Pharma in crisis as costs soar but prices stay fixed

Highlights:

• Government-frozen drug prices clash with soaring production costs
• Essential medicines vanish as local production becomes unviable
• Raw material and currency shocks push firms into losses
• Small and mid-sized companies face collapse without price reforms
• Paracetamol, phenobarbitone show extreme price–cost imbalance
• Experts warn shutdowns will force reliance on expensive imports

Bangladesh's pharmaceutical industry — long praised as one of the country's strongest manufacturing success stories — is currently in a crisis as government-set price caps remain frozen despite soaring production costs.

Industry leaders say the price freeze, unchanged since 2022, combined with escalating raw material bills, dollar volatility, rising utility tariffs and high borrowing costs, has pushed many manufacturers into sustained losses. Several essential medicines have already disappeared from production lines, forcing patients to rely on far costlier imported alternatives.

Companies argue that controlled prices for many life-saving drugs have fallen so far below cost that even minimum batch production is no longer viable. With firms legally barred from raising prices independently, industry leaders warn the sector has reached a breaking point.

Dr Zakir Hossain, secretary general of the Bangladesh Association of Pharmaceutical Industries (BAPI), said pricing controls tightened after 2018 and no broad revisions have been permitted since 2022.

"People assume prices went up," he told The Business Standard. "But only a few items changed, based on approvals given long before 2022 — and even then, those take months to reach the market."

He said a recent High Court ruling directing authorities to set prices strictly under Section 30 of the Drug and Cosmetics Act 2023 should be implemented fully, including preparing a list of essential medicines and reviewing prices regularly.

Renata CEO and MD S Syed Kaiser Kabir said raw material costs have risen "above the price of many medicines," worsened by currency depreciation, monetary tightening and high interest rates.

"Several products are now inherently loss-making," he said. "Without swift pricing adjustments, more firms will halt production."

Infograph: TBS

A case study: phenobarbitone wiped out by price gap

Phenobarbitone, an essential anti-epileptic, has become emblematic of the crisis. Its government-fixed retail price is Tk0.47 per tablet, while production costs stand at Tk0.85 after accounting for raw materials, freight, salaries and overheads.

Unable to absorb the gap, local companies have stopped manufacturing the drug. Patients now rely entirely on imported versions retailing at Tk8–10 — more than 10 times higher.

"If the price were even Tk1, local firms could continue," Kabir said, adding that patients would still pay a fraction of the imported rate.

ACI Pharmaceuticals continues manufacturing around 30 medicines at negative margins. CEO Mohibuz Zaman said the company does so "solely because patients need them."

"Electricity prices have risen, utility expenses are increasing, salaries must go up every year. We are caught between two sharp edges. Bangladesh has one of the lowest drug prices in the world, yet people think medicines are expensive," he said.

Health Care Pharma has discontinued 18 medicines, with individual losses touching 70%. CEO Mohammad Halimuzzaman said modest revisions secured in 2024 "barely made a dent." 

Incepta Pharmaceuticals chairman Abdul Muktadir said paracetamol pricing underscores the irrationality: its production cost has risen nearly 40-fold over 20 years. Its retail tag remains Tk1.20. 

Muktadir said it should ideally retail at Tk26. "Each time we ask, we hear medicine prices must stay low. No meaningful revision has happened since 2017. It is seen as politically risky."

He warned that 70% of the nation's top 100 drug makers are in negative growth based on IMS Q2-2025 data. The others are barely breaking even, raising doubts about future reinvestment and quality upgrades.

Margins too thin to survive

Dr Zakir Hossain of BAPI outlined the arithmetic of survival. Out of Tk100 retail price, roughly Tk25 is absorbed by VAT and retail commission. The remaining Tk75 must cover raw materials, labour, bank interest, taxes, freight, regulatory compliance, and sales promotions.

"After covering these, there is very little left, and often nothing," he said. "Large firms with 500-1,000 products can cross-subsidise. Smaller companies with 30-50 items collapse if even 10 become loss-making."

Renata halts over 150 medicines

There is no central database for discontinued medicines. Company disclosures reveal scale. Renata has suspended 102 human medicines and 50 animal health products out of 626 registered items.

Renata CEO Kaiser Kabir said raw material prices have breached selling prices in many cases. He said over 150 items were halted by Renata alone in 2025. He warned firms could "shut one after another" without reforms.

While Renata remains profitable overall, Kabir said margins no longer sustain reinvestment, compromising quality upgrades.

Small firms at the brink

Smaller and mid-sized firms have axed whole lines, including drugs for Alzheimer's, Parkinson's, infections, anaesthesia, epilepsy and psychiatric care, with deep cutbacks or full stoppages on life-critical items.

Apex Pharma, part of the Apex Group, has 350 registered products, but most are now sold at a loss. Production of over 40 items has already been discontinued. 

In December 2024, the company sought price increases for 10 antibiotics, yet nearly a year later, the requests remain pending.

Dilip Kajuri, managing director of Apex, said, "More than 150 of our medicines are being sold at a loss. Total losses have crossed Tk30 crore. We continued production out of commitment, but we can't sustain this much longer."

At Rephco Pharmaceuticals, the situation is even worse. Two years ago, it produced over 120 life-saving medicines; today, nearly half are no longer manufactured. 

Director Mamun Rahman said, "Big companies can survive by raising prices or cross-subsidising. Small firms like ours are struggling just to stay alive."

Industry insiders say nearly all of the country's 250-plus pharmaceutical companies, except the top ten, are under severe financial stress. 

BAPI President Abdul Muktadir added that efforts to freeze prices for political reasons are crushing domestic manufacturers.

"Earlier, importing raw materials costing $1 required Tk86. Today it costs Tk123," he said. "A medicine that once earned Tk5-10 profit now results in a loss."

What experts, authorities, CAB say

Dr Syed Abdul Hamid, professor of health economics at the University of Dhaka, urged consumers, policymakers and businesses to "be more considerate."

"What we bought five years ago at a certain price can't still be expected at the same price today. People's incomes are limited, so rising costs hurt; that is true. But commercial products can't remain static year after year," he said.

He warned that if companies shut down due to losses, foreign medicines would fill the gap – and imported drugs would be even costlier.

Asked about industrywide distress, Dr Md Akter Hossain, director of the Directorate General of Drug Administration (DGDA), told TBS, "We are not aware that the situation is so severe. We approve price increases on a case-by-case basis. If companies submit applications, we will review and decide accordingly."

He added that DGDA recently resolved complications over new drug approvals and will address pricing issues as well.

Meanwhile, the Consumers Association of Bangladesh (CAB) has opposed pharmaceutical companies' demands for higher prices. CAB Treasurer Dr Monjur-e-Khoda Torofdar said several medicines were unjustifiably hiked in 2022.

"Following a court petition, further price increases are now halted. We want the government to set prices based on production costs and consumers' purchasing capacity. No company should raise prices at its own discretion," he said.