How Policy Shifts and Demographics Are Reshaping Pakistan’s Drug Industry?

Posted by: Tania Farooq 0

How Policy Shifts and Demographics Are Reshaping Pakistan’s Drug Industry?

Pakistan’s pharmaceutical sector is undergoing a transformation. A combination of regulatory liberalization and long-term demographic trends is setting the stage for sustained growth, making it an attractive investment opportunity for forward-looking investors.

Deregulation unlocks pricing power

One of the most significant developments in recent years has been the deregulation of non-essential drugs, which make up nearly 58% of the pharmaceutical market. Historically, price controls constrained manufacturers, especially during periods of sharp PKR depreciation. With the new deregulation in place, companies now have the flexibility to adjust prices in line with input costs—an essential cushion amid volatile macroeconomic conditions. This change alone lifted average sector gross margins from 20% in CY23 to 36% in CY24.

Population boom means long-term demand

Pakistan’s population currently stands at 241.5 million and is growing at 2.55% annually—more than double the global average. A larger population naturally leads to higher demand for medicines, especially as healthcare awareness and access continue to improve.


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Ageing population and chronic diseases

With life expectancy increasing from 64.4 years in 2010 to 67.9 years in 2025, the country’s demographic profile is shifting. This aging population is more susceptible to chronic diseases like diabetes and hypertension, driving long-term consumption of pharmaceuticals.

Urbanization driving healthcare access

Urbanization is on the rise, with the rural-urban split shifting from 70/30% in 2010 to 66/34% by 2025. Urban centers are associated with better healthcare infrastructure, more frequent diagnosis, and higher rates of health-seeking behavior—all of which drive medicine usage.

Valuation discounts amid strong fundamentals

Despite this favorable backdrop, pharma stocks in Pakistan are trading at significant discounts. While historically the sector traded at a forward P/E of 20x, companies like AGP, ABOT, and GLAXO are currently priced at just 12-15x CY25 earnings. This disconnect presents a potential upside for savvy investors.


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Improving API landscape and import substitution potential

Pakistan currently imports 85% of its Active Pharmaceutical Ingredients (APIs), making the sector vulnerable to FX volatility. However, 38% of these imported APIs are already produced locally—highlighting a clear path for import substitution. Policy support for local API manufacturing could significantly boost sector resilience.


The stars are aligning for Pakistan’s pharmaceutical industry. With regulatory tailwinds, demographic tailwinds, and growing urban demand, the sector is shifting from a defensive investment to a growth story. While risks such as policy reversals and FX volatility remain, the sector’s upside potential is hard to ignore.

Source: Optimus Capital Management

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →

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