Active Pharmaceutical Ingredients Manufacturing in Pakistan – Asrar Qureshi’s Blog Post #1207

Active Pharmaceutical Ingredients Manufacturing in Pakistan – Asrar Qureshi’s Blog Post #1207

Dear Colleagues! This is Asrar Qureshi’s Blog Post #1207 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to pharmaveterans2017@gmail.com  for publishing your contributions here.

Preamble

For readers who are not from pharma industry, here is a brief background.

Pharmaceutical products, commonly known as ‘Medicines’ or ‘Drugs’ are formulated by combining two main categories of ingredients: Active Pharmaceutical Ingredients - APIs’ and ‘Inactive Substances or Excipients’. Tablets, capsules, dry syrups and liquid syrups are all manufactured like this. Injections also have API(s) but may or may not have excipients.

Pakistan pharma market is divided into three main segments: Retail sales, Institutional Sales, and Trade sales. According to the US company IQVIA, which collects and publishes pharma industry data, retail sales value crossed one trillion rupees in 2024. Institutional sales are not reported but are estimated to be about 200 billion. Trade sales are completely unreported, but the best guess puts it anywhere between 300 – 500 billion.

In addition, most of veterinary products contain the same APIs. Veterinary market is estimated to be over 500 billion.

Pakistan has about 750 human pharmaceutical manufacturing units and about 200 veterinary products manufacturing units. The number of registered products in Pakistan has crossed the mark of 125,000. All these products contain one or more APIs. The number of APIs is over 250.

While Pakistan caters about 95% of its need with local finished products, some specialized products are still imported. The same is not the case with APIs. About 85% APIs are imported, mainly from India and China. The first local API manufacturing unit was put up by the government in Daud Khel. Antibiotics Pakistan was manufacturing penicillin only. It was later divested and sold to Pharmagen, the first modern API plant in Pakistan. Pharmagen is still leading in API manufacturing. Around ten other units have also come up but the total number of APIs produced is still less than 20. The second issue is of capacity. No API is produced in sufficient quantity to fulfill entire local requirement.

Why Pakistan Must Establish Active Pharmaceutical Ingredient (API) Manufacturing Plants

Pakistan is one of the world’s largest consumers of finished pharmaceutical products, yet it remains critically dependent on imported APIs, primarily from China and India. This dependence exposes the country to supply disruptions, foreign exchange volatility, national security risks, and long-term industrial stagnation.

Establishing API manufacturing plants in Pakistan is no longer an option; it is a strategic necessity for:

• Health security

• Economic resilience

• Export competitiveness

• Industrial upgrading

• Pharmaceutical sovereignty

Pakistan’s API Import Dependence Is Structurally Risky

• Over 85% of APIs used in Pakistan are imported

• More than 70–75% originate from China and India

• APIs account for 50–70% of formulation production cost

This makes Pakistan’s pharmaceutical sector externally fragile.

COVID-19 Was a Wake-Up Call.

During COVID-19:

• China temporarily shut down API plants

• India imposed export restrictions on 26 APIs and formulations

• Pakistan faced shortages of paracetamol, azithromycin, antivirals, and antibiotics

This exposed a national health vulnerability, not just a commercial inconvenience.

Evidence-based conclusion: Countries without domestic API capacity are structurally unsafe during global crises.

Global Trend: Countries Are Re-Shoring APIs

Pakistan would not be swimming against the tide; it would be aligning with global industrial policy trends.

• India launched a USD 2 billion Production-Linked Incentive (PLI) scheme for APIsUS & EU classify APIs as critical infrastructure

• Japan subsidizes API plants outside China to diversify risk

• Bangladesh has established an API Industrial Park (already operational)

Pakistan is currently the outlier, despite having one of the largest pharma markets in Asia.

Economic Case: APIs Save Foreign Exchange at Scale

Pakistan’s Current Cost: API imports consume USD 1.2–1.5 billion annually. This is structural FX leakage, not discretionary spending. 

What Local APIs Would Achieve: Import substitution of even 30–40% would save USD 400–600 million/year. FX savings are recurring, not one-time, and it reduces vulnerability during balance-of-payments crises.

For a country with chronic FX stress, API manufacturing is macro-economic risk management.

Pakistan Already Has the Demand Base

Unlike many countries that build APIs “hoping” demand will emerge, Pakistan already has:

• 750+ licensed pharmaceutical manufacturers

• One of Asia’s largest domestic medicine consumption markets

• Strong demand in: Antibiotics, Analgesics, Cardiovascular drugs, Antidiabetics, and Gastrointestinal medicines. 

• APIs would be absorbed immediately, reducing market risk.

API projects in Pakistan face lower demand risk than greenfield projects in many emerging economies.

Export Competitiveness Depends on API Control

Pakistan’s pharma exports are stuck at USD ~350–400 million, far below potential.

Why?

Export buyers increasingly demand:

• Supply-chain transparency

• Cost stability

• Traceability of raw materials

• API dependence weakens pricing power

Evidence from India

India’s dominance in global generics is built on:

• API self-sufficiency

• Vertical integration

• Cost control across value chain

Without APIs, Pakistan will remain a formulation-only, low-margin exporter.

APIs Enable Price Stability & Patient Access

API price spikes directly translate into:

• Medicine shortages

• Sudden price hikes

• Pressure on regulators

Local API production:

• Dampens international price shocks

• Allows better forecasting

• Improves affordability of essential medicines

API plants are public-health infrastructure, not just industrial assets.

Environmental & Compliance Concerns Can Be Managed

A common objection is that APIs are “polluting”. Modern API plants use zero-liquid-discharge systems, solvent recovery, and green chemistry processes. 

Pakistan already hosts chemical, fertilizer, and petrochemical plants with similar risk profiles. The issue is regulation and zoning, not feasibility. 

With central effluent treatment plants, dedicated API industrial zones, strong oversight by Drug Regulatory Authority of Pakistan, the environmental risk is manageable, not prohibitive.

APIs Strengthen National Security

Medicines are not ordinary consumer goods. WHO and national governments classify APIs as strategic health assets, and critical supply items. Dependence on foreign APIs means exposure to sanctions, exposure to geopolitical conflicts, and loss of autonomy in emergencies.

Domestic APIs are as strategic as food security or energy security.

Pakistan Has Missed This Window Before—It Should Not Again

In the 1990s and early 2000s, Pakistan had a strong pharma base. India invested heavily in APIs, while Pakistan stayed focused on formulations. The result is that India became the “pharmacy of the world”, while Pakistan became structurally dependent. Countries that delay API investment may lose decades.

What Must Be Done

To succeed, API manufacturing in Pakistan requires dedicated API Industrial Zones with shared utilities, effluent treatment, and chemical safety infrastructure.

Fiscal Incentives, like 10–15 years tax holidays, duty-free import of plant & machinery, and preferential energy tariffs are highly desired.

Sum Up

Establishing API manufacturing plants in Pakistan is not about competing with China or India; it is about survival, resilience, and sovereignty.

The evidence is clear:

• Import dependence is risky

• Global supply chains are unstable

• FX pressures are chronic

• Health security cannot be outsourced

API manufacturing offers Pakistan strategic autonomy, economic resilience, export growth, skilled employment, and affordable medicines

Concluded.

Disclaimers: Pictures in these blogs are taken from free resources at Pexels, Pixabay, Unsplash, and Google. Credit is given where available. If a copyright claim is lodged, we shall remove the picture with appropriate regrets.

For most blogs, I research from several sources which are open to public. Their links are mentioned under references. There is no intent to infringe upon anyone’s copyrights. If, any claim is lodged, it will be acknowledged and duly recognized immediately.