIC.
The corporation is hoping to create 25,000 jobs directly at the API Park once all the investors go into operation. At least Tk 2,000 crore will be invested in the park, he said.
The owners of the plots could have started the construction a long time back, but the emergence of Covid-19 delayed the infrastructure development, he said.
As per allotment conditions, the plot owners will have to start operations within a year.
Hasan acknowledged that investors might not be able to begin the production within the stipulated time because of the delay caused by the pandemic.
"We hope Bangladesh would be almost self-sufficient in API production within three years. This will cut our reliance on imports to a large extent," said Abdul Muktadir, chairman and managing director of Incepta Pharmaceuticals.
Incepta is setting up an API factory in Dhamrai and another in the API Park in Munshiganj.
"We will be able to start the API production by two years," he told The Daily Star.
He said all the companies were competing in the same markets. So, if one company does not have its own API and instead buys it from other companies, it would fall behind on incurring higher production cost.
Five companies have already started establishing manufacturing facilities.
Among them are Acme Laboratories, UniMed UniHealth Pharmaceuticals, Healthcare Pharmaceuticals and IBN Sina Pharmaceutical Industry, said Parvez Ataur Rahman, project director of the API Park.
He expects the companies to be able to start operations by next year.
Muhammad Halimuzzaman, deputy managing director and chief executive officer of Healthcare Pharmaceuticals, said their facility at the API Park was about to be ready and the company plans to go for trial operations soon.
Healthcare Pharmaceuticals will be the first company to start operations, he said.
Mizanur Rahman Sinha, managing director of Acme Laboratories, said the pandemic had delayed their development work.
"We will open letters of credit to import equipment early next year."
Md Ayub Hossain, deputy director of the Directorate General of Drug Administration, said the pharmaceuticals companies do not need separate licences to manufacture APIs as it is part of the drugs.
All necessary equipment to set up a central effluent treatment plant have reached the site.
The investors are paying around Tk 100 crore to set it up through the government, which awarded the work to Indian company Ramky Environment Services.