Prescription for growth

Business Recorder

29-07-2025

EDITORIAL: It turns out a little deregulation goes a long way — at least in Pakistan's pharmaceutical sector. The 2024 decision to liberalise pricing for non-essential medicines has delivered something the country rarely sees: evidence-based success. In FY25, pharmaceutical exports jumped 34 percent — the highest annual growth in over two decades — pushing total exports to USD 457 million and making the category one of the top five fastest-growing in the economy.
This wasn't the result of subsidies, bailouts, or political gimmickry. It was a simple structural reform; a long-overdue acknowledgement that strangling private industry in the name of affordability doesn't just shrink margins, it chokes investment, stunts innovation, and deters international interest. The deregulation policy did the opposite: it created price signals, unlocked capacity, and gave both local and foreign players the confidence to expand. That confidence translated into something tangible — not just record export figures, but new production lines, supply chain upgrades, and the early stages of import substitution in an industry that has long been overly dependent on foreign APIs (active pharmaceutical ingredients).
Predictably, much of the new growth is still concentrated in less regulated regional markets like Afghanistan, Philippines, Sri Lanka, Uzbekistan, and parts of West and East Africa. But the trend line matters more than the destination at this stage. The fact that Pakistan is being taken seriously in therapeutic exports, not just medicines, but medical devices, supplements, and nutraceuticals, is a shift that would have been inconceivable just a few years ago.
It's also no coincidence that foreign firms, some of which were openly considering exit strategies not long ago, have reversed course. Instead of winding down, they are scaling up. Some are investing in vaccine lines, others in backward integration for raw material production. That's not just a boost for exports — it's a hedge against future supply shocks, currency swings, and import-driven inflation in domestic healthcare.
And while the headline number — USD 457 million — is still modest in the context of Pakistan's overall export profile, the momentum is what matters. Broader therapeutic exports crossed USD 900 million in FY25, and if trends hold, the sector could breach the billion-dollar mark within a year. More importantly, the global generic pharma market, worth an estimated USD 600 billion, is wide open. India and China, traditionally dominant in this space, are shifting focus to high-end research and development, leaving a vacuum in lower-margin, high-volume generics that Pakistan is well positioned to fill, especially in disease-burdened, price-sensitive countries.
There's also the credibility dividend. A sector that once relied almost entirely on domestic sales, with export revenue contributing just 5 to 7 percent for most players, is now positioning itself as globally relevant. That repositioning is the direct result of a pricing framework that finally aligned with international best practice — letting firms adjust for inflation, plan long-term, and access markets where rigid state controls would have made them uncompetitive.
None of this was particularly complicated. The lesson here is not about pharma alone; it's about economic governance. When policy is rooted in market logic rather than populist optics, industries respond. They invest. They compete. And they grow.
The same thinking can, and should, apply elsewhere. Whether it's agriculture, logistics, energy, or digital services, the constraints are rarely technical. They are regulatory and institutional. And just as the government found the political will to get out of the way in one sector, it must find the resolve to do so in others.
Pakistan's economic recovery won't come from chasing grand announcements or foreign bailouts. It will come from sector-by-sector reform, grounded in discipline, data, and realism. If anything, the pharma sector's export surge offers a small, potent case study in what's possible when government stops trying to run the market and instead builds an environment in which the market can run itself.
Copyright Business Recorder, 2025