Public Disclosure Authorized DISCUSSION PAPER PUBLIC AND PRIVATE SECTOR APPROACHES TO IMPROVING PHARMACEUTICAL QUALITY Public Disclosure Authorized IN BANGLADESH Janet Bumpas Kees Kostermans Dinesh Nair Public Disclosure Authorized South Asia, Human Development Department THE WORLD BANK August 2007 Public Disclosure Authorized World Bank Discussion Paper August 2007 Table of Contents Acknowledgements......................................................................................................... v Foreword........................................................................................................................ vi Summary....................................................................................................................... vii 1. Introduction ............................................................................................................ 1 1.1 Background ......................................................................................................... 1 1.2 Objective ............................................................................................................. 1 1.3 Methodology ....................................................................................................... 1 2. The Global Pharmaceutical Industry................................................................... 2 2.1 R&D Based Pharmaceutical Firms...................................................................... 2 2.2 Generic Pharmaceutical Firms ............................................................................ 2 2.3 Manufacturing Process ........................................................................................ 3 3. Pharmaceuticals in Bangladesh ............................................................................ 5 3.1 Pharmaceutical Manufacturing Firms in Bangladesh ......................................... 5 3.2 Drug Quality........................................................................................................ 5 3.3 Domestic Drug Distribution ................................................................................ 6 3.4 Export Market...................................................................................................... 8 3.5 Partnerships with Global Firms......................................................................... 12 4. TRIPS and Bangladesh........................................................................................ 14 4.1 The WTO and TRIPS ........................................................................................ 14 4.2 TRIPS’ Implications for Bangladesh ................................................................ 15 4.3 Bangladesh Patent Law ..................................................................................... 17 5. Benchmarking the competitiveness of Bangladesh’s pharmaceutical sector . 18 5.1 Manufacturing Cost........................................................................................... 19 5.2 Workforce Skills................................................................................................ 22 5.3 Government and Regulatory Environment........................................................ 22 5.4 Drug Legislation................................................................................................ 23 5.5 Drug Directorate Administration....................................................................... 24 5.6 Drug Testing Laboratories................................................................................. 25 5.7 Bioequivalence Laboratories............................................................................. 25 5.8 Manufacturing Certification.............................................................................. 26 5.9 Macro Factors.................................................................................................... 27 6. Potential Approaches to Improving Quality of Pharmaceuticals in Bangladesh ................................................................................................................................ 29 7. Conclusions and Next Steps................................................................................. 31 7.1 Improving Price and Quality on the Domestic Market ..................................... 31 7.2 Improving price and quality on the export market ............................................ 34 7.3 Taking advantage of TRIPS .............................................................................. 35 Endnotes........................................................................................................................ 41 Page ii World Bank Discussion Paper August 2007 List of Tables Table 1: Bangladesh’s Pharmaceutical Exports in USD millions....................................... 8 Table 2: Recent Exports by Some Bangladeshi Pharmaceutical Firms .............................. 9 Table 3: Square and Beximco expenditures...................................................................... 22 Table 4: Gross Enrollment Ratios in Selected Countries................................................. 22 List of Figures Figure 1: Annual Growth Rates of the Bangladesh Pharmaceutical Sector........................ 5 Figure 2: Pharmaceutical manufacturing cost driver ........................................................ 19 Figure 3: Scale Economy Curves...................................................................................... 21 Figure 4: Local Production and Tertiary School Enrollment............................................ 27 Figure 5: MNC’s R&D Activities in India........................................................................ 38 List of Boxes Box 1: Case Study Beximco................................................................................................ 9 Box 2: Case Study of Incepta............................................................................................ 11 Box 3: Case Study of Square Pharmaceuticals ................................................................ 12 Box 4: Lessons Learned from India and China................................................................. 18 Box 5: Medicines Transparency Alliance (MeTA).......................................................... 33 Box 6: China...................................................................................................................... 37 Box 7: India....................................................................................................................... 38 Page iii World Bank Discussion Paper August 2007 List of Acronyms Acronym Definition API Active Pharmaceutical Ingredient BAPI Bangladesh Association of Pharmaceutical Industries BMA Bangladesh Medical Association cGMP Current Good Manufacturing Practice DCO Drug Control Ordinance (Bangladesh) DCC Drug Control Council (Zimbabwe) DDA Drug Directorate Administration (Bangladesh) DTL Drug Testing Laboratories FDI Foreign Direct Investment GAAP Generally Accepted Accounting Principles GDP Gross Domestic Product GMP Good Manufacturing Practice GSK Glaxo Smith Kline HIV/AIDS Human Immunodeficiency Virus / Acquired Immune Deficiency Syndrome HVAC Heating, Ventilation and Air-Conditioning ICDDR,B International Center for Diarrhoeal Disease Research, Bangladesh IFC International Finance Corporation IPR Intellectual Property Rights LDC Least Developed Country KWH Kilowatt Hours MNC Multinational Corporation MSF Médecins Sans Frontières MVA Manufacturing Value Added Nafdac National Agency for Food, Drug Administration and Control (Nigeria) NDP National Drug Policy NGO Non-Governmental Organization NOC No Objection Certificate PP&E Plant Property & Equipment R&D Research and Development QA Quality Assurance RS Indian Rupee TGA Therapeutic Goods Administration (Australia) TLC Thin Layer Chromatography TRIPS Agreement on Trade Related Aspects of Intellectual Property Rights UK United Kingdom UKMHRA United Kingdom Medicines and Healthcare Products Regulatory Agency UNICEF United Nations Children’s Fund UNIDO United Nations Industrial Development Organization USA United States of America USFDA United States Food and Drug Administration WHO World Health Organization WIPO World Intellectual Property Organization WTO World Trade Organization Page iv World Bank Discussion Paper August 2007 Acknowledgements This report has been prepared by a team of World Bank staff and consultant led by Kees Kostermans (Task Team Leader). The team members included Janet Bumpas, Dinesh Nair and Iffat Mahmud. Administrative and logistical support was provided by Aynul Haque and Shahadat Chowdhury. The study has been financed by the United Kingdom Department for International Development (DFID), Delegation of the European Commission (EC), the Embassy of the Kingdom of the Netherlands (RNE), the Swedish International Development Cooperation Agency (Sida) and the World Bank through the Bangladesh Health, Nutrition and Population Sector Program (HNPSP). We thank all the pool financiers of HNPSP for supporting this assignment. We are grateful to Ehsanul Fattah, the then Secretary of Ministry of Health and Family Welfare (MOHFW), for his support and interest in this work. We are grateful to all the officials of MOHFW, Directorate of Drug Administration and the Bangladesh Association of Pharmaceutical Industries (BAPI). During the preparation of this report, we had discussions with people in the Bank and various stakeholders involved with the pharmaceutical industry.