Strategic marketing and planning to improve pharmaceutical marketing in Bangladesh 1 | Page Strategic Marketing and Planning To Improve Pharmaceutical Marketing In Bangladesh A project report submitted to the Department of Pharmacy, University of Asia Pacific, for partial fulfillment of the requirements for the degree of Master of Science in Pharmaceutical Technology Submitted By: MD. Foysal Fuad Chowdhury Registration No.: 15207067 Session: Spring 2016 Submission Date: 6 th October, 2016 Department of Pharmacy University of Asia Pacific
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Strategic marketing and planning to improve pharmaceutical marketing in Bangladesh
1 | P a g e
Strategic Marketing and Planning To
Improve Pharmaceutical Marketing In
Bangladesh
A project report submitted to the Department of Pharmacy, University of Asia
Pacific, for partial fulfillment of the requirements for the degree of Master of
Science in Pharmaceutical Technology
Submitted By:
MD. Foysal Fuad Chowdhury
Registration No.: 15207067
Session: Spring 2016
Submission Date: 6th October, 2016
Department of Pharmacy
University of Asia Pacific
Strategic marketing and planning to improve pharmaceutical marketing in Bangladesh
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Summary of study
The purpose of this study was to summarize the available evidence of the introduction,
pharmaceutical history & background, strategic planning and other factors influencing
pharmaceutical marketing and export prospects of pharmaceutical sector in Bangladesh. There
are several sectors in Bangladesh on which we can be proud of and undoubtedly, the
pharmaceutical sector is one of these sectors. It is one of Bangladesh’s success stories and one of
the most technologically advanced sectors currently in existence. This industry is matter of
substantial pride to the country. Skillful attitudes, knowledge and innovative ideas from the
professionals are the key reasons why this industry grew in the way it did. The domestic market
of Pharmaceutical products in Bangladesh has shown a tremendous growth over the last couple
of years. The success story of Bangladesh pharmaceutical sector is very pleasant. It had to travel
a long way to achieve the present prestigious position in domestic and international markets. By
now, 97% of country’s demand of medicines is produced locally mainly by national
pharmaceutical companies. The pharmaceutical sector of Bangladesh is expanding rapidly and
some companies have already certified by different international regulatory authorities like US-
FDA, UK-MHRA, Australia-TGA, EU, etc. for quality management and quality products
manufacturing. Bangladesh Pharmaceutical Industry is now heading towards self-sufficiency in
meeting the local demand. There are about 460 generics registered in Bangladesh. Out of these
460 generics, 120 are in the controlled category i.e. in the essential drug list. The remaining 340
generics are in the decontrolled category, The total number of brands /items that are registered in
Bangladesh is currently estimated to be 5,300, while the total number of dosage forms and
strengths are 8,300. The pricing and other competitive strategies of pharmaceutical companies
have been altered by revolutionary developments in information technology, new state drug
substitution laws, federal legislation, and the emergence of market institutions that include
health maintenance organizations (HMOs) and pharmacy benefit managers (PBMs). An
important and sometimes overlooked factor that distinguishes one company from another in
the pharmaceutical industry is strategic planning. Bangladesh’s pharmaceutical industry has
tremendous potential to grow and compete in the international market. This is a remarkable
achievement for the Bangladesh pharmaceutical industry as this makes ways for us to export
medicines to the US market known for stringent regulations and quality standards.
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TABLE OF CONTENTS
Serial No. Contents Page No.
