In the forthcoming national budget, the government intends to provide duty rebates on the importation of additional raw materials for the production of medicines and medical equipment. This initiative has been hailed by experts as a means to fortify the domestic industry and yield advantages for the healthcare sector.
Furthermore, it is anticipated that the exemption from value-added tax (VAT) will persist in the following year for the importation of raw materials used in the manufacturing of sanitary napkins, diapers, and toiletries. These items are deemed essential for public health and hygiene.
Initiatives in expanding access to Cancer and Diabetes treatments
Finance ministry officials have announced that the government intends to expand the list of duty-free raw materials for cancer and diabetes drugs by including additional 10-12 items in the upcoming budget. This measure aims to make these treatments more affordable for the general public.
Furthermore, the next budget is expected to introduce a 150% supplementary duty on liquid nicotine and transdermal nicotine patches, as well as a 212.20% duty on e-cigarettes, vapes, and their components, with the intention of discouraging their use.
Industry leaders and health economists have praised these budgetary initiatives, emphasising their positive impact on public healthcare. Professor Syed Abdul Hamid, from the Dhaka University Institute of Health Economics, expressed his support for the duty waiver on raw materials used in the production of anti-cancer and anti-diabetes drugs. He suggested that all medical raw materials should be imported duty-free, with strict monitoring to regulate their pricing.
Prof. Hamid also highlighted the high cost of cancer treatment, which often involves expensive medications. The annual expenses for cancer treatment can range from Tk3 lakh to Tk20 lakh, depending on the patient’s financial capacity. According to data from the Bangladesh Cancer Society, the country has an estimated 13 to 15 lakh cancer patients, with approximately 1.56 lakh new cases diagnosed annually. The Globocan 2020 data reveals that cancer-related deaths amount to 1.08 lakh each year. In 2021, the Bangladesh Diabetes Society reported a total of 13.1 million diabetes patients.
A study conducted by BMC Health Services Research in 2019 revealed that the average annual treatment cost for type-2 diabetic patients was Tk93, 819.95. Medicine costs accounted for 60.7% of the direct cost, followed by hospitalization expenses at 27.7%.
Raw material duty exemption vital for price reduction
Industry insiders have suggested that if raw materials for key cancer and diabetes medicines can be imported duty-free, it would significantly reduce the prices of these drugs, especially considering the current inflationary pressures. At present, Bangladesh imports more than 100 varieties of raw materials for cancer and diabetes medicines, with around 76 of them specifically utilized in the production of cancer drugs. Regrettably, the government provides import duty exemptions for only 30% of the raw materials required for cancer medication.
Monjurul Alam, the Director of Global Business Development at Beacon Pharmaceuticals, emphasized that their company produces over 100 types of cancer medicines. He noted that if all raw materials were granted duty-free benefits, the industry could offer medicines at more affordable prices. Currently, the industry sells cancer drugs at approximately 50% to 60% lower prices than imported counterparts. Alam further urged the government to enable duty-free importation of raw materials essential for the manufacturing of kidney and cardiac medicines.
SM Safiuzzaman, the Secretary General of the Bangladesh Association of Pharmaceutical Industries (BAPI), echoed these sentiments, highlighting that several companies in Bangladesh produce oncological drugs, enabling the provision of medicine at lower prices.
During recent discussions, an industry representative emphasized that local pharmaceutical companies are now selling a type of medicine that was previously imported at a cost of $1,000 for only Tk500. To further support the production of cancer and diabetes medicines, the representative called for VAT-tax waivers.
Over the past 12 years, several pharmaceutical companies, including Beacon, Eskayef, Renata, Incepta, Healthcare, and Techno Pharma, have begun manufacturing over 100 different types of oncological drugs, contributing to the availability and affordability of these crucial medications.
Government’s move to support Sanitary Pad and Diaper industry
In a further development, the government is considering extending the VAT exemption on raw materials for sanitary pads and diapers until 30 June 2024. This measure aims to stimulate local production and promote the growth of the industry.
Based on the findings of the National Hygiene Survey 2018 conducted by the Bangladesh Bureau of Statistics, the usage of sanitary pads among menstruating women in the country has risen from 14% in 2014 to 29%. The domestic market for sanitary napkins is presently valued at around Tk700 crore and has been experiencing an annual growth rate of approximately 20%. Local companies have been meeting the majority of the demand. Likewise, the diaper market size is estimated to be Tk800 crore, with 90% of the supply being provided by local companies.
Industry insiders have highlighted that the VAT waiver on raw materials for sanitary napkins has played a vital role in protecting and supporting the local industry. Quamrul Hassan, the business director at ACI Limited, stated that continuing this exemption is logical and necessary to sustain the growth of the industry.
An official from the National Board of Revenue (NBR) acknowledged that some facilities cannot be abruptly withdrawn, as investments have been made based on them. Therefore, it is important to consider the long-term impact and gradually adjust policies.
Furthermore, the government intends to permit the import of LABSA (Linear Alkyl Benzene Sulphonic Acid) and SLES (Sodium Lauryl Ether Sulfate), essential raw materials utilised in the production of soaps and shampoos, at a reduced VAT rate of 5% for an additional year. Stakeholders in the toiletries and skincare industry, which has a market size of approximately US$3 billion and a compound annual growth rate of 12.5%, have expressed their support for the continuation of this reduced VAT rate.
Delwar Hossain, the managing director at United Sulpho-Chemicals Limited, emphasised that the extension of the reduced VAT rate would protect the local industry and ensure the availability of raw materials at competitive prices. Zaved Akhtar, the CEO and managing director of Unilever Bangladesh, added that cancelling this facility would result in higher prices for these products, and therefore, the continuation of the reduced VAT rate would have no adverse impact on the market.
