Image by Mika Tennekoon/Himal Southasian.
Bangladesh defied Big Pharma to create a thriving low-cost generic drug industry — with regulation and policy lessons for India, Southasia and the world
In May 1982, a committee of eight experts submitted a report to Bangladesh’s health ministry proposing an overhaul of the country’s drug regulation regime. At the time, Bangladesh was almost entirely reliant on imports for its pharmaceutical needs, just like many poor countries in Southasia and beyond continue to be today. Most medicines on the market were expensive, and often-unsafe cocktails of antibiotics, cough syrups, digestive enzymes and palliatives were ubiquitous. Some three-quarters of the country’s pharmaceuticals were manufactured by just eight multinational companies, which typically sold their products at exorbitant prices. But medicines were not always easily available even to those willing and able to pay, owing to inadequate and poorly distributed infrastructure.
The expert committee proposed a radical, transformative National Drug Policy (NDP). “Irrational cocktails of digestive and cough syrups and liver tonics were the majority of the drugs in our market,” Abdul Muktadir, the chairperson of Incepta Pharmaceuticals, one of Bangladesh’s largest producers of generic drugs, said. Out of the 56 drug products sold by the British multinational Glaxo in Bangladesh in the early 1980s, 22 were vitamin supplements and tonics — and only three of these were marketed by the company in Britain. “They had little role in the treatment of diseases prevalent in our country,” Muktadir, who is also the president of the Bangladesh Association of Pharmaceutical Industries, added. “If you look at India, to this day, these kinds of cocktails are bestsellers. It doesn’t happen in Bangladesh. The NDP encouraged companies to produce what the country needed, like antibiotics and antiviral medicines. That law was such a big jerk to the whole system. To this day it impacts the psyche of patients and doctors, who don’t put their trust in irrational medicines.”
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Today, Bangladesh is a long way along the road that the NDP set it on. Of the world’s present total of 46 Least Developed Countries, or LDCs, it is the only one to have a thriving pharmaceutical industry. This industry manufactures safe medicines, available at among the lowest prices in the world, that cater to almost all of Bangladesh’s domestic demand. Its exports, though still nascent, go to well over a hundred developing countries, including ones in Southasia. Bangladesh’s pharmaceutical market was estimated to be worth roughly USD 3 billion in 2022, having grown three-fold over the preceding decade. Official trade figures from 2023–2024 put the industry’s export earnings at USD 205 million, with Myanmar, Sri Lanka, the United States, the Philippines, Afghanistan and Kenya the top export destinations.
Bangladesh is well known internationally for the rapid growth of its garment industry. But the rise and growth of its pharmaceutical manufacturing has attracted less attention, at least in part because the country has achieved this success by going against the dominant global dogmas of industrial development, imposing price caps, banning imports and stressing local manufacturing. This is a story of how a poor, newly independent nation took on Big Pharma and won.
It is also the story of how Bangladesh’s pharmaceutical sector, though not without its problems, has avoided the kind of mass dysfunction and regulatory crises that confront the Indian pharmaceutical industry, its more famous and globally celebrated cousin next door. With its rationalised, large-scale manufacturing and an ongoing push for self-sufficiency even in APIs — Active Pharmaceutical Ingredients, the key raw materials of pharmaceutical drugs — the country has also shielded itself from the overwhelming dependence on Indian pharmaceutical exports that plagues many poor countries today, a dependence that too often comes with grave costs. For Indian pharma and for all the countries left at its mercy, Bangladesh offers a model and an alternative.
WHEN EAST PAKISTAN rose up for its independence and became Bangladesh in 1971, it lost most of its domestic pharmaceutical industry, which was concentrated in West Pakistan — what we know as Pakistan today. The newly independent country faced a critical challenge in ensuring the availability and accessibility of essential drugs, which led initially to large-scale pharmaceutical imports. In the absence of a robust drug regulatory mechanism, the result was a market flooded by unnecessary, counterfeit and ineffective drugs. New domestic pharma companies began to emerge, but many of these effectively just served as sales agents for foreign pharmaceutical firms, importing drugs in bulk and bottling them for domestic distribution without adequate quality control.
