Low-cost Pharmaceuticals In Bangladesh

By CDC

Low-cost Pharmaceuticals In Bangladesh

“We are a least developed country, but in pharmaceuticals, we are ahead”

DR. M.A. MALEK CHOWDHURY Director, Industrial Operations

In the photo above he demonstrates the infusion bags, used for diarrhoea and post–operations, which are now manufactured by Popular Pharmaceuticals in Bangladesh

ACCESS TO AFFORDABLE MEDICINES

Popular Pharmaceuticals is one of Bangladesh’s largest companies producing pharmaceutical products.

Located on the outskirts of the bustling city of Dhaka, the capital of Bangladesh, it has modern manufacturing facilities including separate facilities for penicillins, hormones and vaccines. In a spotlessly clean environment, Popular Pharmaceuticals manufactures nearly 400 different products for common ailments such as painkillers, antiulcerants and antiallergics as well as high-tech medicines such as insulin and infusions. Many of these medicines are sold at affordable prices to the local market, medicines such as Pro-Gut for stomach ulcers which are only 5 or 6 BDT (less then £0.04).

Popular Pharmaceuticals started as a small diagnostic centre in 1983; today its revenue is around US$80m. It has a good distribution network of 15 distribution centres covering over 50,000 chemists across Bangladesh, reaching thousands of families and communities.

Bangladesh is considered to be a Least Developed Country (LDC) but it is progressing rapidly. Today it produces nearly 97% of pharmaceutical products required for the home market, an immense leap forward compared to where it was a decade ago. Its economy has been expanding too with a growth rate of six percent per annum and the rate of poverty is decreasing.

Access to medicines, especially in least developed countries, is a key challenge to development. Despite the ability of larger countries such as China and India to produce high-quality medicines at low cost, a significant proportion of the world’s population do not have good access to affordable, quality medicines. The local production of pharmaceuticals in developing countries is therefore important to ensure that poorer people can have greater access to medicines. Popular Pharmaceuticals obtains the active pharmaceutical ingredients from countries like India and China and are therefore able to manufacture pharmaceutical products in their own country.

According to a recent UN report,

“From a public health perspective, development gains are greatest if local production increases the supply of good quality and affordable essential medicines, of which there is a shortage, as well as for other poverty-related, tropical and neglected diseases.”

(Investment in Pharmaceutical Production in Least Developed Countries, UNCTAD, 2011)

CDC’S INVESTMENT IN POPULAR PHARMACEUTICALS

Although Popular Pharmaceuticals has been successful, many businesses in developing countries, particularly those which have faced political instability like Bangladesh, struggle to find the investment they need to grow. CDC is the UK’s development finance institution and it supports the building of businesses throughout South Asia and Africa, creating jobs and making a lasting difference to people’s lives in some of the world’s poorest places. Working with local fund manager, Brummer and Partners, CDC invested nearly US $1.8m in 2013 through the Frontier Fund in Popular Pharmaceuticals. Frontier was the first private equity fund set up in Bangladesh.

“By investing in the first private equity fund in Bangladesh, CDC sets a precedent. The belief is that there is opportunity in Bangladesh and this will bring in other investors. CDC not only brings in capital but it also has a long-term approach. It’s a frontier market that has inherent risk but it’s coupled with high rewards.”

Khalid Quadir, CEO, Brummer and Partners Asset Management (Bangladesh)

BUSINESS EXPANSION

Kazi Mohammed Badruddin, Director, Finance
and Accounts, Popular Pharmaceuticals

Popular Pharmaceuticals started as a small diagnostic centre in 1983; today its revenue is around US$80m. There are now nearly 5,000 employees with many more in the supply chain such as 50,000 chemists around the country. Its average growth rate has been around 25% a year and it produces over 400 formulations including tablets, capsules, oral liquids, creams and injectables. Around 50% of its revenue comes from 15 Popular Pharmaceutical products which are in the therapeutic areas of vaccine, antibiotic, antiulcerant, insulin, antiallergic and antihypertensive. It has also started exporting products to Africa, South America and other parts of South Asia and almost three percent of its revenue is derived from exports today.

The cost of borrowing is very high in Bangladesh. If we can reduce this, we can have more growth and profit and introduce new products. For this reason, we are getting funding from Brummer and Partners and foreign investors.

DEVELOPMENT IMPACT AND FINANCIAL RETURN

Financial return is important, but it has to go together with development impact.

Hiti Singh, Portfolio Director, Asia Funds, CDC

Companies such as Popular Pharmaceuticals reflect CDC’s dual objectives of achieving business success and development impact. Building the domestic capacity to produce active pharmaceutical ingredients is one means to try to reduce the price of drugs and ensure security of supply. Access to medicines is an important aspect of the UN Millennium Development Goals. Additionally, Popular Pharmaceuticals creates employment (5,000 employees) and provides an income to thousands more in its supply chains.

Thanks, in part, to the continued support of CDC and Brummer & Partners, Popular Pharmaceuticals is expanding significantly, creating affordable pharmaceutical products as well as jobs in the pharmaceutical industry in Bangladesh for local people.

INVESTMENT DATA

Investee Company

Popular Pharmaceuticals

Fund

Frontier Fund

Fund Manager

Brummer and Partners

CDC Commitment to the fund

US $10m

Date of CDC Commitment

2010

Location

Bangladesh, South Asia

Editor’s Note: This blog was previously published on CDC and is reproduced with permission.

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