Bangladesh’s pharmaceutical industry, despite its strong growth potential, remains largely underutilised in capital market participation, with only 19 of over 200 companies listed on the stock exchange.

While the sector meets nearly 98% of domestic demand and is projected to be worth $6 billion by year-end, the current market size stands at $3.5 billion, according to the Bangladesh Association of Pharmaceutical Industries (BAPI).

Foreign direct investment (FDI) in the sector has seen a rise—from $44 million in FY22 to $123.8 million in FY24—but remains negligible compared to global FDI in pharmaceutical manufacturing, which totals $1.4 trillion.

“The sector hasn’t received priority in attracting FDI, partly due to macroeconomic constraints like the power crisis,” said Syed M Omar Tayub, Managing Director of Prime Bank Investment.

Public offerings have also been modest. Between FY22 and FY24, just four companies raised a combined $2.04 million through IPOs and QIOs. Regulatory complexities and IPO valuation methods have discouraged more firms from entering the market.

Although listed firms enjoy a financial edge—about 4.5 percentage points in cost savings over non-listed ones—experts say that alone is insufficient.

“Monetary benefits aren’t enough; IPO valuation flaws and rigid compliance requirements need reform,” said Muhammad Zahangir Alam of Square Pharmaceuticals.

Efforts are underway to reform IPO procedures, with the securities regulator reviewing taskforce recommendations. Still, post-listing challenges, including shareholder misconduct at AGMs, also deter firms.