Centralised fund: pharma sector urges govt to let it utilise 1% of profit on in-house R&D activities
Tauqeer Ul Haq, Chairman, Pakistan Pharmaceutical Manufacturer Association (PPMA), said: 'The Central Research Fund (CRF) - is not being utilised purposefully for the sectoral R&D, but for administrative purposes.'
While Pakistan's traditional export sectors; such as textiles, carpets, leather, and sports goods have long benefited from preferential treatment in the form of subsidies, rebates, and policy incentives, one high-potential sector has quietly been making strides with minimal state support: the pharmaceutical manufacturing industry.
Price deregulation improves access to medicines, helps stabilise industry
Over the past few years, pharmaceutical exports from Pakistan have expanded steadily into key international markets including Africa, the Middle East, Central Asia, South America, South East Asia, the Commonwealth of Independent States (CIS), and beyond.
Industry officials believe this performance can be more effective if the sector is provided some government support in terms of export incentives and targeted funding for innovation. They say the pharmaceutical industry presents an untapped opportunity for strategic growth, but a significant policy bottleneck is holding it back.
At the center of this concern is the mandatory 1% contribution from net profits that all pharmaceutical manufacturers in the country are required to deposit into the CRF. Originally introduced to foster research and development, the current utilisation of the CRF has come under industry-wide scrutiny. According to stakeholders, the majority of the fund is directed toward administrative and infrastructural spending—such as laboratory upgrades, pharmacovigilance systems, poison control centers, antimicrobial surveillance cells, and digital record-keeping—rather than supporting core, product-focused R&D.
While such infrastructure is important for maintaining regulatory standards, it does not drive the innovation or international competitiveness needed to grow exports, attract investment, or promote technology transfer. The sector is now urging the government to allow pharmaceutical companies to invest this 1% directly into their own R&D programmes—a shift that they believe can help transform the industry's trajectory.
How will this policy revision benefit the pharma industry?
The pharma sector argues that if they are allowed to utilise 1% of their profit for in-house R&D, it will lead to:
1) Targeted investment in product innovation, with direct outcomes in terms of market-ready formulations and technology adaptation.
2) Facilitation of technology transfer for advanced biotech and complex pharmaceutical products, enabling large-scale import substitution and a competitive edge in global markets.
3) Strengthening of public-private R&D partnerships, including collaboration with universities and academic research centers.
4) Development of Contract Research Organisations (CROs) and WHO-accredited laboratories within Pakistan to conduct clinical trials and bioequivalence studies—services currently being outsourced to India, Indonesia, Malaysia, Jordan, and others.
5) Capacity building for global regulatory compliance, including preparation for Current Good Manufacturing Practice (CGMP) certifications and approvals from WHO, PICS, ANVISA, US-FDA, UK-MHRA, EMA, and Health Canada. These accreditations are critical for entry into high-value markets and are already being secured by competitors in India, China, Turkey, and Bangladesh.
In the last 12 months, the pharmaceutical sector has managed to expand its exports while meeting domestic healthcare needs, which the sector says can improve further with government support.
Copyright Business Recorder, 2025
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