To address the crisis of substandard, ineffective and overpriced drugs, the expert committee formulated 16 criteria to evaluate all pharmaceutical products already manufactured in and imported into the country, as well as to govern the registration and licensing of new drugs and production units. Zafrullah Chowdhury, one of the committee’s members — regarded as the father of Bangladesh’s drug policy — summarised the principles underlying these criteria in The Politics of Essential Drugs, published in 1995.
One principle was “the introduction and reformulation of single-ingredient products, especially antibiotics and analgesics,” and “strict restriction of combination drugs” — all to push out the murky and overpriced cocktails of multiple drugs that dominated much of the market. Other principles included the “elimination of placebo products and drugs without adequate scientific and medical grounds to justify their existence; and, last but not least, a ban on toll manufacturing” — the outsourcing of production by foreign corporations to domestic companies. The NDP also granted domestic companies exclusive rights to manufacture antacids and oral vitamin supplements.
The NDP led to the ban of 1742 medicinal products deemed ineffective or non-essential. Earlier, Bangladesh had 177 licensed drug manufacturers — many of them non-operational firms, small companies making traditional medicines and subcontractors for multinational firms — between them meeting only around a third of domestic demand. There were 122 foreign companies exporting drugs to Bangladesh, including firms from the United Kingdom, the United States, West Germany, Switzerland and the Netherlands. Of the newly banned drugs, 176 were produced locally by multinational pharmaceuticals, and 617 were imported from them. “Capitalist countries had exported more ineffective, useless or harmful drugs than socialist countries,” Chowdhury observed. “Among the offenders, West German and Swiss companies ranked very high.”
Chowdhury noted in his book that the new policy unleashed a storm, with the massive geopolitical power of global pharmaceutical firms — “Big Pharma” — on full display. Hours after news of the NDP broke, the US ambassador to Bangladesh called on Hussain Muhammad Ershad, Bangladesh’s military ruler at the time, “to convince him that the policy was unacceptable to the USA and it should not be implemented.” The British, Dutch and West German ambassadors also expressed their dismay. The US ambassador also had meetings with the editor of Bangladesh’s most widely circulated daily, Ittefaq, as well as with the heads of multinational pharma companies.
Ershad was compelled to hold a public hearing on the policy. There, as Chowdhury recalled, the pharmaceutical companies called the expert committee’s recommendations “suicidal” and even suggested that the downfall of the leftist leader Zulfikar Ali Bhutto in Pakistan was linked to his introduction of a policy favouring generic drugs. Global companies also argued that the new policy would damage public health in Bangladesh and deter foreign investors. Chowdhury wrote that Ershad also faced pressure from the top levels of the US government during a visit to Washington DC – including from George H W Bush, then the vice president of the United States.
In the end, Bangladesh stood its ground. This made it one of only 14 countries in the world at the time to have its own NDP.
In a chapter of the 2017 edited volume Economic and Social Development of Bangladesh, Tetsushi Sonobe, Khondoker Abdul Mottaleb and Mohammad Nurul Amin noted that the NDP initially met fierce opposition not only from multinational firms and local contractors working for foreign manufacturers, but also from Bangladeshi intellectuals and doctors. However, the benefits of the new policy gradually became undeniably clear.
The NDP heralded a new era of increased self-reliance, improved pharmaceuticals and affordable drugs. It induced a massive shift of managers, engineers and skilled workers from multinational to local firms. More importantly, it wrestled market share away from multinationals, giving domestic manufacturers plenty of room to grow. Local firms began manufacturing antacids, vitamins and generic drugs under their own brand names, and quickly grew.
The NDP’s protectionist measures and emphasis on local industry stood in stark contrast to the thinking on global trade and economic development enshrined with the formation of the World Trade Organisation (WTO) in 1995. The WTO regime called for restrictions on countries’ ability to regulate foreign investment and mandated non-discriminatory treatment of foreign products. It also insisted on strict protections of patents and intellectual-property rights. In the pharma world, with large multinationals holding and zealously defending patents for many of the world’s most vital medicines — often via questionable practices — this meant the threat of restrictions on production of generic alternatives by smaller companies, such as those in Bangladesh.
