Healthcare Investment Opportunities in Bangladesh and way ahead
Bangladesh, on the northern coast of the Bay of Bengal, is surrounded by India, with a small common border with Myanmar in the southeast. The country is a low-lying riverine land traversed by the many branches and tributaries of the Ganges and Brahmaputra rivers. Tropical monsoons and frequent floods and cyclones inflict heavy damage in the delta region. The Siliguri Corridor separates it from Nepal and Bhutan. Dhaka, the country’s capital and largest city, serves as the country’s economic, political, and cultural nerve center.
Healthcare Snapshot of Bangladesh
The Bangladesh healthcare sector comprises of hospitals, clinics, diagnostic centres, clinical trials, outsourcing, telemedicine, and medical devices and equipment. Growing at a CAGR of 10.3% percent since 2010, the size of the healthcare industry has reached USD 6.76 billion in 2018 (in terms of spending on the healthcare expenditure), doubling in the last 8 years.
The private sector dominates the healthcare business, with tertiary hospitals and diagnostic institutes seeing rapid expansion. There were 255 public hospitals, 5,054 private hospitals and clinics, and 9,529 diagnostic facilities registered with the Directorate General of Health Services as of the end of 2019. (DGHS).
Bangladesh’s Economy
The Economy of Bangladesh is characterised as a developing market economy. It is the 42nd largest in the world in nominal terms or at current prices, and 30th largest by purchasing power parity (US dollars at current prices). It is classified among the Next Eleven emerging market middle income economies and a frontier market, and in the first quarter of 2019, Bangladesh was the world’s seventh fastest-growing economy with a real GDP or GDP at constant prices annual growth rate of 8.3%.
Dhaka and Chittagong are the principal financial centres of the country, being home to the Dhaka Stock Exchange and the Chittagong Stock Exchange. The financial sector of the country is the third largest in the Indian subcontinent. Bangladesh is one of the fastest growing economies in not only South Asia, but the world.
Bangladesh ranks 133rd in the world Human Development Index (HDI), With 20.5% of the population living in poverty, 28.3% living on less than $3.20/day, and 6% living in extreme poverty according to 2020 reports.
Recent Healthcare investments in Bangladesh
The Bangladesh government values the significance of health towards building a healthy and productive population. Over time, the country has made great progress in improving life expectancy, reducing infectious disease, infant and maternal mortality.
The government is encouraging further development of the sector through favourable incentives. The sector is open to 100 percent Foreign Direct Investments (FDI) with tax holidays being offered to new hospitals who meet a few conditions.
STS becomes part of Evercare and CDC Group (UK)
UK based investor group CDC and Evercare, a network of hospitals that operate across South Asia and Africa, acquired a controlling nterest in STS Holdings Ltd (STS) in 2020. Founded in 2005, STS operates a 425-bed multi-disciplinary hospital in Dhaka with healthcare providers across 29 specialties and is currently developing a new, 400-bed facility in Chittagong.
STS’ facility in Bangladesh was the first hospital to receive Joint Commission International (JCI) Accreditation in 2008, an international stamp for excellence in clinical practices in patient care and safety and remains the only JCI-Accredited hospital in the country.
Support from Global Bank Organisations
Support from development partners has always been an important source of health financing in Bangladesh. The World Bank and the Asian Development Bank (ADB) have signed agreements of $100 million each for strengthening government systems for COVID-19 response.
Investment by the International Finance Corporation (IFC)
In 2022, The International Finance Corporation (IFC) has planned to invest $5 billion in diversified sectors in Bangladesh over the next five years. Key IFC investments have been made to help private sector growth in the country, in key sectors that have included healthcare and pharmaceuticals.
Healthcare investment Opportunities in Bangladesh
The healthcare sector in Bangladesh has experienced increased growth in recent years. Bangladesh is the only least developed country (LDC) that meets nearly 98 percent of its domestic demand for pharmaceutical products, with a market size of approximately $3 billion.
Pharmaceutical Industry
Bangladeshi pharmaceutical products are exported to some 150 countries and generated $169 million in fiscal year 2020-21. With an annual two-digit growth rate, the Bangladesh pharmaceutical industry is now heading toward self–sufficiency in meeting local demand. There are more than 300 small, medium, and large enterprises operating in the country producing pharmaceuticals; the top ten producers make up approximately two-thirds of the market.
At present the industry is serving 97 percent of the domestic market and exporting to more than 100 countries around the world. The Bangladeshi drug market is dominated by production of branded generic drugs, which account for almost 80% of the drugs produced locally, while patented drugs make up the remaining. Currently, there are 271 Allopathic, 205 Ayurvedic, 271 Unani, 32 Herbal and 79 Homoeopathic drug producing companies in the country.
