BMI View: Private consumption growth in Bangladesh will continue to gather momentum, contributing to the pharmaceutical and healthcare sector expansion. In addition, the recent increase in the government budget for health will translate in improved access to healthcare services, including in rural areas, prioritizing investments in infrastructure and tele medicine . While the sector will present substantial growth potential over the next decade given rising incomes and higher levels of urbanisation, low per capita spending on medicines will ensure that generic medicines continue to account for the largest market share, albeit this figure is expected to gradually moderate due to improving access to innovative pharmaceuticals .
Headline Expenditure Projections
Pharmaceuticals: BDT154.24bn (USD1.99bn) in 2014 to BDT171.62bn (USD2.19bn) in 2015; +11.27% in local currency terms and +10.35% in US dollar terms. Forecast revised upwards from last quarter.
Healthcare: BDT437.86bn (USD5.65bn) in 2014 to BDT494.03bn (USD6.32bn) in 2015; +12.8% in local currency terms and +11.9% in US dollar terms. Forecast revised upwards from last quarter.
Risk/Reward Index: In Q415 Bangladesh RRI score remains stable at 41.8 (out of 100). Bangladesh also retains its ranking position in our RRI matrix, standing as the 15th most attractive market to pharmaceutical investors out of 19 markets in the Asia Pacific region. Bangladesh's score is driven by a large pharmaceutical market (market expenditure score of 10.0 out of 20) and rapid drug market expansion (sector value growth score of 8.4 out of 12), but dragged down by low levels of drug spending per capita (spending per capita score of 1.2 out of 12) and limited intellectual property protection (patent respect score of 1.4 out of 7).
Key Trends And Developments
Access to subsidised or cost-free emergency obstetric care is very low in Bangladesh as there is only one public obstetric care facility per 500,000 people in the country, according to a survey conducted by the International Centre for Diarrhoea Diseases and Research. The survey highlighted the potential of public-private partnerships to increase access to care for low-income women, or performance-based incentive schemes to retain skilled rural health workers and tackle regional imbalances in healthcare coverage.
Beacon Pharma sales manager Dr Mahbubur Rahman said Bangladesh's drug manufacturers are not enthusiastic to produce cancer drugs as they find the market to be small as patients lack the financial capacity to access high-priced drugs, reports Financial Express. The National Institute of Cancer Research and Hospital (NICR&H) director Dr Moarraf Hossain stated that 100% of cancer drugs were imported as recent as five years ago, including illegal imports. He added that Beacon Pharma and Techno Drugs have been manufacturing 90% of the total locallyproduced cancer drugs, both oral and injectable, and fulfilling more than 50% of demand, while some other companies like General and Beximco manufacture such drugs on a limited scale. About 250,000 new cancer patients are detected every year, of which only 50,000 come under treatment, Dr Moarraf added.
Under Bangladesh's FY2015/16 budget, the Ministry of Health and Family Welfare (MHFW) saw funding rise by 10% year-on-year from BDT111bn (USD1.4bn) FY2014/15 to BDT126bn (USD1.6bn). Some of the initiatives that will be undertaken by the MHFW for the fiscal year include the modernisation of the public health system as 12,979 community clinics have begun operations and another 882 are under construction. In addition, the government is in the midst of formulating the 'National Drug Policy 2014', which will see its standards modernised.
Against this backdrop, Bangladesh's healthcare access is expected to improve in FY2015/16. Central to this outlook is the successful implementation of the country's telecare initiative, with the government investing heavily into a more digital provision of medical services. This will help alleviate the low levels of healthcare access in the country which is particularly acute in the rural areas of Bangladesh. However, we highlight that the increases in the budget allocation will not be enough to see a significant reduction in out-of-pocket payments and further delay the implementation of universal healthcare.
BMI Economic View: Bangladesh's economy will likely grow at 6.0% in FY2015/16 as political unrest abates and foreign investment starts to return to the country. Moreover, the government's ongoing focus on infrastructure development will be a positive to the manufacturing sector, which should act as a tailwind for Bangladesh's economy over the longer term.
BMI Political View: Despite the conclusion of the political crisis in Bangladesh in May, we remain cautiously optimistic about the political risk outlook in Bangladesh as the country has historically been susceptible to economic disruptions resulting from political conflict. Moreover, the rise of radical Islamism also poses a considerable threat to Bangladesh's political stability.