While the overall business activities were reeling under the unprecedented economic fallouts of the novel coronavirus pandemic, drugmakers saw an opportunity to expand their operations in it – resulting in over 150% year-on-year growth in the import of capital machinery in July this year.
The opening of fresh letters of credit (LC) against capital machinery for the pharmaceutical industry grew by over 200% year-on-year in July, reflecting the business expansion efforts of the local drug manufacturers.
In stark contrast to the boom in the pharmaceutical industry, the overall imports of capital machinery tumbled by 56% in July this year compared to the same period last year, according to the Bangladesh Bank's data.
The imports of raw materials for the drug industry also surged by around 30% in the month of July amid a rising demand for new pharmaceutical and hygiene products during the Covid-19 situation.
The sector, however, saw a slowdown in imports of capital machinery and raw materials in September, registering a 25% year-on-year growth in LC settlement in the July-September period.
M Shafiuzzaman, secretary to the Bangladesh Association of Pharmaceutical Industries (Bapi), told The Business Standard that export-oriented pharma companies went for mega investment after the government had announced a 10% cash incentive for pharmaceuticals exporters last year.
Besides, there has been a surge in fresh investment amid the pandemic, as companies are investing in product development and new products relating to Covid-19 treatment, he added.
Citing the instance of Globe Pharma, which is working on developing a Covid-19 vaccine, he said the company has invested around Tk100 crore in the effort.
More big companies like Incepta and Square also have gone for mega investment, which contributed to the surge in capital machinery import, he explained.
The banking sector that has been suffering from sluggish credit demand also did a handsome business from the high import in the pharma sector, said Syed Mahbubur Rahman, managing director of the Mutual Trust Bank.
He also mentioned that the pharmaceuticals sector, having a high import demand, has largely contributed to the private sector credit growth that is currently around 9%, including stimulus loans.
The early recovery and good business prospect put the pharma industry in the priority list of banks for financing, he added.
Md Arfan Ali, managing director of Bank Asia, said banks have done better business from the pharmaceutical sector when compared to any other sector during the pandemic situation, as drug manufacturers went for mega investment amid a rising demand for healthcare services and medicines.
Explaining the reason behind the decline in the overall capital machinery imports, he said general investors except those in the drug industry have adopted a "wait and see" policy to observe impact of the second wave of the coronavirus infection.
The result of high import is already evident in the pharmaceutical companies' financial performance and business expansion announcements.
The large drug manufacturers saw 10-30% growth in their business amid the pandemic.
For instance, Renata Limited – one of the top five drug manufacturers in the country – has reported a 31% jump in its sales in the third quarter of the 2019-20 financial year.
It posted the highest growth among all pharmaceutical companies, according to industry insiders.
Meanwhile, the sales of market leader Square Pharmaceuticals rose by 12% in that quarter and the revenue of the pharmaceutical market grew at 16.4% amid the Covid-19 pandemic.
Square Pharmaceuticals Ltd has decided to set up a subsidiary company by investing Tk350 crore to extend its footprint in the medicine market and meet the growing demand for its products.
ACI Limited posted a net profit of Tk4 crore in the first quarter of the current fiscal putting the brakes on a series of quarterly losses. ACI suffered an annual loss of more than Tk100 crore in FY2020.
The profit of the company was bolstered mostly by rising sales of its pharmaceutical and hygiene products, according to the company.
Local drugmakers have also been performing strongly in the international market by exporting Covid-19 drugs.
The export of pharmaceutical sector surged by 20% in the July-October period of the current fiscal year compared to the same period last year. The country's overall exports saw less than 1% growth during this time.
In the process, pharmaceuticals exports exceeded the government target by 6% in the July-October period.
The outstanding performance has made drug exporters optimistic about crossing the $1 billion mark in annual export earnings within the next two years.
Salman F Rahman, private industry and investment adviser to Prime Minister Sheikh Hasina, made the projection recently at the three-day Asia Pharma Expo 2020.
In the first half of the current fiscal year, Bangladesh exported pharmaceutical products worth $74 million – 5.7% higher than that of the same period a year ago.
Salman said, "Bangladeshi companies are producing biosimilar and other advanced drugs now. The industry is also heading for production of active pharmaceutical ingredients (API)."
The ongoing Covid-19 pandemic has opened up a new window of opportunity for local drugmakers as the demand for antiviral drug remdesivir is increasing worldwide with its approval for emergency use by the US FDA to treat Covid-19 patients.
The government has permitted six companies including Beximco, Beacon, Eskayef (SK-F), Incepta, Square and Healthcare to export remdesivir .
Beximco that produced the drug first in the country has already exported the medicine to at least six countries – Azerbaijan, Pakistan, Nigeria, the Philippines, Venezuela and Lebanon.
The rise in business growth of pharma companies during the pandemic situation has been reflected in their share prices.
The market capitalisation of 32 listed pharmaceuticals companies gained 8.57% in four months from March to July when overall market capitalisation grew by 5.53% according to the Dhaka Stock Exchange (DSE).