Innovation and Competitive Capacity in Bangladeshs Pharmaceutical Sector

The global pharmaceutical sector is highly patent intensive, and firms rely on product, process and formulation patents to protect their innovations. Intellectual property rights on pharmaceutical products, as contained in the Agreement on Trade Related Aspects of Intellectual Property Rights (hereafter, the TRIPS Agreement) have been defended on grounds of extensive R&D investments required to discover and develop new drugs. But at the same time, grant of uniform pharmaceutical patents in all developing and least developed countries that are members of the World Trade Organization in accordance with the TRIPS Agreement, raises a range of issues for access to medicines. These issues can be framed under three broad areas: the restriction of reverse engineering possibilities for firms in developing countries and its implications for catch-up in this sector, higher prices of drugs and access to medicines as well as access to technologies due to patents on upstream technologies. The transitional arrangements under the TRIPS Agreement specifically mandated that all developing countries that are members to the WTO enact national laws that are TRIPS-compliant by 2005. As a result, from 2005 onwards, several countries like India, which played an important role as producers and exporters of generic copies of brand name products patented outside the country, can no longer produce such drugs due to the introduction of TRIPS-compliant patent regimes in their countries. Least developed countries have an extension until 2016 to implement the pharmaceutical patent provisions of the TRIPS Agreement under the Doha Declaration on TRIPS and Public Health. However, such legal flexibility is quite meaningless for least developed countries in the absence of local technological capabilities to produce generic drugs amongst least developed countries. Bangladesh, although a least developed country, is an exception in this regard with thriving domestic processing sectors that are actively engaged in producing textiles and ready made garments (RMGs), processed food products and generic drugs. Therefore, the question that looms large in the global access to medicines debate is whether Bangladesh's pharmaceutical sector can gradually evolve to provide low-cost substitutes of important patented drugs to other developing and least developed countries? This study is an original empirical investigation into issues of innovative capacity and competitiveness of the local pharmaceutical sector in Bangladesh.