LDC graduation delayed by three years, giving Bangladesh’s pharma industry time to prepare

Bangladesh’s pharmaceutical industry is one of the country’s most successful industrial sectors. From a once import-dependent sector, it has now gained the capacity to meet nearly 98 percent of the country’s medicine demand locally. Bangladeshi medicines are exported to more than 150 countries.

Behind this success lie investment by local entrepreneurs, government policy support, the landmark Drug (Control) Ordinance of 1982, a skilled workforce including an adequate number of graduate pharmacists, and the intellectual property benefits Bangladesh enjoys as a least developed country (LDC).

The good news is that on 30 October 2026 the United Nations General Assembly extended Bangladesh’s preparatory period for LDC graduation by three more years, setting the new date at 24 November 2029 instead of 24 November 2026. This extra time is very important for managing the risks the pharmaceutical industry would have faced after graduation.

It is important to understand what benefits Bangladeshi drug companies receive as an LDC, and what impact the loss of those benefits after graduation in 2029 could have on the pharmaceutical industry and public health.

Medicines marketed worldwide can be divided into three categories — patented drugs, generic drugs and branded generic drugs. When a company discovers a new drug molecule and markets it after the necessary research, pre-clinical and clinical trials and approval from the regulatory authority, it is known as an innovator or originator drug. If the originator company patents the innovation, generally for 20 years from the date of the patent application, no other company can produce that drug without the originator company’s permission.

On the other hand, another company can legitimately produce the same generic drug based on the drug’s active ingredient or generic name. To produce a generic drug legitimately, the drug’s patent must have expired, or, if the patent period has not ended, permission must be obtained from the innovator company by paying a fee. However, because Bangladesh is listed as a least developed country, Bangladesh and other LDCs have enjoyed the benefits of ‘compulsory licensing’ and ‘parallel import’ since 2001.

Through the compulsory licensing benefit, Bangladesh can produce, import and export generic versions of patented drugs without any legal barrier. And through the parallel import benefit, it can import patented drugs from another country without the permission of the company holding the patent.

A branded generic drug is a drug produced and marketed by a pharmaceutical company under its own chosen and registered brand name. Such drugs contain the same active ingredient, but different companies can market them under different brand names. For example, paracetamol is a generic name. In Bangladesh, Napa and Ace are two generic brands of paracetamol. Almost all medicines in the country are branded generics.

The growing development of Bangladesh’s pharmaceutical industry is closely linked to the World Trade Organization’s agreement on intellectual property, known as the TRIPS agreement. Under this agreement, member countries generally must provide patent protection for inventions, including medicines. But considering the economic and technological limitations of least developed countries, special exemptions have been given. In particular, for pharmaceutical patent protection, least developed countries can enjoy a special exemption until 1 January 2033 or until the country concerned loses its LDC status, whichever comes first.

After losing LDC status, Bangladesh will have to fulfil the obligations under the TRIPS agreement, including pharmaceutical patent protection. This does not mean that all generic drug production in Bangladesh will stop. Rather, drug companies will be able to produce and market drugs that have no patent, whose patent has expired, or whose production faces no legal barrier.

But if an effective patent for a new drug exists in Bangladesh, local companies will not be able to produce a generic version of that drug without a proper licence or other lawful basis. First, to produce a patent-protected new drug, local companies may have to take a voluntary licence from the innovator institution, which could require paying royalties or licence fees. Second, the scope for local generic production of modern drugs whose patents remain in force may be limited. Third, import dependence may increase for some life-saving drugs protected by patents, which could affect the price and availability of medicines.

Many medicines used in modern treatment for cancer, diabetes, heart disease, autoimmune diseases and other complex illnesses are extremely expensive, and some of them are still under patent protection. After LDC graduation, when patent protection obligations take effect, the scope for producing generic versions of these and other drugs may be limited, raising fears that treatment costs could rise. However, the TRIPS agreement contains some important flexibilities for protecting public health, including compulsory licensing, patent opposition and other lawful measures. Bangladesh must build the capacity to use these benefits properly in the public interest.

An important aspect of the success of Bangladesh’s pharmaceutical industry is supplying medicines within the purchasing power of ordinary people. After graduation from LDC status in 2029, it is essential to ensure that this achievement is not harmed by the changed reality of patent protection.

The challenges in realising the benefits of the delayed graduation are also considerable. Bangladesh’s pharmaceutical industry still depends on generic drugs. The biggest challenge for the country’s drug manufacturers over these three years is to acquire the capacity to innovate new drugs. Alongside the conventional production of tablets, capsules and injections, the time has come to increase investment in complex generics, biosimilars, biological drugs, controlled-release drugs, inhalation products and specialised cancer medicines. Biosimilar drugs, in particular, are an important promising field for Bangladesh.

Another major weakness of Bangladesh’s pharmaceutical industry is its dependence on imports for active pharmaceutical ingredients. Although domestic drug companies produce a large volume of finished pharmaceutical products, they have to depend on foreign sources for many important active ingredients and raw materials. Nearly 90 percent of the country’s drug raw materials have to be imported. Although an initiative was taken to establish an API industrial park in Gajaria, it has not yet become fully operational. The government should turn the API industrial park into an effective production centre, attract domestic and foreign investment, and increase local production through technology transfer.

Besides, although there is ample scope for joint drug research between drug companies and local or foreign universities that teach pharmacy or pharmaceutical science, it has hardly been utilised at all. Joint research projects between universities and drug companies, industry-funded research, technology innovation centres, industry-based fellowships for researchers and systems for commercialising research results must be built. Tax incentives, research grants and support in intellectual property management are also needed for investment in drug research. If this three-year preparatory period is used well, it will be easier to manage the risks to the pharmaceutical industry and public health after graduation from LDC status in 2029.