Tax exemptions
Anti-cancer drugs, vaccines, hormonal contraceptives, and other products can be imported without tax.
API Production
The government of Bangladesh is strongly encouraging manufacturing of API through various fiscal and export subsidies. The government formulated API Policy in 2018 with a goal to attract investment worth USD 1 billion in API production and reduce import-dependence to 80% by 2032. The policy also aims to raise API export income and create 500,000 jobs by 2032. A dedicated API Park has also been established recently.
Branded generic/patented medicines
Given Bangladesh’s expertise in producing branded/ blockbuster generic drugs, the anticipated patent-cliff will provide a huge opportunity for Bangladeshi producers to expand their production and market of generic drugs. In addition, Bangladesh can expand its production and exports of patented drugs to LDCs and non-WTO members benefitting from WTO’s extended patent waivers.
Drugs related non-communicable disease (NCDs)
Rapid increase in non-communicable disease among the Bangladeshi population as well global population has been leading to the growing demand for drugs used for the treatment of NCDs. Such drugs for NCDs include anti-cancer, anti-diabetes, vaccines, insulin, etc.
Medical Devices Industry
Bangladesh offers opportunities for international exporters of high-end medical equipment, surgical instruments, diagnostic equipment, and services. Imported medicines and medical devices are subject to customs duties depending on types and classes.
Position of the Medical Devices Industry
The medical equipment and devices industry is currently at a nascent stage with 85 percent of devices being imported. The size of Bangladesh market was estimated to be valued at USD 442 million in June 2020 and is expected to reach approximately USD 820 million in 2025, growing at a CAGR of 13%.
Dominates the Healthcare Market
The market currently is dominated by the instruments/ appliances segment and diagnostic imaging equipment in terms of value, which are expected to grow steadily. At present, over 4,000 medical devices and equipment are in use in the country, about 5-7% of which are manufactured in the country. Among the locally produced items, majority are consumables/disposable with an estimated market size of USD 55-60 million. Aside from consumables, Bangladesh also produces orthopaedic products, surgical sterilisers, hospital furniture, home care devices, electrocardiogram and other small instruments, albeit at a small scale. The demand for IVD device/ kit is expected to be the fastest growing segment, followed by cardio logical devices, consumables and diagnostic imaging equipment.
Demand for PPE production
The COVID outbreak has enhanced local production of personal protection equipment (PPE) including protective masks/ clothing, respirator, hospital gowns.
Hospital Industry
In spite of the increase in the number of healthcare facilities during the last decade, the demand for hospital beds has consistently outpaced the supply in Bangladesh.
Establishment of tertiary/ specialised hospitals
Available bed density per 1,000 population was 0.8 in 2016, which is low compared to the global standards. This fact indicates the untapped need for tertiary/ secondary hospital establishment, to which foreign investors are welcome to contribute.
High Disease Burden
The changing disease profiles in Bangladesh is generating further demand for tertiary or specialised hospitals catering to the treatment of non communicable diseases. There is a high demand for specialised care for cardiac and oncology treatment at tertiary institutions. According to Bangladesh NCD Risk Factor Survey 2018, around 16% Bangladeshis, aged 40-69 years, are at risk of suffering from cardiovascular diseases.
Conclusion
Bangladesh has one of the world’s fastest developing economies. Its economy has grown gradually at a pace of more than 6.5 percent on average over the last decade, transforming the country into a land of opportunity. Unlike seasonal businesses, demand for healthcare products and services more or less remains intact at any point of time. So, like FMCG, investments in healthcare also provide the investors an opportunity to get a relatively stable return. The country has a fantastic economic track record, a highly adaptable and competitive workforce, and numerous promising industrial areas in Asia with low cost and high return manufacturing regimes. Bangladesh’s enormous domestic markets, strategic location, high profitability, demographic dividend, and attractive incentive policies and persistent changes for a better business climate have positioned the country as one of the world’s top investment locations.
For more information about the Country and Healthcare opportunities in Bangladesh, you can visit the company website on www.hospaccxconsulting.com or contact us directly.
Sources:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6933436/
https://bida.gov.bd/healthcare
https://en.wikipedia.org/wiki/Economy_of_Bangladesh#Macro-economic_trend
https://www.trade.gov/country-commercial-guides/bangladesh-healthcare-and-pharmaceuticals
https://www.bii.co.uk/en/news-insight/news/evercare-platform-and-cdc-expand-to-bangladesh/?fl=true
https://bida.gov.bd/storage/app/uploads/public/616/6c3/2de/6166c32dec22c700971227.pdf
