Why Pakistan imports almost 90% of its APIs — and the push to make more at home
Pakistan makes most of its finished medicines but imports nearly all its active ingredients, mostly from China. The case for localisation, and what it needs.
In this article
Pakistan’s pharmaceutical industry has a structural imbalance: it makes nearly 85% of the finished medicines the country uses, but still imports almost 90% of its active pharmaceutical ingredients (APIs) and other raw materials. Federal Health Minister Mustafa Kamal gave those figures at the Pakistan-China Pharmaceutical & Healthcare B2B Investment Conference in Islamabad in July 2026.
Where the imports come from
| Source of pharmaceutical imports, FY24 | Share |
|---|---|
| China | 58.6% |
| India | 13.5% |
| Korea | 4.5% |
| Germany | 4.2% |
| Italy | 3.6% |
The figures come from a December 2025 policy paper by the Islamabad Policy Research Institute (IPRI), which put total pharmaceutical imports at PKR 304.1 billion in FY24, up 7.1%.
The localisation push
The July conference, organised by SIFC, the health ministry and DRAP, brought about 160 Chinese pharmaceutical companies together with around 340 Pakistani firms to discuss joint ventures, technology transfer and advanced manufacturing. The minister argued that more domestic production would improve medicine security and ease pressure on foreign exchange.
The IPRI paper sets a mid-term goal of 20–30% API localisation and proposes 5–10 year tax exemptions for API production, alongside faster registration and annual GMP audits.
What an API is — and why it is hard to make
The active pharmaceutical ingredient is the substance in a medicine that has the therapeutic effect. Everything else in a tablet or syrup — fillers, binders, coatings, flavours — is there to deliver it. Most APIs are made in specialised chemical plants through several reaction steps, starting from basic chemicals and passing through intermediates; others, such as many antibiotics, start with fermentation. Each step needs reactors, purification, drying and milling equipment, solvent handling and recovery, effluent treatment and a GMP quality system specific to active substances.
Why finished medicines came first
Formulating finished medicines needs less capital, uses widely available equipment and can serve a domestic market with many different products. Making APIs competitively requires scale: global producers make a single API for many countries, so they can spread the cost of large plants. That is why many countries, not only Pakistan, built strong formulation industries while importing most active ingredients.
The case for change
- Security of supply — dependence on a few foreign sources exposes patients to disruptions far beyond Pakistan’s control.
- Foreign exchange — local production would reduce the import bill and the impact of currency swings.
- Industrial depth — API plants create skilled jobs in chemistry, engineering and quality, and support suppliers of equipment and services.
- Exports — a competitive local API could also be sold abroad.
Where Pakistan could start
| Approach | Why it helps |
|---|---|
| Final steps of synthesis | Lower investment; imported intermediates finished locally |
| High-volume molecules | Large domestic demand supports scale |
| Joint ventures | Foreign partners bring proven processes and markets |
| Shared industrial parks | Common utilities and effluent treatment cut costs |
India’s experience with its bulk drug incentive scheme offers practical lessons on each of these.
The role of policy
Because API plants take years to pay back, investors look for policy they can rely on for the whole period: tax treatment, pricing of the medicines made from local APIs, approval timelines and protection against sudden changes. The IPRI paper’s recommendations — tax exemptions, faster registration and regular GMP audits — are aimed at that predictability. Without it, even well-designed projects struggle to find finance.
What to watch
API plants need scale, chemistry skills and reliable utilities, and the payback is long. The paper places API promotion on an 18–36 month timeline — so partnerships, not quick wins, are the realistic path.
Meet API makers, importers and excipient suppliers — including 45 Chinese companies — at Pharma Asia 2026.
