After the Readymade Garments (RMG), agro-processing, light engineering and the pharmaceuticals are considered the top potential export sectors of Bangladesh. The country also considers these as promising export diversification industries to reduce its dependence on apparel, which currently accounts for the largest share (81 per cent to 85 per cent) of the total export earnings. The shares of the potential sectors in export earnings include the agro-processing (1.0 to 1.5 per cent), light engineering (0.4 to 1.5 per cent) and the pharmaceuticals (0.3 to 1.0 per cent ) respectively. Clearly, given their marginal contribution to the total export earnings in comparison with RMG, the challenge would be very high before these sectors can come close to the RMG. However, proper government policies can turn even those sectors into ones that can contribute to the total export earnings significantly in the coming days.
Consider, for instance, the case of the pharmaceutical sector. It made its real start in 1980s, especially following the enactment of the National Drug Policy and Drug Control Ordinance of 1982. Prior to that, the market was heavily import-dependent, with foreign multinational companies controlling about 75 to 98 per cent of this sector. During the pre-independence days, a few pioneering local companies and multinationals began operations in the 1950s and 60s. Fast forward to the 1980s. The 1982 National Drug Policy pioneered by late Dr Zafrullah Chowdhury restricted unnecessary and harmful drugs, controlled prices and actively provided space to domestic companies to manufacture essential generics. From late 1990s to date, the favourable regulatory environment and intellectual property rights exemptions for LDCs catalysed the sector's dramatic growth. Local manufacturers now meet 98 per cent of the country's domestic demand.
Despite its share in the total export earnings may currently appear quite insignificant, the possibility of this sector's growing into the country's most prestigious as well as revenue earning industry is very high.
Notably, it is also a very promising high-tech export sector, valued domestically at around US$6.0 billion. Currently, the pharmaceutical sector is widely considered a unique and unprecedented success story among Least Developed Countries (LDCs). Starting practically from scratch, it is now a nearly self-sufficient industry, meeting 98 per cent of domestic demand and exporting life-saving, anti-cancer and antiviral medications to over 160 countries. The fact that the development of Bangladesh's drug sector is unique among LDCs is due to several factors. Unlike other LDCs which relied heavily on free-market imports, the pharmacy sector here utilised its drug policy effectively to foster a robust local manufacturing base.
As an LDC, the country fully utilised the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) pharmaceutical patent waiver. This allowed local manufacturers to legally produce generic versions of vital patented medications-including oncology and antiretroviral drugs-before paying royalties. While many LDCs have rudimentary packaging capabilities, Bangladeshi firms including Beximco pharmaceuticals, Square Pharmaceuticals and Incepta Pharmaceuticals
produce complex therapeutics, such as biosimilars (biological medications that are nearly identical copies of an already-approved existing biologic drugs), metered-dose inhalers (MDIs), and vaccines. Nonetheless, the sector faces a critical juncture as Bangladesh graduates from LDC status, which will phase out the TRIPS patent exemption and various export subsidies. To survive, the sector must urgently transition from copying generic formulations to investing heavily in Research and Development (R&D) and domestic Active Pharmaceutical Ingredient (API) manufacturing. The WTO waiver allowing the production of generic versions of patented medicines without paying royalties will expire. This directly threatens the affordability of essential and lifesaving medicines, with some specialised drugs potentially seeing severe price increases. Bangladesh currently relies heavily on imported APIs, mostly from India and China. Post-LDC, the dependency exposes local manufacturers to global price fluctuations and supply chain vulnerabilities. Expanding into highly regulated markets (e.g., US, EU) requires stringent certifications such as US FDA approvals and WHO pre-qualifications. Current cash incentives for exports will no longer be compliant with WTO regulations as a developing nation. In that case, the API Industrial Park in Gazaria (Munshiganj) needs to be completed and fully operationalised.
By manufacturing raw materials domestically, Bangladeshi companies can reduce import dependence and secure more stable production costs. In a similar vein, the drug companies must allocate a larger percentage of revenue towards R&D. Moving beyond basic generics into biosimilars, oncology drugs, and biologics will help the industry capture higher profit margins globally. In this connection, Bangladesh should strongly prioritise Foreign Direct Investment (FDI) and technology transfer in the pharmaceutical sector. With the WTO's TRIPS patent waiver ending, local companies will no longer be able to legally copy patented medicines without expensive licensing agreements. Strategic joint ventures with multinational corporations (MNCs) will provide necessary legal licensing and technical know-how to continue producing complex drugs. Currently, domestic investment in pharmaceutical research and development is low (around 3.4 per cent). Technology transfers will help fast-track the transition from simple generic formulation to developing novel treatments and adhering to stringent international testing standards (such as bioequivalence and biosimilar testing). Since the industry currently relies heavily on imported raw materials, joint ventures focused on API production will insulate Bangladesh from global supply chain shocks and reduce import costs. To successfully capitalise on this strategy, the government and the industry stakeholders will need to create a supportive regulatory and policy environment. The Directorate General of Drug Administration (DGDA), for example, has to be modernised so it may efficiently register and approve complex, jointly-developed therapeutics. Such strengthening of the DGDA's capacity would help it meet World Health Organization Maturity Level-3 (ML-3) standards. That will open up the prospect of procurement contracts with major global agencies like UNICEF, Gavi, and the Global Fund. The WTO has recommended granting a transition period for graduating LDCs to build their patent compliance capacity.
This window must be fully utilised to establish accredited bioequivalence study centres and train specialised synthesis chemists within the country. The Bangladesh Economic Zones Authority (BEZA) can offer dedicated pharmaceutical hubs or parks specifically designed to attract foreign biotech and pharma companies with tax incentives and streamlined utilities. Developing a robust domestic framework for patent protection and enforcement will build the confidence required for MNCs to safely share their proprietary technology and research methods with local firms. These are but a few of the steps the government as well as the pharma sector would need to take to develop the sector into a competitive one on the global scale. Since the pharma sector is able to draw some of the country's scientific brains from the biological sciences into its production and research facilities, it deserves plaudits not only for providing jobs to those graduates, but also reversing to some extent the trend of brain drain.
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