Pakistan's pharma sector a bright spot amid industrial downturn?

Pakistan’s industrial sector remained a key contributor to the economy in fiscal year 2023-24 (FY24), accounting for 20.2% of its GDP. Manufacturing made up 13.1% of this output, though the Large-Scale Manufacturing (LSM) segment faced significant setbacks, contracting by 9.6% after a 10.2% rise in FY23.

Amid these challenges, the pharmaceutical industry stood out as a bright spot. Representing 5.15% of the Quantum Index of Manufacturing (QIM), the sector grew by an impressive 15.7% in FY24, defying the overall downward trend in manufacturing.

Nukta analyzes a recent report by IQVIA, a global leader in providing advanced analytics, technology solutions, and clinical research services to the life sciences industry. The report highlights trends in Pakistan’s pharmaceutical industry during the third quarter of 2024 (3QCY24).

Pakistan’s pharmaceutical sector achieved remarkable growth in the third quarter of 2024, with record-breaking increases in both revenue and volume, as reported by IQVIA Pakistan.

The retail pharmaceutical market expanded to PKR 962.5 billion ($3.44 billion), reflecting a year-on-year growth of 21.79%. The domestic pharmaceutical market surged to PKR 717.9 billion, recording a robust growth of 22.62%, while multinational corporations (MNCs) saw their share climb to PKR 244.6 billion, reflecting a solid increase of 19.40%.

Over the past five years, the industry has sustained a robust compound annual growth rate (CAGR) of 18.6%, showcasing its upward trajectory.

The industry reached its record levels during September, recording the highest-ever sales of PKR 94 billion driven by robust performance from local corporations (PKR 70 billion) and multinational companies (PKR 24 billion).

Top performers, new products

Among the top performers, Getz Pharma and SAMI emerged as market leaders, with several others achieving growth rates above national companies’ growth. Eight out of the top ten multinational corporations also posted substantial gains.

Pakistan’s pharmaceutical sector launched 540 new products, including 526 by national companies and 14 by multinational corporations valued at PKR 6.02 billion and contributing 0.62% to the market share. 3Q2024 featured significant additions such as Elagolix, Finerenone, Roxadustat, and Bempedoic Acid, with key contributions from Horizon, Getz, and others.

Among the top launches, brands like Pubergen and Zolk performed exceptionally well, with the highest sales reaching PKR 729.17 million cumulatively. These developments underline national and multinational players' strong focus on innovation and market diversification.

The primary driver of growth in the third quarter of 2024 was price hikes rather than an increase in units sold, as unit sales edged up by just 2.27% (PKR 3.70 billion) compared to the previous year.

In FY23, Pakistan's Drug Regulatory Authority (DRAP) permitted pharmaceutical companies to raise prices by about 14% for life-saving medicines and 20% for other drugs. The move contributed to a 24% year-on-year increase in the drug price index, up from 12.1% in FY22, amid soaring inflation that averaged 29.4%, nearly doubling the previous year’s 13.7%.

While price adjustments have driven revenue growth, there is potential for further expansion through innovation and strategic investments.

As the industry gears up for 2025, stakeholders are optimistic about sustained growth fueled by new product launches and an expanding healthcare infrastructure. Furthermore, growing population, stabilized exchange rate that will cushion raw material imports, and government’s interventions to control prices will support the industry’s growth.