Pharma firms take to contract manufacturing

Domestic pharmaceutical companies including Square Pharmaceuticals and Eskayef Bangladesh Ltd have slowly made inroads into the lucrative business of contract manufacturing of bulk drugs and formulations for global clients. At least four top companies are eyeing exports of about $10 million this year through contract manufacturing deals with European pharma majors.
Low labour and power costs, depreciation of the US dollar against most currencies and comparative advantages for Bangladesh under the WTO's agreement on Trade-Related Aspects of Intellectual Property Rights have inspired many global pharma giants to set up their contract manufacturing base in the country, industry experts said.
Eskayef Bangladesh Ltd, a leading pharma company, has signed agreements with two UK-based companies to manufacture their brands of cardiac, diabetic and hormone products. The company is also negotiating contract manufacturing deals with a German and a Dutch company.
“We are expecting that our overall export will reach around $5 million with the new deals of contract manufacturing this year. Last year, our exports were to the tune of $1 million,” A.M. Faruque, Managing Director, Eskayef Bangladesh, said. Inspectors from the UK have already visited the company's state-of-the-art technology plant. "We are hopeful, our plant will get the MHRA accreditation very soon," he added. The UK's Medicines and Healthcare Products Regulatory Agency (MHRA) is one of the toughest registration processes for pharmaceutical products in the world.
Square Pharmaceuticals Ltd., the market-leader in Bangladesh, executed contract manufacturing deals worth $ 1.5 million with two British companies last year. It was the first company to receive the MHRA accreditation in May 2007. “We are negotiating with some European countries and are hopeful we will get some new contracts after completion of the inspection procedures,” Parvez Hashim, Executive Director, Square Pharmaceuticals said.
Hashim, however, declined to disclose the names of the British companies Square had received work orders from given the price sensitiveness. “The order size may not be big, what is more significant is the fact that by bagging contract manufacturing deals, Bangladesh is now in the map of the mainline pharmaceutical industries,” he said.
The company exported products worth $2.75 million in the previous fiscal but projects exports to more than double this year.
Another fast growing company Incepta Pharmaceuticals has also got manufacturing contracts from a German company and has initiated negotiations with two other German firms.“We will supply diabetic and hypertension products to the German company and we are hopeful that our annual export through contract manufacturing will cross $2 million in 2008,” Abdul Muktadir, Managing Director, Incepta Pharmaceuticals said. The company has received accreditation from The European Medicines Agency (EMEA) that helps it get manufacturing contracts from European countries. It already has a GMP (Good Manufacturing Practices) Certificate of Europe.
Pharmaceuticals manufacturing opportunities in Bangladesh are brighter than ever because of the country's Least Developed Country (LDC) status until 2016, Beximco Chief Executive Officer Nazmul Hasan said. “This is a win-win situation for both Bangladesh and foreign pharmaceutical or investment companies because investors/companies will get high return on their investment and this will create high paid jobs in Bangladesh," he added.
The cost of medicines has increased in China and India since they entered the WTO. Bangladesh has a unique opportunity to pare the costs of manufacturing medicines due to the low-cost high-qualified manpower and its LDC status.