1 Introduction
1-4
2 Pharmaceutical background and history 4
2.1 Size of the Bangladesh Pharmaceutical Market and its
Growth
5-6
2.2 The Reasons after Market Growth 6
2.3 Growth Projection 6-7
2.4 Key points of National Drug Policy of 1982 8
2.5 Essential Drugs’ List 8
2.6 The Bangladesh Association of Pharmaceutical Industries 8
3 Drug Regulatory Authorities in Bangladesh 9
3.1
The Directorate General of Drug Administration (DGDA) 9
3.2
The Pharmacy Council of Bangladesh (PCB) 9
4
Local Market Overview 10-13
4.1 Top three leading companies of the country 14-15
4.2 Top Drug Groups 15-16
5 Strategic planning and other factors influencing
pharmaceutical marketing
16-17
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5.1 Industry Size 18-19
5.2 Current Environment 19
5.3 Identification and analysis of the strategic planning,
promotional patterns and factors adopted by leading
pharmaceutical companies in Bangladesh
21
5.3.1 Product, Pricing and Promotion 22-23
5.3.2 Manufacturing and Production Strategy Consulting features 22-23
5.3.3 Complete analysis 24
5.4 Production Pricing 24
5.4.1 Pricing Strategy 25-26
5.4.2 Marketing Strategy and the Marketing Mix 26
5.4.3 Pricing Objectives 27
5.4.4 Penetration pricing 28
5.4.5 Pricing Methods 29
5.4.6 Price Discounts 29-30
6 Competitive strategies of pharmaceutical companies 30-31
6.1 Influential factors on prescription preparation by doctors: a
survey conducted on practicing doctors and medical
representatives in Bangladesh
31
6.2 Materials and Methods 32
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6.3 Results and Discussion 32-33
6.4 Comparative analysis of subjective and objective responses 34-36
7 Export prospects of pharmaceuticals sector in Bangladesh 37-38
7.1 Foreign Markets 38
7.2 International Privilege 38
7.3 Where the industry is right now 38-39
7.4 Export Scenario 39
7.5 Barriers in Export Sector 39-40
7.6 Opportunities in Pharmaceutical Sector 40
7.7 Support needs to buster export 41
8 Market insight: How Bangladesh pharmaceutical sector
performed in 2015
41-42
8.1 Export scenario 42
8.2 Domestic competition 43
8.3 MNCs 43
8.4 Backward integration 44
8.5 TRIPS 44
8.6 Beximco pharma secures FDA approval 44-45
9 Conclusion 45-46
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LIST OF FIGURE
Serial No. Name of Figure Page No.
Figure 1 Bangladesh’s Largest Pharma Companies (by sales) 19
Figure 2 Manufacturing Strategy 22
Figure 3 Manufacturing and Production Strategy 23
Figure 4 Comparative response (in percentage) in consideration of
company image during prescribing medications to patients
34
Figure 5 Comparative response (in percentage) in consideration of
regular promotion during prescribing medications to
patients
34
Figure 6 Comparative response (in percentage) in consideration of
availability of brands during prescribing medications to
patients
34
Figure 7 Comparative response (in percentage) in consideration of
low price of medicine during prescribing medications to
patients
35
Figure 8 Comparative response (in percentage) in consideration of
medical representative’s improvisation during prescribing
medications to patients
35
Figure 9 Comparative response (in percentage) in consideration of
easy brand name during prescribing medications to patients
35
Figure 10 Comparative response (in percentage) in consideration of 36
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international certification of company during prescribing
medications to patients
Figure 11 Comparative response (in percentage) in consideration of
promotional tools during prescribing medications to
patients
36
Figure 12 Comparative response (in percentage) in consideration of
scientific information during prescribing medications to
patients
36
Figure 13 Local Sales (Source: IMS /4th quarter report – data
visuals by EBL Securities)
42
Figure 14 Exports (Source: IMS /4th quarter report – data visuals by
EBL Securities)
42
LIST OF TABLE
Serial No. Name of Table Page No.
