Mehmood ul Hasan Qadir — Economist & Financial Analyst | Dubai, UAE

The Pakistan Ledger | Opinion

Pakistan’s pharmaceutical industry is one of the country’s best-kept economic secrets — and not in a flattering way. It is a sector with genuine industrial depth, a trained scientific workforce, and a domestic market of 220 million people. It manufactures thousands of formulations across therapeutic categories. It has functioning manufacturing plants that have received international regulatory approvals. And yet, by virtually every measure of ambition, export performance, and value creation, it operates at a fraction of what its fundamentals should support. At approximately $5 billion in annual revenue, it should be a $15–20 billion sector. The difference is policy.

The DRAP Registration Bottleneck

The Drug Regulatory Authority of Pakistan — DRAP — is simultaneously the guardian and the gatekeeper of Pakistan’s pharmaceutical sector. Its registration process, designed to ensure drug quality and efficacy, has in practice become one of the most significant barriers to pharmaceutical sector expansion in the country. New drug registration timelines in Pakistan have historically stretched to five to eight years for products that receive US FDA or EMA approval within 12–18 months. The backlog of registration applications at DRAP has at various points exceeded 10,000 pending files.

For a pharmaceutical company weighing investment in Pakistan — whether domestic expansion or foreign direct investment — this registration environment is a direct deterrent to product portfolio development, export market entry, and R&D investment. If developing a new product for the Pakistan market requires a decade-long regulatory journey, the rational corporate response is to direct innovation investment elsewhere. That is precisely what Pakistan’s pharmaceutical sector has done: it has become a sophisticated generic manufacturer for the domestic market, with minimal innovation investment and limited export ambition.

The India Comparison — What Could Have Been

India’s pharmaceutical export sector is now the world’s largest supplier of generic medicines by volume, exporting approximately $25 billion annually to over 200 countries. Pakistan’s pharmaceutical exports — to all international markets combined — are estimated at $350–500 million annually. The divergence begins in the 1970s and 1980s, when India made deliberate policy choices to develop pharmaceutical manufacturing capability: patent law reform, process chemistry investment, regulatory pathway development, and export promotion infrastructure. Pakistan, with a comparable pharmaceutical industry base at the time, made no equivalent strategic commitment.

The branded versus generic market share dynamic compounds the problem. Pakistan’s pharmaceutical market remains dominated by multinational branded products — despite most active pharmaceutical ingredients being off-patent — because the generic regulatory framework does not provide robust bioequivalence requirements that would allow generic substitution to be trusted by prescribers and patients. The result is that Pakistani patients pay branded prices for molecules that should be available generically, and Pakistani manufacturers cannot capture the global generic export opportunity because their regulatory and quality infrastructure does not meet international benchmark standards.

API Import Dependency — The Vulnerability Nobody Discusses

Pakistan imports the vast majority of its Active Pharmaceutical Ingredients — the biologically active components of medicines — primarily from China and India. This API import dependency creates two simultaneous vulnerabilities: supply chain disruption risk, dramatically exposed during the COVID-19 pandemic when API supplies were disrupted globally; and a structural cost disadvantage that limits the export competitiveness of Pakistani generic formulations.

India addressed this vulnerability through deliberate API manufacturing development — pharmaceutical parks, process chemistry research investment, and industrial policy support for API production. Pakistan has no equivalent programme. The API manufacturing sector in Pakistan is negligible. Building domestic API capacity would require sustained industrial policy investment over 10–15 years, but the alternative — continued import dependency from geopolitical rivals — carries strategic and economic risks that should focus policymakers’ minds considerably more than they currently do.

Price Control Policy — Killing R&D Investment

Pakistan’s pharmaceutical price control regime — administered through DRAP with federal government oversight — caps medicine prices in ways that compress industry margins below the levels required to fund meaningful research and development investment. The stated objective — affordable medicines for Pakistan’s population — is laudable. The mechanism — administered price caps rather than reference pricing, generic substitution, and public procurement efficiency — is counterproductive. When margins are compressed below investment thresholds, companies respond by reducing the product portfolio to high-volume commodity generics, exiting the market for niche and specialty products, and eliminating R&D budgets entirely.

The path to a $20 billion Pakistani pharmaceutical sector runs through regulatory reform, API manufacturing investment, export promotion infrastructure, and a pricing policy that distinguishes between essential medicines requiring price protection and non-essential products where market competition can drive prices down more effectively than administered controls. The sector’s potential is not in question. The political will to unlock it is what remains, stubbornly, missing.

---

Mehmood ul Hasan Qadir is an Economist and Financial Analyst based in Dubai, UAE. He writes on Pakistan’s economic structure, policy failures, and reform pathways for The Pakistan Ledger.