Bangladesh joined the WTO right at the organisation’s inception. But, as an LDC, it was granted exemptions from the WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS) treaty, as well as the Trade-Related Investment Measures agreement. That meant Bangladesh was able to sidestep pharmaceutical patents, maintain import restrictions and strategic export subsidies, and so continue to shelter and nurture its nascent pharma industry.
Bangladesh remains a glaring outlier: other eligible countries have by and large not managed to take advantage of TRIPS concessions to build strong pharmaceutical industries of their own. A 2022 paper authored by the economist Mustafizur Rahman and a collective of researchers from Boston University examines the potential for low- and middle-income countries to establish themselves in the pharmaceutical industry in the way Bangladesh has managed. The authors find that the odds are stacked against them, not just because of TRIPS restrictions — including provisions on patent terms, patent exclusions and compulsory licensing — but also other regional and bilateral trade and investment treaties across the globe that further constrain their policy space.
The Bangladesh government continued with similar policies in subsequent decades. In 1998, for instance, it banned the import of drugs that were being produced in “sufficient quantity” by more than two local manufacturers. An updated NDP in 2005 slightly relaxed restrictions on foreign firms, allowing them to invest and manufacture in the country if they met certain criteria. In turn, the local pharmaceutical industry got new opportunities to export and grow globally. Sonobe, Mottaleb and Amin have noted that the pharma sector’s total turnover grew and grew, from USD 100 million in the mid-1980s to almost USD 2 billion in 2014. “The domestic demand for medicines has increased substantially due to the rapid growth of the Bangladeshi economy,” they write, “but the growth in output has exceeded demand, thereby reducing medicine prices drastically.”
Amin and Sonobe, in a separate paper on the development of Bangladesh’s pharmaceutical industry, compared drug prices in Bangladesh between 2010 and 2011 with those in Sri Lanka, India, the Philippines, Indonesia and the United Kingdom over the same period. They concluded that “almost all of the medicines are sold at the lowest price in Bangladesh,” with local prices sometimes more than ten times lower than in other countries.
“In the West, generic substitutes enter the market after expiry of the patent, which lasts for twenty years or longer as companies maximise their profit with exorbitant prices,” Muktadir, the Incepta chairperson, said. “In the developing world, we see a different model: branded generic sold at balanced prices which are arrived at because there is competition.” In 2015, Incepta created a stir when it launched a generic version of the patented Hepatitis C drug Sofosbuvir at a price of just USD 10 per tablet; in the United States, the non-generic drug was priced at USD 1000 per tablet.
While most of Bangladesh’s main pharmaceutical firms in 1985 were subsidiaries of multinationals, today every one of the country’s top ten firms is domestically funded and owned. But even as the likes of Incepta, Beximco, Square and Renata have cornered most of the market, the rise and dominance of the private sector here has not come with an erosion of regulatory standards on the scale seen in neighbouring India.
India’s private pharmaceutical industry, born out of the country’s economic liberalisation in the 1990s, enjoys a high profile as “the pharmacy of the world,” thanks to its mass production of affordable generics. But where the Indian drug regulatory regime suffers from ineffective laws and a system of regulatory responsibilities divided almost incoherently between multiple national and state-level authorities, Bangladesh has retained a far more orderly arrangement. The country’s sole drug regulator is the Directorate General of Drug Administration (DGDA), which maintains 47 offices across the country. It takes responsibility across the country for licensing and market authorisation, ensuring the safety, quality and efficacy of drugs and APIs, as well as monitoring prices and undertaking environmental risk assessments. The DGDA’s chief is Bangladesh’s designated Licensing Authority, responsible for issuing licenses for all drug manufacturing, sales, imports and exports.
