The pharmaceutical sector is eyeing a recovery from the difficulties brought on by the Covid-19 pandemic and Russia-Ukraine war as the opening of letters of credit (LCs) for raw materials imports is gaining pace, according to industry insiders.

The opening of LCs to import raw materials for the pharmaceutical sector increased by 14 percent to $636.26 million year-on-year during the July-January period of the current fiscal year, Bangladesh Bank data shows.

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According to industry people, the dollar crisis in the country is gradually easing and the global supply chain is getting smoother, positively impacting the pharmaceutical sector.

"Opening of LCs for raw materials is increasing as the dollar crisis is lessening day by day," said Md Mahbubul Karim, executive director (supply chain management) at Incepta Pharmaceuticals Ltd.

According to him, the sector suffered a lot as the Russia-Ukraine war and dollar crisis disrupted the supply chain immensely.

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"We could not even keep up with the lead times due to disruptions in the raw materials supply chain," he said.

He added that they had endured a tough time opening LCs despite managing 100 percent margin, but added that the current situation was much better.

He also alleged that pharmaceutical manufacturers would open LCs at the government rate but were later asked to settle them at higher rates.

He further said that the management teams of pharmaceutical companies had shown their efficiency during the difficult times. As a result, the sector tackled the crisis and there was no deficit of medicine.

"No visible impact was felt in the export of pharmaceutical products either," he claimed.

Pharmaceutical exports fetched $134.15 million during the July-February period of this fiscal year, a 13 percent increase compared to the same period in the last fiscal year.

Monjurul Alam, chief executive officer at Beacom Medicare Limited, a concern of Beacon Pharmaceuticals PLC, said opening LCs had become easier as the dollar crisis was gradually easing. Consequently, more LCs were being opened.

The situation will improve further in the second half of the year, he said.

"We were really worried about whether we could overcome the crisis or not," Alam said, adding that the sector was saved from a collapse by virtue of good management and government cooperation.

According to him, there was greater availability of the greenback in the second half of the current month. He also added that the price of dollars was decreasing.

"We opened LCs at Tk 118.50 per dollar last week while it was Tk 125 per dollar in February," he noted.

However, he said the local currency needed to strengthen further against the greenback for the economy to rebound strongly. He also believed the pharmaceuticals sector recovering rapidly would contribute to the country's economy.

Alam said the volume of sales in the domestic market increased slightly in the last fiscal year, but the margin declined due to increased costs of production.

Last year, drug sales grew two percent to Tk 30,059 crore, far lower than the four-year average growth of 8.5 percent in 2022, according to a report by IQVIA, a global provider of advanced analytics, technology solutions, and clinical research services.

"We are on the way to recovering fully from the crisis and maintaining the raw materials supply chain," said Shah Imran, head of procurement of Beximco Pharmaceuticals Ltd.

During the crisis, small manufacturers suffered a lot and failed to ensure smooth production, he said.

Fortunately, his company did not suffer severely due to their skilled management team, which helped facilitate the continuing supply of raw materials and production of lifesaving medicine, he noted.

He added that banks and the government also cooperated in opening LCs during the crisis, but added that banks charged a higher rate and 100 percent margin.

The situation has now improved and there is no possibility of a crisis regarding medicine supply in the future as the sector has already overcome the difficulties, he said.

"We have given serious effort to tackle the difficulties because of which we are enjoying a comfortable situation at this moment," said Imran.

Zahangir Alam, chief financial officer of Square Pharmaceuticals, said the dollar crisis did not impact his company as it had enough in-house income of dollars.

Although the dollar situation was tight, the supply of products to the drug market was not impacted, he said. As LC openings for medicine are rising, it will help the sector, he added.