With Malaysia and Bangladesh both forecasting sharp increases in their pharmaceutical exports, business groups are calling for the establishment of a Free Trade Agreement (FTA) between the two nations.

At the recent Showcase Malaysia trade exhibition in the Bangladeshi capital of Dhaka, government officials from both sides agreed that an FTA, which was first proposed in 2004, should now be established.

One reason is that Bangladesh’s total exports to Malaysia – its largest investment partner among the Association of Southeast Asian Nations (ASEAN) - were worth just US$16.9 million in 2006-7, while its imports from there totaled US$384.16 million.

"We need to take steps to narrow this asymmetric trade pattern by encouraging more exports from Bangladesh to Malaysia,” Salahuddin Kasem Khan, president of the Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI).

Bangladesh is the only nation among the world’s 49 least-developed countries (LDCs) to be almost self-sufficient in the production of pharmaceuticals – largely branded generic drugs. Moreover, its drug exports - to 68 nations - grew 47% to $28.12 million in 2006-7 and, at $23.63 million, they have beaten first-half 2007-8’s target of $15.63 million by over 51%, the nation’s Export Promotion Bureau (EPB) reports.

The Bangladesh Association of Pharmaceutical Industries (BAPI) expects this growth rate to double in the second half of this year, as the industry looks to expand its business beyond the less-regulated Asian markets of Myanmar, Nepal, the Philippines and Vietnam, where its products have faced very little competition. They are now moving successfully into moderately regulated markets such as Russia, Ukraine and Singapore and are looking at western Europe and the Gulf Cooperation Council (GCC) states of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE).

High quality
A recent visit by GCC officials to the Bangladesh Export Import Company (Beximco) reportedly found that the quality of pharmaceuticals produced by the Bangladeshi industrial conglomerate’s pharmaceuticals arm, BPL, to be “similar to that of medicines manufactured by world's leading pharmaceutical companies.” BPL chief executive Nazmul Hasan says the firm plans to capture just 1% of the GCC market, which would be worth over $100 million. With proper government support to help it enter the world’s highly-regulated markets, the industry could create an export market worth over 10,000 crore taka ($1.5 billion) by 2009, he added.

Meantime, the Malaysia External Trade Development Corporation (Matrade) says it expects the country’s drug exports to exceed last year’s 678 million ringgit ($212 million), based on strong demand from markets in Asia, and that intensifying R&D will help to accelerate this growth.

Frost & Sullivan recently forecast that the Malaysian drug industry will grow by an average of 10.5% a year to 2013, when it will be worth about $1.80 billion. As a result of its export growth, Malaysia is now a member of the Pharmaceutical Inspection Co-operation Scheme (PICS), and its drug industry “has become increasingly reputable,” according to Lin Hui Tham, healthcare Asia Pacific consultant at F&S.

The key drivers building the sector’s global reputation are medical tourism and the markets for generics, specialist-driven therapies, dietary supplements and herbal or traditional medicines, while the bio-generics sector is currently relatively unexplored and represents a major opportunity, she adds.

Malaysia’s pharmaceutical industry is dominated by multinationals, and the sector is set to grow this year as these firms increase their outsourcing and licensing operations, including the conduct of clinical trials, with the support of government initiative schemes. Moreover, the Malaysian population is small in size but its healthcare spending is “incredibly high,” says Ms Lin Hui. “Hence, the opportunity for health care companies venturing into Malaysia looks bright. This in return enables the country to expand its global footprint in the Asia Pacific health care industry,” she adds.