As of March 2025, the DGDA website lists 644 drug manufacturers under the agency’s jurisdiction, including 323 making allopathic drugs — 253 of them listed as functional — and hundreds more producing ayurvedic, herbal and homeopathic products. In 2021, the agency had 117 inspectors in charge of ensuring Good Manufacturing Practices (GMP) stipulated by the World Health Organisation. It also had 74 inspectors responsible for Good Distribution Practices and three responsible for ensuring Good Clinical Practices. Bangladesh’s 2005 NDP stated that GMP guidelines would be “strictly followed in the manufacture of drugs” and mandated regular inspections to ensure compliance. A 2016 update to the NDP mandated that DGDA staff be sufficiently trained so that GMP standards are “effectively followed and implemented in drug manufacturing companies of all recognized systems.”
India’s pharmaceutical industry comprises over 10,000 manufacturers across various organised and unorganised segments. Its various drug regulators at the national and state levels are chronically understaffed and dogged by questions over their competence and honesty. The national-level Central Drugs Standard Control Organisation, for instance, had just 201 inspectors as of December 2023 against a sanctioned strength of 504. One of its top officials is facing prosecution on corruption charges.
Following a global uproar over toxic Indian cough syrups that killed more than a hundred children in The Gambia, Cameroon and Uzbekistan, in 2023 the Indian government belatedly decided that all manufacturers would have to meet GMP standards. A deadline extension to December 2025 for certain categories of manufacturers means that India’s pharmaceutical industry has still not achieved universal GMP compliance.
“Bangladesh realised that pharmaceutical companies were dumping substandard medicines in their markets,” Leena Menghaney, a health-rights activist who has worked with the international charity Doctors Without Borders in Southasia, said. “So they built a movement around rational medicines and invested in local manufacturing. They rely entirely on domestic manufacturers for their needs.”
When it comes to quality, Menghaney added, “The thing that protects you against substandard medicines is a good drug controller. Countries that don’t have that shield are suffering.”
FOR ALL ITS SUCCESS, however, Bangladesh’s pharma industry is not immune to flaws and failures.
Like India, where scandals involving substandard or fake drugs are depressingly regular, Bangladesh also faces concerns over the production and distribution of unsafe pharmaceuticals — even if not on the same scale as its neighbour. In December 2023 and January 2024, three children died after being administered adulterated Halothane, a general anaesthetic. Several earlier deaths under similar circumstances were suspected to also be down to spurious anaesthetic. The only company authorised to make Halothane in Bangladesh had earlier informed the DGDA that it had discontinued production of the drug, in line with a global shift to newer alternatives with fewer side effects. Yet it was only after the deaths that Bangladesh’s health ministry directed hospitals to stop using the anaesthetic, and authorities have failed to identify the source of the adulterated Halothane.
Bangladesh has also seen mass poisonings from contaminated syrups. Over 200 children died in one episode in the early 1990s, and at least 28 in another in 2009. Five companies were implicated in the deaths from the 1990s. After repeated delays, only some of the cases against them have been concluded. Three employees of one company were sentenced to prison in 2014, and six of another the following year. (Five of the latter remain on the run.) In the case of the 2009 deaths, a court acquitted all officials of a company linked to the toxic syrups, accusing regulatory authorities of “negligence, inefficiency and incompetence” in conducting a proper investigation and putting together a prosecutable case. Bangladesh’s Daily Star described it as a “case designed to be doomed.” In 2022, the country’s Supreme Court directed the health ministry to pay compensation to the families of 104 children who had died across the two mass poisonings.
Another crucial hurdle for Bangladesh’s pharma industry, right from the beginning, has been a continued reliance on imports for APIs. Bangladesh still has limited capacity to manufacture these key molecules and depends heavily on supplies from India and China — the global powerhouses of API production.
The Bangladesh government has long promoted self-reliance in the pharmaceutical sector, with a major focus on APIs. The objectives of the most recent NDP, from 2016, include achieving “self-sufficiency in the manufacture of drugs and raw materials.” In 2008, the government approved the construction of an industrial park for API production near Dhaka; plots were handed over to local firms in 2017. The following year, the government launched an API policy to incentivise local production, including a 100-percent tax exemption for companies that can produce five different API molecules or more per year. Even then, Bangladesh still relies on imports for up to 85 percent of its present API demand, with a reported cost of around USD 1.3 billion per year as of 2024.
