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Home Lex Jaw Implication of the WTO TRIPS Agreement on the Pharmaceutical Industry in Bangladesh and Way Forward

Implication of the WTO TRIPS Agreement on the Pharmaceutical Industry in Bangladesh and Way Forward

Sharifa Khan
Implication of the WTO TRIPS Agreement on the Pharmaceutical Industry in Bangladesh and Way Forward
Source: Internet

The pharmaceutical sector of Bangladesh is one of the vibrant industries of the country. Starting from a poor infrastructure the sector has now emerged as a developed one during the last four decades. Professional knowledge, entrepreneurial skills, thoughts and innovative ideas of the pharmacists working in this sector are the key factors for this development. There are however, concerns about the future performance of this sector once the TRIPS (Trade Related Aspects of Intellectual Property Rights) transition period expires on December 31, 2015. 

Bangladesh inherited a poor base pharmaceutical industry which could meet less than 20% of the local demand. In 1981, there were 166 licensed pharmaceutical manufacturing units and the local market was dominated by eight multinational companies (MNCs). The local companies could meet only 25% of the total demand and the rest 75% were fulfilled by the MNCs. However, this sector has been showing a tremendous positive performance since the last three decades and is now able to meet 97% of the total medicinal requirements of the local market in addition to exporting to the global market including Europe. 

Export of Pharmaceutical products from Bangladesh

Export of Pharmaceutical products from Bangladesh

Promulgation of the Drug Control Ordinance of 1982 which allowed restricting the import of certain pharmaceutical products, adoption of newer technologies and emergence of highly skilled pharmacists contributed to this success.

Currently 450 registered companies hold 97% share in the domestic market and the import accounts only for just 3%. According to an IMS, a US-based organization reports the value of Bangladesh’s domestic drug market was $686 million in 2008, $797 million in 2009, and $977 million in 2010. The sector is now growing at about a 25% rate per annum. 

Despite the export of pharmaceutical products compared to the total sales across the world, Bangladesh is still in an insignificant position. The size of the global medicine market is US $ 22 billion while Bangladesh exports only $ 40.69 million (0.18%). 
Figure 1: Export of Pharmaceutical Products from Bangladesh

Looking into imports, it is revealed that Bangladesh annually imports around US $389 million worth of pharmaceutical items. Imports mainly comprise inputs required for the local manufacturing industries and value addition is low due to a higher percentage of raw materials, both Active Pharmaceutical Ingredients (APIs) and Excipients.

TRIPS is one of the main treaties governed by the WTO that deals with Intellectual Property Rights. TRIPS was enforced from 1 January 1996 but the developing countries were however, given a four-year transition period. Considering the special needs of the LDCs, a 10 year transition period to enforce the TRIPS obligation was later on allowed. In 2001, LDCs were granted another transition period from patenting the pharmaceutical products until January 01, 2016. Besides, the LDCs were granted a general extension of the transition period until 01 July, 2013 too. However, numerous efforts have been made for a further 15 years transition period extension for the LDCs.

However, in Bangladesh the Patent & Design Act, 1911 grants patents for any innovation which includes pharmaceutical products too. The Department of Patents, Design and Trademarks (DPDT) is in charge of receiving patent applications and granting patent rights which grants about 300 patents of various types each year. More than 90% of these granted patents are foreign applications, mostly for pharmaceutical and agro-chemical products. DPDT however stopped granting any patent from January 2008 for pharmaceutical products following the TRIPS extension which has reduced the number of patent applications being filed and thus the growth of the domestic industries have been put to a halt.  

Since no decision has yet been taken by the WTO regarding the extension of TRIPS transition period for pharmaceuticals, implications of the TRIPS agreement on the pharmaceutical industry in Bangladesh are to be examined based on the alternative scenarios discussed below. 

If the transition period is not extended, patented companies, mostly foreign entities will enter the Bangladeshi market at a larger scale to produce and sale medicines and APIs under patent protection. The government of Bangladesh will have to start granting patents. The number of patent applications will increase for sure. Local companies will be bound to follow the international patent norms and shall be liable to pay royalty for using patented items. This has a likelihood of increasing the price of patented medicines which shall further cause difficulty in fighting new diseases for which drugs are still under patent obligations.

It is however, to be noted that this possible scenario would not be as worse as it is projected since 95% of the pharmaceutical products produced in Bangladesh are generic medicines for which the patent period is over. Bangladesh however, can still produce the generic medicines even after the expiry of the TRIPS transition period and exporting the non-patented pharmaceuticals would not be a problem as long as the importing countries’ rules and regulations are met. On the other hand, following the patent provisions would encourage foreign pharmaceutical companies to invest in Bangladesh which would add value to our economy and accelerate the local technology and skills. Besides, the price of patented APIs which is relatively high now will continue even after January, 2016. This shall result in increasing the cost of production and price of the locally manufactured medicines, which will not affect the import of off-patented APIs as their patent period is over and a number of competitive products exist in the market.

An analysis of the global API market shows that new exporters are emerging in the API production which is driving the API price low. India and China export more than 75% of the APIs that are expected to reduce the cost of them. Further to this, an API company cannot sustain only by meeting the local manufacturing demand. They therefore, have to penetrate into the export markets which would increase the competition and reduce the price. It is however, to be mentioned that the import of patented APIs in Bangladesh is relatively low and most the APIs are off-patent.

Now, what happens if the TRIPS transition period is extended? TRIPS and public health had already been acknowledged as a sensitive issue in the WTO and the member states already demanded a public health supportive TRIPS. In addition, considering the LDCs requirement WTO had in principle, agreed to extend the general waiver period during the Eighth Ministerial Conference held in December, 2011, and the issue of public health is expected to receive priority than the decision of general waiver. About 33.3 million people now are suffering from HIV/AIDS of which 22.7 million live in the Sub-Saharan countries. A total of 60 million people now are suffering from various preventable diseases. Pharmaceutical industry infrastructure in LDCs has not developed to the expected level. Implementation of TRIPS will drive these countries with no option but to import high cost patented medicines from developed countries which will aggravate the existing public health scenario for sure. 
However, considering the above, LDCs including Bangladesh can legitimately expect another term for the extension of the transition period of TRIPS for pharmaceutical products which shall allow the continuation of the current state of producing and exporting both patented and generic medicines by Bangladesh. Bangladesh by far is the lone LDC that produces and exports pharmaceutical products and should therefore proceed systematically to make the most from the extension of the transition period. 

 

 

 

The story was first published in INTELLECT Issue no.2, dated July 2012. 

September 08, 2015
About Author

The author is the Designated Commercial Counsellor for High Commission in London, UK. The views and comments expressed in this paper are her own, and do not in any ways reflect the views & comments of the Government of Bangladesh.

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