The Covid-19 pandemic has highlighted the importance of the global pharmaceutical industry in a new way. The fourth largest pharma company of the country Renata Limited has been at the forefront of ethical business practices in the country, setting the benchmark on employee welfare, environmental awareness and CSR initiatives. During the pandemic, the company has been producing Ivermectin, Favipiravir, and Dexamethasone to aid in the battle against the deadly virus.
Renata's market capitalisation increased from $1 million in 1993 to $1 billion in 2018. Its net profit grew on average 18.49 percent for the last five years (2016-2020). Profit on export sale has been 52.2 percent and revenue growth has been 18.22 percent till 2018.
Besides producing medicines for humans, Renata is the market leader in producing animal healthcare products. They export medicines to 22 countries - Afghanistan, Belize, Burundi, Cambodia, Honduras, Hong Kong, Ireland, Kenya, Lithuania, Malaysia, Malta, Mongolia, Myanmar, Nepal, Nigeria, Philippines, Somalia, Sri Lanka, Thailand, Uganda, UK and Vietnam.
Fifty-one percent owned by Sajida Foundation, Renata received recognition for its CSR activity, environmental awareness and entrepreneurial spirit in the past.
Renata provides health care benefits for employees and their families and has invested in the beautiful Renata Park to encourage healthy lifestyles and promote protection of our environment.
In this interview with The Business Standard, Kaiser Kabir, chief executive officer and managing director of Renata Limited, spoke about the global pharmaceutical market and how Bangladesh can secure a larger share of the pie.
The Business Standard: Give us a bit of an overview and your thoughts on the pharma industry in Bangladesh. Among developing countries, Bangladesh has been at the forefront of making best use of the relaxed WTO restrictions on pharma patents. How were we able to do this?
Kaiser Kabir: Valued at approximately $1.5 billion, the pharmaceutical market is relatively modest in size, however, it has three unique characteristics.
First, virtually the entire domestic demand is met by local production.
Second, it is one of the few high-growth markets remaining in the world.
Third, while an inconsequential player in the global pharmaceutical scheme at the moment, a few local companies harbour audacious ambitions of becoming world-leaders in various market segments.
History has been on our side. By the early days of Bangladesh, MNCs such as Pfizer, ICI, Hoechst, et al, had set up a solid manufacturing base. This meant that there was rudimentary local expertise regarding pharmaceutical technology. As the Drug Policy of 1982 precipitated a mass exodus of MNCs, local entrepreneurs stepped up to fill the vacuum.
TBS: The pharma industry has been experiencing a boom since the pandemic globally. Do you see any opportunity for the Bangladeshi pharmas in this?
KK: The alleged boom has been restricted to specialty drugs related to treating Covid-19. Overall, the pharmaceutical industry is experiencing a slump because patient-flow for other diseases has plummeted. Growth in the pharmaceutical industry of Bangladesh has fallen to less than 4.5 percent, in contrast with the usual range of 10 percent to 15 percent.
So far, three Bangladeshi companies have exported Remdesivir. It is not yet clear whether there is a pandemic-boost for other medicines.
TBS: India controls the US generic drug market. How can we get a bigger share of the pie?
KK: It is an increasingly uphill battle. Even if we make inroads in terms of volumes, the prospect of securing a large value share is small. Healthcare spending as a fraction of GDP is static in most developed countries. Innovative drugs are claiming an increasing share of health budgets, and consequently prices have been falling for plain-vanilla generics.
To become a serious player in the world market, Bangladeshi companies must upgrade their capabilities for developing high value-added medicines. This is not to cast a gloom on our export prospects. Exports are rising and shall continue to do so. However, our share of world trade is likely to remain insignificant without a shift into specialty medicines.
TBS: What happens to us after 2024 when the patent restrictions come into play? Does our industry have the capability to graduate to producing patented drugs? Do you see us acquiring strong R&D capabilities?
KK: Whether it is 2024 or 2031, a good patent law can protect the existing market for at least an additional decade. However, growth is likely to come from new medicines, which is why it is vital for us to upgrade our research and development capabilities. Developing a new molecule is extremely difficult and expensive. However, we should aspire to at least develop variants of patented drugs. There are established pathways for doing so in developed intellectual property regimes.
At Renata, we have upgraded our R&D capacity to produce high value-added medicines, adding highly skilled scientists and relevant equipment.
TBS: Tell us a bit about Renata. How it started? How and when you joined? What has been the journey like so far?
KK: In 1993, Pfizer Inc., divested its interests in Bangladesh. The name of the company was changed to Renata Limited. Presently, the well-known NGO, Sajida Foundation holds 51 percent of the shares.
Renata has done well over time. In 1993, its market capitalisation on the Dhaka Stock Exchange was only $1 million. Presently, it is well over $1 billion.
I joined the company as CEO in 2002.
Renata is an interesting place to work. The culture encourages initiative and leadership. As a result, there are many interesting personalities with diverse styles of management, but all working towards a single goal and adhering to a strict value-system. Highly intelligent, self-motivated persons holding liberal values, empathy for the less well-off and concern for the environment tend to enjoy working at Renata.
TBS: Renata's production standards and facilities are of global standard. How does this square with the pricing of the products? How do you manage the costs?
KK: High volumes help in absorbing overhead costs. There is also considerable emphasis on process-optimisation for increasing productivity. We have had some startling successes in this area. Finally, Renata effectively has no long-term or short-term debt, which certainly helps keep costs down.