Leading Bhutanese director Tshering Wangyel, who played a key role in developing the Himalayan kingdom's movie industry with films that blended Bollywood and Buddhism, died in hospital Monday aged 43.

"Our prolific filmmaker, Director Tshering Wangyel has passed away today morning in the hospital," the Bhutan Film Association said on its Facebook page.

Wangyel was shooting his latest film when he was taken to hospital in the capital Thimphu last month with pneumonia, the association said.

"It's a great shock and a huge loss to the film industry and the nation," said Yeshi Dorji, executive director of the association.

"Most of our popular actors and actresses got their break because of him -- every year he would make at least a couple of films, creating so many jobs in the process," Dorji told AFP in the Nepalese capital Kathmandu in a phone call from Thimphu.

An avid Bollywood fan, Wangyel was working in the ministry of agriculture when he decided to take a shot at making movies.

"I was living this mundane nine to five life when I decided to make my first film: a love triangle about two college kids falling for the same girl," he told AFP in an interview last year.

The Dzongkha-language film starred three of Wangyel's friends who contributed $5,000 each towards the shoestring budget. He wrote the screenplay and handled the camera, sound and lighting.

Released in 1999, "Rawa" (Hope) also featured Bhutan's first musical number, with Wangyel lifting the melody from a popular Indian film and persuading his cousins to serve as backup dancers.

He went on to direct more than 40 films during his career, lugging projectors, screens and tents across the mountainous kingdom to set up makeshift cinemas for movie-loving audiences who flocked to his productions.

The growing popularity of local films even saw fans spurn Bollywood productions, which are rarely shown these days in Bhutan's handful of cinemas after dominating screens for decades.