Pharmaceutical industry seeks fiscal and regulatory incentives to raise exports to $2 billion

Pakistan’s pharmaceutical industry has sought fiscal and regulatory incentives from the government as it aims to increase annual exports from about $457 million to $2 billion over the coming years.

Representatives of the Pakistan Pharmaceutical Manufacturers Association (PPMA), including Chairperson Muhammad Tahir Azam and former chairperson Tauqeerul Haq, held separate meetings in Islamabad with Commerce Secretary Sualeh Ahmed Faruqi, Special Investment Facilitation Council (SIFC) Secretary Jahanzaib Khan and Drug Regulatory Authority of Pakistan (DRAP) Chief Executive Officer Dr Obaidullah Malik.

The meetings focused on challenges facing pharmaceutical manufacturers and policy measures required to increase exports, attract investment and expand production capacity.

Industry representatives said pharmaceutical exports grew by around 34% during the last fiscal year to approximately $457 million. They maintained that the sector could make a larger contribution to Pakistan’s foreign exchange earnings if regulatory and taxation constraints were addressed.

The PPMA asked the government to raise the foreign currency retention limit for pharmaceutical exporters from 15% to 35%.

The association said exporters incur significant foreign currency expenses on overseas product registration, regulatory approvals, marketing, promotion and brand development. It argued that the existing retention limit was insufficient to meet these costs.

Allowing companies to retain a larger share of export proceeds in foreign currency would help Pakistani manufacturers enter new markets and compete with regional pharmaceutical exporters, the industry representatives said.

The PPMA also sought the restoration of a 10% tax credit on balancing, modernisation and replacement, expansion and upgrading of manufacturing facilities.

According to the association, the incentive would support investment in modern production plants, improve productivity and help manufacturers comply with international quality requirements.

The industry further urged the government to place pharmaceutical export income under the final tax regime. It said the existing taxation system had increased the financial and compliance burden on exporters, affecting their ability to compete in international markets.

Another proposal involved exempting payments to foreign entities from withholding tax when made for overseas drug registration, marketing and promotional activities.

The industry said these payments were necessary for securing regulatory approvals, establishing brands and expanding into new export markets.

Representatives expressed the expectation that the government, SIFC and relevant regulatory authorities would consider the proposals while developing policies for investment, industrial expansion and export diversification.