Table 1 Healthcare Expenditure as % of GDP 6
Table 2 Bangladesh’s largest Pharma Companies (by sales July’15) 18
Table 3 Pricing Policy (Consulting Buyers) 24-25
Table 4 Market Size, Market Share and Growth of Top Companies 43
Table 5 Market Size, Market Share and Growth of Top MNC’s 43
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1. Introduction
The Pharmaceutical Industry is one of the world’s principal industries owed to worldwide
revenues of around US$2.8 trillion. Pharmaceutical Industry has seen major transforms in the
current years that leave new load on payers, providers and manufacturers. Customers now
demand the same choice and convenience from pharmaceutical industry that they find in other
segment. (Saxena, 2012)
There was hardly any Pharmaceutical enterprise before liberation in Bangladesh (then East
Pakistan). After several years of liberation, the government could not increase budgetary
allocations for the improvement of health sector. At that time, most of the people had little access
to the essential lifesaving medicines. This sector started to improve from 1980s. The
Pharmaceutical Industry has grown in the last two decades at a considerable rate. Today
Pharmaceutical Sector has become an obligatory part of health care system around the world.
Historically pharmaceuticals have played a vital role in the human development by improving
the quality of life and reducing the time spent in the hospitals. Due to its direct link with the
welfare and wellbeing of human beings Pharmaceutical Industry is of strategic importance for
the development of a healthy and productive nation. Today, Pharmaceutical Industry is
considered to be one of the largest and rapidly growing global industries. It is a major source of
employment generation and foreign exchange earnings for many countries around the globe.
(Sesric, 2011)
However, despite all these extraordinary achievements it’s a harsh reality that every year
millions of people die across the world, mostly in low income developing countries, due to
unavailability and inaccessibility of necessary medicines. According to the World Health
Organization (WHO), on average, 30% of the world population lacks access to life-saving
medicines; whereas, in some countries in Asia and Africa, the number may be as high as 50%.
(Roger, 2008)
The domestic market of Pharmaceutical products in Bangladesh has shown a tremendous growth
over the last couple of years. There has been a marked value-wise growth of the market -- at the
rate of 23.59% in 2011 over that of 2010, according to the data released by IMS Health
Bangladesh. According to the IMS, the size of Bangladesh's domestic drug market was $686
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million in 2008, $797 million in 2009, $977 million in 2010, and it reached US $1136 million in
2011.Now in Bangladesh the pharmaceutical sector is one of the most developed hi-tech sectors
within the country's economy. After the promulgation of Drug Control Ordinance 1982, the
development of this sector was accelerated. The professional knowledge, thoughts and
innovative ideas of the pharmaceutical professionals working in this sector are the key factors for
these developments. Due to recent development of this sector it is exporting medicines to global
market including European market. This sector is also providing 97% of the total medicine
requirement of the local market. Leading pharmaceutical companies are expanding their business
with the aim to expand export market. This research may help the exacting authority to be more
watchful about this sector. (Siddique, 2012)
There are several sectors in Bangladesh on which we can be proud of and undoubtedly, the
pharmaceutical sector is one of these sectors. It is one of Bangladesh’s success stories and one of
the most technologically advanced sectors currently in existence. This industry is matter of
substantial pride to the country. Skillful attitudes, knowledge and innovative ideas from the
professionals are the key reasons why this industry grew in the way it did.The success story of
Bangladesh pharmaceutical sector is very pleasant. It had to travel a long way to achieve the
present prestigious position in domestic and international markets. By now, 97% of country’s
demand of medicines is produced locally mainly by national pharmaceutical companies. The
pharmaceutical sector of Bangladesh is expanding rapidly and some companies have already
certified by different international regulatory authorities like UK-MHRA, Australia-TGA, EU,
etc. for quality management and quality products manufacturing. Moreover, few companies are
on the road to achieve US-FDA approval. According to the information of the Director General
of Drug Administration of Bangladesh (DGDA), there are 263 Allopathic drug manufacturing
companies in Bangladesh; 209 of which are functional, 29 companies are non-functional and 25
companies are suspended in status. Pharmaceutical export is contributing to the GDP of the
country and every year this contribution is positively growing In the meantime, Pharma sector
has become the 2nd largest potential sector in Bangladesh to earn foreign currency. At present,
about 30 pharmaceutical companies have started their export activities.