These more recent policy steps came under the government of Sheikh Hasina, the autocrat who ruled Bangladesh for 15 years until she was ousted in 2024. Questions of corruption, a constant theme of Hasina’s time in power, have not left the pharmaceutical industry untouched either. Beximco, one of the country’s largest conglomerates, holds large interests in pharmaceutical manufacturing. Its head, Salman F Rahman, is a member of Hasina’s Awami League party and was her adviser on business and investment. He stands accused of massive financial fraud and is currently under arrest on murder charges. The interim government that took charge after Hasina’s fall has moved to sell shares of Beximco’s pharmaceutical arm to pay off the group’s debts.
On a more quotidian scale, there are also questions over the practices of pharmaceutical sales representatives. Facing relentless sales targets, they often rely on manipulative tactics — for instance, offering gifts or sponsored trips to sway doctors to prescribe their companies’ products. Such practices, common in the industry beyond Bangladesh too, lead to the over-prescription of drugs, particularly antibiotics.
According to a 2021 paper on unethical practices in the promotion of pharmaceutical drugs in Bangladesh, a large part of pharma companies’ marketing expenditure is spent “for physicians in the forms of gifts. … This unethical practice also puts a tremendous negative effect on the whole industry. As a result the extra burden is carried by the consumers as they are to pay mandatorily more for medicines. The experts say if such unethical promotion could be stopped, drug prices would drop by 70%.”
Environmental contamination from pharmaceutical manufacturing is also a growing concern. A 2022 study that looked at rivers in more than a hundred countries found that the “greatest exceedance of the safe target was observed for metronidazole at a sampling site in Barisal, Bangladesh, where the highest concentration of this antibiotic was more than 300 times higher than the safe target.” The researchers found wastewater disposal along the Kirtankhola River and pharmaceutical manufacturing units nearby. An earlier study, from 2019, tested water samples from a lake, a canal and a river in Dhaka, and from ditches, ponds and drinking wells in rural Matlab. It found various pharmaceutical contaminants across the board, including antibiotics, antifungals, anticonvulsants, anaesthetics and antihypertensive drugs.
But perhaps the industry’s biggest challenge today is the impending end of Bangladesh’s right to produce generic drugs without the imposition of global pharmaceutical firms’ patent claims. The country’s economic development, proceeding faster than once foreseen, means it is expected to outgrow its LDC status in 2026. With that, it is expected to lose the attendant patent waivers — although the European Union typically grants a three-year grace period on concessions to LDCs transitioning to more advanced status, meaning some patent waivers may remain in place until 2029. Bangladesh could argue for further waiver extensions since its pharmaceutical industry is seen as a global good, especially for how it increasingly serves poor countries in Asia, Africa and the Americas.
A long-term solution, besides fighting against unfair global patent regimes, could lie in Bangladesh’s pharma industry pushing beyond just the production of existing drugs to try and produce new breakthroughs and drugs of its own. As things stand, Muktadir said, “There is no real innovation culture in the pharma industry.” Global pharmaceutical corporations largely follow a profit model centred on extortionate pricing of their existing drugs, deploying their resources to protect unfair monopolies and using loopholes to inordinately extend their patents. Investing in the pursuit of major new breakthroughs, a lengthy and financially risky business, is a relatively low priority. Today, Muktadir continued, “most research is done in universities” — often funded by Western governments that are hand in glove with Big Pharma — “and the result is gobbled up by pharma companies.”
Pharma industries beyond the West may potentially have a competitive advantage in chasing pharmaceutical breakthroughs — when it comes to labour costs, for instance. That, though, is just one part of the challenge: fostering innovative research requires an alignment of many complex factors, and many non-Western pharma industries, including India’s, have struggled to make things click. Still, Muktadir was optimistic. “In another 20 years’ time, I believe the majority of new research and new medicines will come from this part of the world and not the West,” he said. Bangladesh’s pharma sector, more than four decades after the NDP set it on its way, may have a fighting chance to defy expectations yet again.