Deregulation drives pharma growth to 22% as GDP crawls below 1%

ISLAMABAD: While Pakistan’s economy stagnates, its pharmaceutical sector is thriving. The industry grew by an impressive 21.79 per cent in the third quarter of 2024 compared to the same period last year, reaching a market value of Rs962.5 billion, according to data from IQVIA, an international monitoring firm.

This surge reflects the impact of a deregulatory policy introduced earlier this year, which allowed drugmakers to adjust prices for non-essential medicines amid rising production costs, experts and industry sources said on Wednesday

Pharmaceutical industry experts also added that the market’s expansion is driven predominantly by price adjustments instead of increased unit sales, reflecting a widening gap between value and volume. Over the past year, the industry sold 3.7 billion units, recording a modest volume growth of 2.27 per cent, while revenue surged due to higher prices. In September 2024, the sector recorded its highest-ever monthly sales of Rs94 billion.

Over the past 12 months, the sector introduced 540 new pharmaceutical formulations, further contributing to its growth. National pharmaceutical companies (NATs) outperformed their multinational counterparts -- MNCs -- in terms of growth rate (22.62 per cent compared to 19.4 per cent for MNCs) and market share (NATs dominate 74.59 per cent of the market share in terms of value), reflecting the adaptability of local players in meeting domestic demand.

The pharmaceutical sector’s striking performance comes at a time when other industries are grappling with challenges. In the first quarter of the fiscal year 2025, the economy grew by a meagre 0.92 per cent. Large-scale manufacturing and construction have contracted, while agriculture and services sectors have posted only modest gains .

Although the deregulation policy has proved pivotal for the pharmaceutical sector’s growth, it has led to a rise in medicine prices.

Renowned cardiologist Dr Akram Sultan confirmed that rising healthcare costs are forcing patients to request minimal prescriptions. “The deregulation has undoubtedly boosted the industry, but it has left patients struggling. The cost of transportation, doctor fees, diagnostic tests and medicines is becoming unbearable,” he said.

Pharmaceutical representatives, however, argue that the deregulation policy was necessary to sustain the industry. “This policy allowed companies to recover from financial strain and ensure the availability of many important medicines,” said Tauqeerul Haq, chairperson of the Pakistan Pharmaceutical Manufacturers Association (PPMA).