Pharma needs diverse financing to unlock full potential: experts

The banking sector alone cannot provide the billions of taka required as investments to reap all the pharmaceutical sector's potentials, for which a financing mix of equity, foreign direct investment, bonds, sukuk, and others is necessary, suggested analysts.

They were addressing an event titled "Capital Connect: PBIL- Industry Engagement Health & Pharmaceuticals Industry", organised by Prime Bank Investment Limited at Sheraton Dhaka in the capital's Banani on Monday.

Syed M Omar Tayub, managing director (MD) and chief executive officer (CEO) of Prime Bank Investment, said Bangladesh's pharmaceutical industry was rapidly growing, driven by strong domestic demand, policy support, and export potential.

Its annual market sales amount to roughly $3 billion, growing at around 10 percent per year and projected to exceed $9 billion by 2030, he said.

It has huge export potential, as sales abroad amount to only $205 million at present, whereas the world's pharma market is valued at $1.6 trillion, he added.

To grab the market, the industry in Bangladesh will need a lot of investment. However, solely depending on banks for financing is not viable. The interest rate is also high, said Tayub.

So, a financing mix can be the solution, including coupon bonds, zero-coupon bonds, convertible bonds, green bonds, and sukuk, he said.

However, most of the companies are going for traditional sources such as bank loans, which is raising their interest costs and worries over finance, he said.

The solution can come from Capital Connect, the investment bank's programme to engage industry leaders, access actionable insights, unlock high-potential investment access, and accelerate market readiness, said Tayub.

A poll was run among the event's participants, including finance officials from several non-listed drug companies.

Most reported that they preferred banks for meeting their financing needs, while bonds ranked second.

They also traced their lack of interest in getting listed and raising funds through issuing equity to strict regulatory compliance, dilution of ownership, costs of listing, and stock market volatility.

Officials of Prime Investment briefed them on several other investment products that could help pharmaceutical companies manage their funds efficiently.