Simply being the cheapest producer will not work in the future: Kaiser Kabir

Renata's Managing Director and CEO, Kaiser Kabir, appeared as a guest at TBS Future, an event organised by TBS Multimedia.

Discussing the current state of the pharmaceutical industry, its challenges, and prospects, he highlighted how technological innovation, artificial intelligence, and research and development are transforming drug production and accessibility worldwide.

Sketch: TBS

However, Kaiser Kabir warned that rising raw material prices and stringent government regulatory measures have pushed many small domestic companies into an existential crisis, while larger firms are also under significant pressure. 

To support the sector's global expansion, he emphasised the need to move beyond negative perceptions of entrepreneurs, ensure rational pricing of medicines, and relax foreign exchange policies to facilitate overseas investment.

TBS Executive Editor Shakhawat Liton moderated the session.

We have achieved 98% self-sufficiency in medicine production. Where is the global pharmaceutical industry heading in the next 10 years, and where does Bangladesh stand?

Predicting the next decade is difficult because technology is changing so fast. Artificial Intelligence is making drug invention significantly easier by helping researchers identify exactly which cells a drug will target. We are also seeing a focus on "designer drugs" for rare diseases and bio-electric implants that release medicine or perform mechanical functions internally, making treatment far more efficient.

For generic companies like ours, simply selling a basic tablet like Paracetamol will not be enough to make money in the future. We must move towards "super generics"—drugs that incorporate innovation to stand out.

How is the local industry faring amidst these global shifts?

Since 2023, the industry has been under immense pressure. The government has been pushing to reduce prices even though our costs have skyrocketed due to the devaluation of the Taka. Our financial situation is not good. We are currently in an existential crisis.

Small companies, which employ thousands, are quietly closing down because their brands aren't strong enough to survive without chemist-pushing. I estimate 30 to 40 companies have already shut their doors. 

Even large firms like Renata are struggling; we discontinued 140 products last year because they were no longer viable to produce. When you order a million-dollar machine and the Taka drops by 50% by the time it reaches the port, the cost becomes $1.5 million. This creates massive debt and puts companies in danger.

There is a common perception that medicine prices in Bangladesh are high. What is your take?

Actually, the data shows that Bangladesh has the lowest medicine prices in the world. For a publicly listed company like Renata, if we sold Tk100 worth of medicine previously, we would bring home Tk15 in profit. Now, that has dropped to just Tk5. Some argue that promotional costs drive up prices, but even if you removed those, it would only affect the price by 2-3%.

You mentioned the need for innovation. How do we move away from just being the "cheapest" producer?

Our economy has historically grown because our labour costs are low—this is true for garments and leather. But markets eventually move against those who only operate at the bottom. We must produce something new to add extra value. This requires Research and Development and, more importantly, "brainy" people.

The problem is that our brightest graduates often don't want to stay. They look at the political instability, the stress of living in a place where it takes an hour to travel one kilometre, and they choose to leave for PhDs abroad. They feel that merit isn't recognised here and that "thieves" are the ones growing. However, I believe the pharmaceutical sector is one place that can attract this talent by offering meaningful challenges.

You have previously mentioned that entrepreneurs in this country are treated like "criminals." Why is that?

This perception has worsened recently. Because some "oligarchs" took advantage of the system, destroyed the banking sector, and took the lion's share of government contracts, there is a bad impression of all businessmen. When my face appears on social media, people who don't even know me comment, "thief, thief". This negative perception of entrepreneurs must stop. We need to be allowed to operate as entrepreneurs to grow the sector.

Looking at the 1.5 trillion-dollar global drug market, how can Bangladesh increase its share?

We have to think big. We shouldn't be satisfied just because we export to Vietnam. We need to invest thousands of crores and hire the best brains. Even in these hard times, companies like Incepta spent Tk150 crore and Renata spent Tk165 crore on R&D last year because our future is linked to it.

We also need to acquire companies in America or Europe to gain their technology. Currently, there are major restrictions on our currency that prevent us from buying these smaller tech-heavy firms. Indian companies grew because they "thought big" and set up their own offices and brands abroad rather than just relying on distributors.

How will LDC graduation affect the industry?

LDC graduation is generally bad for the Bangladesh economy. Specifically for pharma, we will have to start filing patents. Currently, if a new drug is released globally, we can produce it here. After graduation, that won't be possible. It will reduce the money in people's pockets and create many unforeseen challenges.

What are your specific expectations from the next government to help the industry bounce back?

I have three main points. First, rational pricing. The next government should follow the 1994 pricing policy, which is still in the 2023 Drug Act but isn't being followed. We need a path that allows us to gradually adjust prices so we have the funds for R&D and setting up overseas offices.

Second, liberalise foreign exchange policies. Let us invest in companies abroad so we can acquire technology and market access.

Third, for the Active Pharmaceutical Ingredient (API) industry, the government must provide subsidised, cheap power. This is the most important element for making raw materials locally.

Ultimately, the government must respect entrepreneurs. We are the ones who built this industry from nothing, ensuring world-class factories without being told to. If you let us grow, the tax revenue generated will fund many government programs. For example, before 2023, Renata's profit was Tk500 crore; last year it was Tk200 crore. Consequently, the tax we pay has more than halved. If you want the country to prosper, let the entrepreneurs do what they do best.