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Tax cut for pharma sector


Published : 30 Jul 2021 09:23 PM | Updated : 31 Jul 2021 01:15 AM

The National Board of Revenue (NBR) will soon issue Statutory Regulatory Order (SRO) offering tax holiday to the country's promising pharmaceutical sector for setting up raw materials producing factories and laboratories.

Sources said such type of tax holiday is usually given for 10 to 20 years.

"It is now in the final stage. An SRO will soon be issued to provide tax holiday to pharma sector for setting up API factories," said a NBR official.

Formulation of a National Active Pharmaceutical Ingredients (API) policy is now at the final stage and such tax relief will be considered as per the policy, the NBR sources added. 

"Our income tax arm has recently taken several steps regarding giving tax holiday facility for setting up API producing industry. The government has a target of achieving self-sufficiency in producing 360 important drug producing raw materials," said the NBR official.

Under tax holiday facility, the producers of raw materials in the pharmaceutical industry are likely to enjoy 100 percent corporate tax exemption and other tax benefits, said the sources.

The government is also setting up an API industrial park in Munshiganj to cut reliance on foreign markets and save foreign currency.

Construction work of the park is progressing fast and it is expected to be ready by 2022.  It is being developed on 200 acres of land adjacent to Dhaka-Chattogram Highway under Gazaria upazila at the cost of Tk 330 crore.

"If the API park can become fully functional, it would cater to 50 to 60 per cent of the demand of medicine raw materials," said a source.

At present some local companies have been producing high-quality raw materials on a limited scale, helping the drug industry add value to their products.

Ten local companies, including Eskayef, Square, Beacon and Beximco, produce APIs, according to the Bangladesh Association of Pharmaceutical Industries (BAPI), which represents about 250 local drug makers.

"Locally produced raw materials can at best meet 10 to 15 per cent of the annual demand of the country's medicine makers," said a BAPI official.

Entrepreneurs in pharmaceutical industry have been demanding such facility up to 2032.

Now the local drug manufacturers have to import 90 per cent of their raw materials from countries like India, China and South Korea.

Presently, the country's pharmaceutical industry meets 98 percent of the domestic demand of drugs. Bangladeshi medicines are being exported to more than 160 countries across the world.

Medicine export is on rising amid Covid-19 as country’s drug makers exported a record $169 million worth of medicines in the just concluded fiscal year 2021-22.

Bangladesh exported medicines worth $135.79 million in 2019-20, $130 million in 2018-19, and $103.5 million in 2017-18, according to the Export Promotion Bureau (EPB).

In the last three years, drug manufactures received approval from the Directorate General of Drug Administration (DGDA) for exporting 1,200 types of medicines.

The allopathic medicine manufacturers produce 24,000 types of medicines and medicinal raw materials annually, according to the DGDA.

Some Bangladeshi companies have already left footprints in the US and the UK markets and around 1,000 products are going to be registered in the international market for subsequent export, which will unlock huge potential for drug manufacturers.

At present, Sri Lanka is the number one destination for exported pharmaceutical products from Bangladesh as it imports an equivalent of $20.5 million worth of pharmaceutical 'finished goods' from Bangladesh.

Myanmar imports a total $435 million worth of pharmaceutical goods every year, where Bangladesh's contribution is 4.53 per cent.

About 11 per cent of total pharmaceutical export earnings of Bangladesh come from the USA, which is 15.19 million in US dollars.