Pakistan's Pharmaceutical Dependency: 95% of APIs Imported
The recent Middle East crisis and COVID-19 pandemic exposed critical vulnerabilities in Pakistan's pharmaceutical industry. While local factories can manufacture tablets, capsules, and syrups, they rely heavily on imported active pharmaceutical ingredients (APIs). Without these essential components, production of life-saving medicines grinds to a halt. Experts have long warned that this dependence poses a significant risk to the nation's health security.
According to the Trade Development Authority of Pakistan, approximately 95 percent of the industry's APIs are imported. A 2024 report by the Pakistan Institute of Development Economics (PIDE) estimated API imports at around $330 million in 2022, while domestic production accounted for only $125 million worth of molecules.
Fiscal and Logistical Pressures Drive Up Costs
The reliance on imports creates a double burden: a weaker rupee increases the cost of imported ingredients, which is then passed on to consumers. Logistical disruptions, such as freight delays during the Middle East crisis, exacerbate the problem, leading to nationwide medicine shortages and price hikes. The BMJ Journals report that 55 percent of physicians in Pakistan experience pharmaceutical shortages, resulting in delayed critical treatments for 89 percent of patients.
Uncertainties in hospital supply, pharmacy shortages, and rising costs for essential medicines place an immense strain on families and the healthcare system. The burden ultimately falls on the patient.
Export Growth Amid Fragility
Despite these challenges, Pakistan's pharmaceutical sector has shown growth. Between July and February 2026, the country exported approximately $230.9 million worth of medicines to 51 markets, according to the Pakistan Bureau of Statistics. In November 2025, the government reported export growth of 34 percent and domestic sector growth of 18 percent. Radio Pakistan noted that profits surged by 78 percent to Rs 42.2 billion, while industry-wide net sales rose by roughly 14 percent to Rs 365.7 billion.
However, experts caution that the sector remains fragile due to its dependence on imported raw materials. Foreign buyers require consistency in quality, delivery schedules, and price—none of which can be guaranteed when APIs are imported.
CPEC 2.0: A Path to Local API Production
Pakistan has made multiple efforts to address these challenges, but the core issue remains the lack of control over active substances that determine a drug's effectiveness, price, and accessibility. CPEC Phase II offers a potential solution beyond roads and energy. In May 2026, Pakistan and Chinese companies signed ten memorandums of understanding (MoUs) related to API manufacturing, technology transfer, vaccine production, and pharmaceutical investment.
Notably, Unichem Pharmaceuticals Pakistan and China's Xinxu Group announced a Rs10-billion investment. The strategy includes local production of OMEPRAZOLE API, for which Pakistan historically imported around 95 percent of its requirement.
Infrastructure Gaps Hinder Progress
While these agreements are promising, more investments are needed. Special Economic Zones (SEZs) under CPEC, such as Rashakai and Dhabeji, are suitable for pharmaceutical and chemical industries. However, lack of basic infrastructure—water, electricity, and gas—has rendered many SEZs ineffective. Business owners also call for connecting economic zones with motorways and fast-track trains.
API production benefits from clustering shared laboratories, treatment plants, utilities, storage, and logistics. High scale can reduce costs and enhance quality. Not all APIs need to be produced locally; the focus should be on costly imports with high local demand and export potential. A PIDE study estimates that the 25 most popular molecules in 2023 accounted for Rs206 billion (38 percent of the total Rs748 billion market), yet only 12 were produced locally as APIs.
Quality and Regulation Are Key
To build trust in local production, strict manufacturing requirements, reliable inspection, qualified laboratories, and complete records are essential. The Drug Regulatory Authority of Pakistan (DRAP) must balance eliminating delays without compromising standards. Achieving World Health Organization Maturity Level 3 status could open over 150 international markets, compared to the current 51.
Government officials emphasize that export growth cannot rely solely on certification; poor regulation undermines the process. Tax relief, cheaper land, and tariff concessions should be paired with technology transfer, training, research, and quality certification. Awards should be given for outcomes, not announcements.
Vaccine Production: A Critical Need
Vaccine production highlights the urgency. In May 2026, the government disclosed that poultry vaccines worth $4.5 million are imported annually, and childhood vaccine costs could rise to Rs 1.2 billion per year by 2030 after foreign support changes. Local vaccine production requires quality management, specialization, and long-term technology cooperation—capabilities Pakistan must develop.
The choice is clear: Pakistan can continue reacting to each pandemic, currency shock, and freight disruption, or seize the opportunity through CPEC 2.0 to invest in selected API and vaccine capacity. The 10 new MoUs have opened the door; execution is now critical.
A surge in factory numbers alone does not ensure a resilient pharmaceutical industry. Pakistan must demonstrate seriousness in science, prioritize quality inspection and timely production, and establish a dedicated team to meet international standards. A supply shock can thus be transformed into a strategic opportunity.