Many smaller companies are on the verge of entering highly regulated overseas markets. Bearing
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in mind its successful past endeavors, the industry has the ability to establish itself in mass
exportation. (Anamul and Zahedul, 2011)
The pharmaceuticals sector is a high-technology and knowledge-intensive industry in
Bangladesh. The industry has two-tier structure. The largest firm accounts for the majority of the
R&D investment in the industry and hold the majority of patents. There are a large number of
smaller firms producing mostly for local markets. The pharmaceuticals industry is heavily
regulated. Once a product is brought to market, pharmaceuticals companies spend heavily on
marketing and promotion. The larger drug companies maintain a large sales force, which makes
direct regular contact with individual prescribing physicians and other pharmaceuticals decision
makers. The money spent on marketing is huge. Pharmaceuticals marketing efforts are not only
directed at physicians and consumers; drug companies have also sought to directly influence
pharmacist, in some cases paying pharmacist to induce customers to change their drug
consumption habits.
The nature of competition in this industry differs between the two sets of firms. The second tier
of firms holds fewer patents and relies primarily on manufacturing off patent generic medicines
or patent medicines under license. Competition between these firms takes the conventional form
of competition on price, cost efficiency and quality. In contrast, a few large research-based
pharmaceutical companies invest heavily in R&D and hold the bulk of the patents, and can often
enjoy substantial market power while these patents are in force. For these companies,
competition is not primarily on the basis of price, but rather on the basis of marketing and
innovation. These companies compete to develop entirely new drugs which treat new medical
conditions, improve upon existing drugs, or serve as substitute for existing patented drugs. Some
large pharmaceutical companies in this tier export and compete in international markets.
(Bhuiyan et al., 2014)
The scenario of pharmaceutical industry can be depicted in two parts-before the Drug policy
ordinance, 1982 and after the Drug policy ordinance, 1982. Before the ordinance there were 177
pharmaceutical companies in the country but local production is used to be dominated by
multinational drug companies which manufactured 75% of total production. 25 medium sized
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national companies manufactured about 15% of total production. 133 small local based
companies produced the remaining 10%. The multinational companies were fully armed with
modern technology for producing sophisticated essential drugs, but they were only engaged,
large extent, in formulation of simple drugs including many useless products. At that time, the
unregulated drug market of the country had very little favorable conditions for pharmaceuticals
to over price their products. Near monopoly market conditions mean that local firms could not
compete effectively with these multinational market tycoons.
A great change was noticeable in the pharmaceutical industry after the drug policy ordinance of
1982. The total national production of pharmaceuticals has risen by a substantial 63%; the value
of essential drugs made in national factories has gone up to 140% over the four years. At present
there are around 300 national & multinational based pharmaceutical companies in Bangladesh.
