The pharmaceutical industry of the country is going to make a giant stride as local companies are setting up factories in a dedicated park near Dhaka to produce active pharmaceutical ingredients (APIs) to reduce dependence on import for key raw materials for drugs.

At least five companies including Acme, Healthcare, UniHealth and Ibn Sina have started setting up factories in Munshiganj's Gazaria API Park and a dozen more companies including Square, Beximco, and Opsonin are going to do the same soon. Some of the companies said they would start production from the beginning of next year.

API Industrial Park Project Director Syed Shahidul Islam told that 27 companies have taken allotment of plots with an expected investment of Tk3,000 crore. Acme and Healthcare have made considerable progress on their API facilities and they plan to start production in 2022.

Creation of specialised zones, 10-year tax holiday offer and formation of a national API policy are among the supports the industry finds encouraging for local production of key drug ingredients.  

Experts say that the innovative production of API by the local pharmas would help keep this booming Tk27,000 crore sector on track in future.

According to the Bangladesh Association of Pharmaceutical Industries (Bapi), at present, local companies can produce only 3% of the total demand for central ingredients of drugs and import the remaining 97% from various countries.

Active pharmaceutical ingredients (API) are the main components of medicines. Inventors of such ingredients usually patent them to retain intellectual property rights. Any drug manufacturer that wants to produce medicines using that API must pay a royalty fee to the inventor.

Bangladesh does not have to pay any royalty or fee for the use of foreign patents in medicine production as the World Trade Organisation's Trade Intellectual Property (TRIPS) Agreement gives the country the right to do so as a least developed nation.

Experts say that after five years, when Bangladesh leaves the LDC title in 2026, the TRIPS facility will no longer be applicable. As a result, the pharmaceutical industry of Bangladesh will enter a new phase of paying royalties or fees for patents that will increase the cost of medicines.

However, sector insiders are hopeful that the country will go for innovation in medicine ingredients before that.

SM Shafiuzzaman, secretary general of Bapi, said, "We are moving towards becoming self-sufficient in raw material production. One or two factories will be able to start production in the industrial park from next year. By 2030, all the factories there will be able to go into API production."

Infrastructures completed by the government
The decision of the API Industrial Park was taken in 2008 to expand the domestic pharmaceutical industry, diversify products to create a competitive market, conduct research on improving the quality of medicines and produce the required raw materials. The Executive Committee of the National Economic Council (Ecnec) approved the project in December of the same year.

The government has already completed the construction of the 200-acre project in Munshiganj's Gazaria including plot development, land filling, roads, drainage system, electricity and water lines etc.

Twenty-seven companies including big names like Square, Beximco, Incepta and Acme have already made places there. A company can take a maximum of 10 acres and a minimum of 5 acres of land. Several companies have already started construction of buildings. The government has initially decided to charge Tk2 crore per acre of land.

Project Director Shahidul Islam said, "Work on a section of the Central Waste Treatment Plant (CEPT) would be completed by this year. Companies will be able to start production from next January."

The preparation of the companies
Acme Laboratories Limited is at the forefront of setting up factories in API Industrial Park. The company has already completed the construction of the fourth floor of their building at a cost of Tk60 crore. The company hopes to start production in June 2022.

Mizanur Rahman Sinha, managing director of ACME Laboratories Ltd, said, "The construction of our building will be completed by December this year. It will take some more time to complete other preparations including capital machinery. However, we will be able to start production in June 2022."

Besides, Healthcare, UniHealth, Ibn Sina Pharmaceuticals have started construction of buildings in the industrial park.

Square Pharma, the country's leading pharmaceutical company, is conducting a feasibility study to set up a factory in the industrial park where they have three plots. They will start construction of their building there early next year.

Zahangir Alam, CFO of Square Pharmaceutical Ltd, said, "We have completed the initial feasibility study to invest in the API. Our construction work will start there soon. However, being a listed company in the capital market, we cannot disclose our investment."

Another top company Opsonin Pharma has taken two plots in the park. The company is also planning to invest from the beginning of next year.

Abdur Rouf Khan, managing director of Opsonin Pharmaceutical Ltd, said, "We put utmost importance on API production. However, as the company's existing factory renovation work is underway, we are not able to invest in API Park right now. We will do it next year."

Like Square and Opsonin, almost all companies, including Beximco, are planning to set up factories next year.

Syed Shahidul Islam, project director of the API, said, "The construction work of the factories of Healthcare and ACI Limited has progressed considerably. Next year almost everyone will start working on their factories."

Tax holiday facility in API production
The National Board of Revenue (NBR) has allowed a 10-year tax holiday to the API Industrial Park for setting up factories to produce medicine raw materials. This facility is being provided in the light of the National Active Pharmaceutical Ingredients (API) policy.

A company will get this facility for 10 years after starting production. Under this, the producers of raw materials in the pharmaceutical industry will enjoy 100% corporate tax exemption and other tax benefits.

Pharmaceutical industry market
The pharmaceutical industry has developed considerably in Bangladesh. In the post-independence period, Bangladesh was almost 100% dependent on foreign medicines. But now Bangladeshi medicines are even being exported to 180 countries of the world.

Local companies are now meeting 98% of the demands of the domestic market. They are now developing and producing a variety of complex and international standard medicines including vaccines, medicines for heart and cancer diseases and insulin.

According to IQVIA, an American multinational company serving the pharma industry, the country's pharmaceutical market has surpassed Tk27,000 crore in 2020 with an annual growth of more than 10%. Bangladeshi companies also export medicines worth around Tk1500 crore per year. However, the top 10 companies in the country sell about 71% of the country's total medicines.

According to the Export Promotion Bureau, the revenue from drug exports in the 2020-21 fiscal year was Tk1,433 crore. In that year, the income growth in this sector was 24.50%. In 2019-20, medicines worth Tk1,153 crore were exported from Bangladesh.

Industries are expecting a brighter day for medicine export once the API is completed. But experts think API is not the only solution for patent rights.

Dr Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue, said after setting up the API industrial park, innovation in generic medicine and patent rights should get importance. It needs foreign investment or joint ventures for new innovation in an API park.

Secondly, the Ministry of Commerce will have to negotiate to get the benefit of patent exemption until 2033, after LDC graduation in 2026.