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Technology Transfer for Pharmaceutical Productive Capacity in Bangladesh

Padmashree Gehl Sampath and ErmiasBiadgleng

(UNCTAD)Kuala Lumpur, April 29, 2010.

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This presentation is based on:

• Ermias Biadgleng and Padmashree Gehl Sampath, Technology Transfer and Local Production in Bangladesh, Draft 2010.

• Gehl Sampath, P., Innovation and Competitiveness in Bangladesh’s Pharmaceutical Sector, UNU-MERIT Working paper, 2007.

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Presentation

The significance of the case study of Bangladesh Productive Capacity for Pharmaceutical

Innovation in Bangladesh;Beximco Pharma and Square Pharma.The genesis – multinational corporations

Institutional Framework Linkages in Pharmaceutical innovation Strengths and Good Practices Challenges Conclusion and issues for the future

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Bangladesh

153 million people (2008 est.) among the 49 LDC;213.5 billion $ GDP measured at PPP (2008) 28.7% industry, 52.3% services (2007)

Unique among LDCs and many developing countries in its strength in pharmaceuticals;Declare itself self-sufficient, except for insulin, vaccine

and anti-cancer;attracting the interest of international business;Started exporting to different markets.

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Current Capacity for Pharmaceutical Innovation in Bangladesh Secondary (Drug) Manufacturing 247 registered pharmaceutical companies 150 operational; 34 suspended, 63 non-functional

The top ten controls 74% of the market 5,300 registered brands, covering 450 generic

drugs (2007)Most manufacturers undertake their own drug

formulation and development; Limited Primary (API) production Domestic market estimated at 750 million US$

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The genesis – multinational corporations and key current factors

The industry credits the multinational corporations that were fully operational until 198s as the sources of technology;

Currently growth and capacity is based on high revenue- supported by growth in household income and remittance;

Other factors, include low labor cost, access to cheaper API in the region.

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Square Pharmaceutical Limited

the leading company- 19.48 % market sharewith authorized capital of ~ $ 73.5 million,Markets 525 products-Very strong in 44

products in injectable dosage forms Its net profit in 2009 was ~ $ 28 millionCurrently exporting to more than 34 countriesFacilities include, three units for drugs, one

unit for API (from advanced intermediary stage) and others for pesticide and pet.

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Beximco Pharmaceutical Limited (BPL)

Considered 2nd largest with 7.22% market shareWith authorized capital of ~ $ 29.4 million; Its net profit in 2008 was ~ US$ 8 million Leads in export from Bangladesh;Markets 410 product-Very strong in IV Fluids in

the local market with 40-45 % market share the niche products include, oral solid dosage

(OSD), and CFC free metered dose inhaler (MDI) and API from advanced intermediary stage.

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Other companies

ACME- considered 3rd largest, strong in rural market, with 325 productsNotable for introducing Baby zinck - launched with

the help of Bill and Melinda Gates Foundation and based on the technology (formulation) of L'Oréal;

Advanced Chemicals Industry- previously Imperial Chemical Industry-

Renata Ltd.- previously Pfizer (Bangladesh) Aristopharma- 9th largest, investing for export; Nuvista Ltd formerly Organon (Bangladesh).

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The Institutional Framework in Bangladesh

Science and technology policy (1986) -emphasis on tech competence and self-reliance;

Ongoing revision (draft as of Feb. 2010) shift toInstitutional mechanism for collaboration and

linkages, bottom up approach- policies to be developed for

each sector, including pharmaceutical sub-sector;Priority to the production of basic materials, basic

pharmaceuticals, and in-house R&D capabilities.

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Industrial and Investment Policy (2009)

Highly export oriented- limited incentives for domestic supply of medicine; e.g land and utility;

In finance - Pharmaceuticals companies rely on commercial loans and capital market, also benefits from income tax holiday for re-investment; limited foreign exchange allocation for export operations

of pharmaceutical companies;

API imported at much lower rate than MFN but at zero if imported 100% for export.

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Intellectual Property Policy

1911 Patent and Design law, interpreted not to apply to pharmaceutical product patents;

Industry takes the TRIPS flexibility as key issue; No exclusivity for pharmaceutical test data; Draft Law (2005)maintain the transition period lasting until 2016;propose for adoption of mailbox application procedure; Does not appear to be a legislative priority; Its adoption may trigger the mailbox application system

which is not required for LDCs.

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National Drug Policy 1982 and 2005

Restrictions on operation of multinational corporations, except for production of vitamins (19982) and production for export (2005);

Contract manufacturing permitted since 2005; No importation of drugs or close substitutes that

are being produced in the country; Coordinates competitive import of API Price control for 209 products- but

implementation is very limited to~ 45 products

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GMP and drug quality control

Bangladesh promoted as ‘non-regulated’ market by the pharmaceutical industry;

No uniform follow-up of compliance once license is issued and a ‘block list’ of raw materials is approved;

Quality of drugs appears to be investigated after incidents occur;

Most small companies are financially stressed; The DA has two testing labs, but not upgraded yet

and has less than half of the staff it was supposed to have

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GMP and drug quality control (3)

Square and Beximco- securing foreign accreditation;

Both investing for more accreditation and acquire technologies from advanced economies,

Not all companies think foreign accreditation is the way forward;

a move to ‘regulatory based’ quality and safety control is timely

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Linkages in Pharmaceutical innovation

Macro Meso MicroPoor linkagesLack of scientific culture Bureaucratic rigidity Weak public support.

Lack of access to technology.Weak scientific infrastructure Inadequate human capital formationInstitutional instability

Intellectual isolation of researchersLack of incentives for collaboration

Source: Gehl Sampath, 2010

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Linkages in Pharmaceutical innovation (2)

FY2007 in primarily, secondary and tertiary levels of education Bangladesh perform below the regional average for net enrollment;

a wide array of institution of engaged in health research and educationMore 74 public research and education,more than 50 private education centres that provide

pharmacy courses, around half of which are accredited by government

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Linkages in Pharmaceutical innovation (3)

very weak collaboration between pharmaceutical companies and public R&D institutions, universities; limited involvement of research centres in

new product and process development;lack of funding for research centres;extensive specialisation of companies on

formulation and production technology (lack of demand)

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Strengths and Good Practices

Comprehensive product range; Beximco’s facilities are qualified by Multinationals (GSK for MDI and Roche for OSD);TGA of Australia, the Gulf Central Committee for

Drug Registration and Anvisa of Brazil. Square’s facility is approved by UK Medicines

and Healthcare Products Regulatory Agency facility at Pabna -ISO 9001 Certificate, enlisted by UNICEF.

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Challenges

Limitations on API production: 80% API imported Limitations on technologies for GMP and R&DLabs not up-grades and no central reference lab;

No capacity in vaccine, insulin etc systemic challenges- allocation of land, finance

for R&D, foreign currency for export, and energy and poor quality of regulations;

Export at limited stage- due to weak API production.

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Conclusion and issues for the future

To sustain the success, Bangladesh needs to: Urgently develop a STI policy and structure for

pharmaceutical sub-sector, including addressing the problem of linkages in R&D

Improve both the governance and the capacity problems on quality and safety, and price control

Address the competiveness challenges in API (technical capacity, incentives and API park);

Leverage support for vaccine technologies;

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THANK YOU