(Sarker, 2011)
2. Pharmaceutical background and history
With a history since 1950s pharmaceutical industry has gone through noteworthy changes. This
industry was largely conquered by multinational companies, and it was very much reliant on
import. A defined rule for the development of the industry was formed through the formulation
of national drug policy, and drug control ordinance in 1982. Next to follow by, MNCs dominated
the market 75% and 133 local firms shared the rest one. Since then, the local firms have
recognized a stronger footing, and Bangladesh has become a vigorous exporter from import
dependent country. (Haroon, 2012)
2.1 Size of the Bangladesh Pharmaceutical Market and its Growth
The size of the retail market reached BDT 84.0 billion (US$ 1.136 billion) as on 2011 based on
IMS health Bangladesh (Haroon, 2012). The report additionally stated that, retail sales in
domestic market achieved 23.59% growth in 2011 which is following 23.8% and 16.8% growth
in 2010 and 2009 respectively. This industry has an annual growth rate of 10.2% during the
fiscal year 2002. The values fell by 4.3% in 2003. The lower growth rate showed in 2003 and
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2004 is largely because of country’s economic recession. Again the growth rate increased by 9%
in 2005. The growth rate of 2005 was 17.5%. In recent times the growth rate has been literally
doubled which is 23.59% in 2011.Recently published Bangladesh Pharmaceutical Index,
3Q’2011 shows that Bangladesh has a tk. 8,000 Cr market. And there are no multinational
companies in top ten lists of pharmaceutical companies. Local manufactured medicine is playing
important role to drive doctor prescription for strong pharmaceutical marketing skill and
product quality. There are only about 20% people in rural area are receiving nursing and medical
care parting the rest of the rural market utilizable because there is a big market lying ahead of
the existing market in the rural areas. The market will be engorged automatically when the
whole population will be under healthcare. It is likely that the total market size (including rural
market) is projected to be over BDT 90.0 billion at nearby. (Haroon, 2012)
2.2 The Reasons after Market Growth
The following datas shows some selected health indicators for Bangladesh. Most of the
indicators improved over the last decade which is among some of the factors that contributed to
the growth of the sector.
There has been an ongoing demographic move - life expectancy improved from 64.7 in
2000 to 68.94 in 2011 which to see the amplified health awareness among the people.
Also the income level of the population increased over the last decade which allowed
them to spend more for healthcare.
The foundation was also stumpy as healthcare expenditure was less than 3% of GDP in
2000 with total pharmaceutical sector size of BDT 24.5 billion only in that year and now
it is 3.72% with a sector size of BDT 84 billion in 2011.
Emergence of Private sector contribution. In the year of 2000 it was 1.72% of the total
GDP but now it has become 2.36% of the total GDP in 2011. A number of top category
hospitals in progress operating which includes Apollo Hospitals, Square Hospitals,
United Hospitals and others. Due to their quality service these hospitals became very
admired with the mass population; they have been a chief issue contributing to increased
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healthcare expenditure.
Development in private expenditure was the most important reason behind fall in public
% of expenditure as can seen a rise in a descending order in expenditure of the public
healthcare expenditure as a % of total healthcare expenditure from the last decade, there
has been increased expenditure in absolute terms which is from 39% in the year of 2000,
again a drop in 2005 at 34.9% and at last a modest climb in 2011 which is 36.58%.
Health expenditure per capita almost tripled in the last decade from 9.1 to 27, indicating
people’s compliance to spend more to stay healthy. Over the last decade income base of
the population has been upward. (Habib and Alam, 2011)
2.3 Growth Projection
Table 1: Healthcare Expenditure as % of GDP
Region 2011 2010 2009 2005 2000
USA 17.9% 17.6% 16.21%
14.72% 13.41%
World 10.1% 10.0% 10.03% 9.73% 9.23%
UK 9.3% 9.6% 9.34% 8.25% 7.04%
Japan 9.3% 9.2% 8.35% 8.16% 7.69%
Afghanistan 9.6% 10.4% 7.36% 8.76% 8.29%
Nigeria 5.3% 5.4% 5.82% 6.60% 4.56%
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Nepal 5.4% 5.1% 5.81% 5.91% 5.06%
Thailand 4.1% 3.9% 4.31% 3.55% 3.40%
India 3.9% 3.7% 4.17% 4.03% 4.61%
Bangladesh 3.7% 3.7% 3.35% 3.21% 2.82%
Sri Lanka 3.4% 3.5% 3.96% 4.04% 3.72%
Pakistan 2.5% 2.8% 2.62% 2.78% 3.02%
Table shows that comparison of Bangladesh with other neighboring countries and also with
some other developed countries in terms of healthcare expenditure as a % of GDP. Bangladesh is
a way below the list of countries except Sri Lanka and Pakistan.
