Essential Drugs’ new plant construction drags on for a decade, now costs 2.5 times
A rusty, fading sign comes into view at an under-construction pharmaceutical plant at Gopalganj municipal area's last limit when travelling along the Dhaka-Khulna highway.
Massive sand piles fill up the area from the highway to the project site's boundary wall. There are no internal roads inside the plant area.
This is how the third plant of Essential Drugs Company Limited stands now after 10 years of work that began in 2011.
The state-owned drug-maker, which meets 80% medicine demand of the country's public hospitals, was supposed to complete the construction of four units of the factory in less than three years, but the work still drags on despite a four-time extension to its implementation tenure.
Over the years, the project cost has also escalated by 2.5 times to Tk800 crore from Tk315 crore because of the delay.
The indirect loss from the delay of the project amounts to Tk2,060 crore, money it would have earned had it gone into production on time.
There is no clear answer from any responsible source as to the reason for the delay.
The health and family welfare ministry has sent a proposal mid-December to the Planning Commission, seeking a two-years extension.
If the time extension proposal is approved, the three-year project completion time will reach 12 years.
Essential Drugs took up the project with its declining production capacity at its main Tejgaon factory with outdated machinery installed in the 1960s, a reason that the state-owned drug maker has to resort to private suppliers to meet at least 30% of its needs.
It was also not possible for Essential Drugs to comply with the Current Good Manufacturing Practice (CGMP) regulations with the old production facilities resulting in different global health agencies, including the World Health Organisation (WHO), withdrawing their certification.
At the project evaluation committee meeting in November last on the revised project, Prof Ehsanul Kabir, managing director of Essential Drugs and the project director, said work on installation, testing, commissioning, validation, balancing and qualification of the three production units of the new factory still remains pending.
Many foreign experts are now staying away because of the pandemic. In this situation, it will take another two years to complete the project, he pointed out.
Mohammad Saifur Rahman, deputy director to the Implementation Monitoring and Evaluation Division (IMED), has recently inspected the project site in response to Essential Drugs' proposal for extending the project deadline.
He said a decision cannot be made about the time extension until a final report is made after reviewing the project documents.
IMED Secretary Pradeep Ranjan Chakraborty told The Business Standard there can be no reason for taking 12 years to set up a pharmaceutical factory. The project's progress will be examined in detail.
The Essential Drugs is one of the very important institutions of government. It meets about 80% of the demand for medicines in all government hospitals and 100% in about 14,000 community clinics.
Essential Drugs sold medicines worth Tk634 crore in the last two financial years each, and this FY21 it has set a target of Tk655 crore.
The drug maker's main factory is located at Tejgaon in Dhaka city. The company has a condom manufacturing plant in Khulna too. The Gopalganj plant is the third and largest one.
Why this project is important
Declining capacity and dependence on outside vendors cost the company Tk190 crores a year.
The WHO, the United Nations Children's Fund (Unicef), the UK-based Medicine and Healthcare Product Regulatory Authority (MHRA), the European Medicines Evaluation Agency (EMEA) and other agencies withdrew the certification given to the Essential Drugs because of its failure to maintain CGMP regulations. Consequently, the WHO, Unicef and icddr,b stopped buying drugs from Essential Drugs.
After inspecting Essential Drugs, the Directorate General of Drug Administration suggested relocation of its Dhaka factory, as production of penicillin as well as other drugs at the same plant is against CGMP regulations.
The government then decided to set up a new plant in Gopalganj.
In 2011, the Executive Committee of the National Economic Council (Ecnec) gave the go-ahead to the project costing Tk315 crore. The project implementation deadline was September 2013.
Although Essential Drugs has a prophylactic factory, there is no factory for oral and injectable contraceptives widely used in the country. With a demand of 15 crore cycles per year, Bangladesh is a big market for oral contraceptive pills. The popularity of injectable birth control methods is also increasing in the country.
The demands need to be met entirely by imports. For this, a unit for making birth control devices would also be set up in the Gopalganj factory.
From three years to a decade
The project tenure was extended for two years in the first phase as work was not finished in September 2013. After that, the target was set to complete the project in June 2018 by extending the tenure for two years in the second phase and one more year in the third phase.
But the project could not be completed within time and the project deadline was pushed back for another two years till December 2020 in the fourth phase.
As the latest deadline passed without a completed project, the health ministry recently sent a proposal to the Planning Commission, seeking another two-year extension till December 2022.
The project cost has also increased.
According to a recent meeting of the evaluation committee of the project, Tk590 crore or 73.77% of the allocation was spent till June last year.
The yet to be completed factory is located near Gopalganj's Ghonapara intersection.
Construction of the cleanroom at the iron tablet production building – which is at the final stage – and electrical work are underway. Setting up of furniture is still going on.
Moreover, construction of the cleanroom at the birth control product manufacturing unit and arranging power connections are still going on. Project officials said some equipment of the unit is being supplied.
Intravenous fluid production building construction has not been completed yet. Cleanroom construction and electricity connection work are also pending. Officials said only 30% of the equipment of this unit had arrived.
Work is underway to install different equipment and racks in the central warehouse building. Some 75% of work on setting up an effluent treatment plant has been completed.
Once the project is completed, it will be Essential Drug' largest plant. The first of the four units will be dedicated to penicillin production. Of the rest, one will produce a variety of life-saving intravenous fluids, another will make iron tablets, and the other will manufacture birth control pills and injections.
On 1 November 2018, Prime Minister Sheikh Hasina inaugurated the factory along with various development projects in Gopalganj through videoconferencing. Production began at the penicillin unit in July last year.
Institutions and engineers from Spain, India, Italy, South Korea, Taiwan, and China are working to supply and install the project equipment.
Delay costs a lot
With delay raising the project cost, the company is losing money that it would have otherwise earned from the pharma products. If the factory was completed as per the schedule, the first year would have seen the production of IV fluid worth Tk40 crore, penicillin worth Tk50 crore, and birth control products worth Tk150 crore.
If the minimum production is calculated, IV fluid worth Tk360 crore and birth control products worth Tk1,350 crore would have been produced in nine years from 2014 to 2022. Production at the penicillin plant began seven years after the project was scheduled to be completed. If there was no delay, penicillin worth Tk350 crore would have been produced.
The project was supposed to employ 1,200-1,500 people. Officials said only 300 people had been employed as only one unit had been commissioned.
BM Emam Hasan, deputy general manager Essential Drugs Company and director of the project, said even though the project was approved in 2011, it took five years to start work at the field level.
He referred to those in charge of implementation earlier for any explanation of the delay instead of a direct answer.
When asked why the work was not completed in the next five years either, he said most of the construction had already been completed and equipment installation was also at the final stage.
Emam also said the rest of the work was being delayed due to the pandemic.
Project equipment, he said, is coming from at least six countries.
"Some equipment could not arrive because of the pandemic, and foreign technicians could not come either."