Bangladesh has achieved 6.7% GDP growth rate over the last decade. With a vision to
attaindouble-digit growth within 2018, the current government has set target to achieve a higher
growth rate. So, it is expected that the actual growth rate in GDP will be 7% within 5 years and
the healthcare expenditure is expected to be more than that estimated value of around 17%. Now,
the retail Pharmaceutical market size is about 1% of GDP and health expenditure is about 3.7%
of GDP. As a result, the Pharmaceutical sector revenue accounts for almost 30% of the
healthcare expenditure. If this situation continues over the coming five years, pharmaceutical
revenue will also mature at par at 16.67% annually over the next five years. (Habib and Alam,
2011)
The pharmaceutical sector is one of the thrust sectors in Bangladesh. Before Liberation, there
was hardly any pharmaceutical enterprise in Bangladesh (then East Pakistan). After several years
of liberation, the government could not increase (in relative terms) budgetary allocations for the
improvement of health sector. At that time, most of the people had little access to the essential
lifesaving medicines. This sector started to improve from 1980s. The pharmaceutical industry
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has grown in the last two decades at a considerable rate.
Right after liberation war three fourth of the pharmaceutical industries was dominated by
multinational companies. The National Drug Policy (NDP) in 1982 and 2005 has major impact
in the development and growth of the Bangladesh pharmaceutical industry.
The need for NDP was very evident. Almost all the multinational companies were producing
simple and non-essential drugs in Bangladesh like vitamins mixture or cough syrups. They used
to import their raw materials from abroad at high prices. (Habib and Alam, 2011)
There was a need for vast quantity of essential, useful and economic drugs in Bangladesh. It was
essential and important for Bangladesh to introduce a drug policy for the betterment of national
health by availing international standard medicine in lower cost to Bangladeshi people. Precisely,
multinational companies were prevented to reduce their unessential drugs production and
discouraged to import raw material at high process. (ShariatUllah and Razzak, 2006)
2.4 Key points of National Drug Policy of 1982:
To provide administrative and legislative support for ensuring quality of essential drugs
which are relevant to the national health need.
To reduce the price of medicine by ensuring the lowest competitive price.
To eliminate non-essential medicine from the market.
To promote production of local drug and raw materials.
To develop proper drug monitoring and information system to prevent wasteful misuse
and to ensure the proper utilization of the drugs.
To ensure GMP and qualified pharmacist in manufacturing companies.
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As NDP 1982 implemented, most multinational companies sold their business to local
pharmaceutical. This fueled to the evolution of the local pharmaceutical sectors. According to
the Directorate General of Drug Administration (DGDA) website, the value of the locally
produced drug was 175 crore in 1981 that increased to 325 crore by 1985. (ShariatUllah and
Razzak, 2006)
2.5 Essential Drugs’ List: Under the Drug (Control) Ordinance 1982, the Government
determines Maximum Retail Prices (MRP) of 117 essential drug chemical substances. This price
determination is only for the local producer companies and still now the multinational
organizations are determining their price by their own way.
2.6 The Bangladesh Association of Pharmaceutical Industries – BAPI: BAPI, (Bangladesh
Aushad Shilpa Samity in Bengali), established in 1972 with just 33 members, has been playing a
very vital role for development of this sector. Today, BAPI is a very strong organization having
as many as 144 companies as its members.
3. Drug Regulatory Authorities in Bangladesh
A regulatory agency is a public authority or government agency responsible for exercising
autonomous authority over some area of human activity in a regulatory or supervisory capacity.
An independent regulatory agency is a regulatory agency that is independent from other branches
or arms of the government. Two organizations regulate drugs and pharmacies in Bangladesh, one
governmental and one semi-government, which are:
The Directorate General of Drug Administration (DGDA)
The Pharmacy Council of Bangladesh (PCB)
3.1 The Directorate General of Drug Administration (DGDA): DGDA is the drug regulatory
authority of Bangladesh, which is under the Ministry of Health and Family Welfare. DGDA
regulates all activities related to import and export of raw materials, packaging materials,