Pakistan's pharma industry seeks reform of research and development fund to foster innovation

Pakistan's pharmaceutical manufacturers are urging the government to redirect a mandatory 1% profit contribution, currently channelled into a centralised fund, directly into their own in-house research and development (R&D) programmes.

Industry leaders argue this strategic shift is crucial for developing export-oriented products and boosting sustainable economic growth.

Tauqeer Ul Haq, Chairman of the Pakistan Pharmaceutical Manufacturer Association (PPMA), voiced strong concerns about the existing Central Research Fund (CRF). "The Central

Research Fund (CRF) is not being utilised purposefully for the sectoral R&D, but for administrative purposes," he stated.

While Pakistan's traditional export sectors like textiles and leather have historically received significant government support, the pharmaceutical industry has seen steady export growth into key international markets – including Africa, the Middle East, and Southeast Asia – largely on its own steam.

However, industry officials believe this performance could be significantly amplified with targeted government support, particularly in fostering innovation.

The core issue, they say, lies with the mandatory 1% profit contribution to the CRF. Originally intended to spur R&D, stakeholders report the fund is now predominantly used for administrative and infrastructural spending. This includes laboratory upgrades and regulatory systems, which, while important, do not directly fuel the product-focused innovation needed for international competitiveness and export growth.

Industry players emphasize that allowing pharmaceutical companies to invest this 1% directly into their own R&D programmes could transform the industry’s trajectory.

Benefits of In-House R&D Investment

The pharmaceutical sector outlines several key advantages if companies are permitted to manage their 1% R&D contribution directly:

● Targeted Innovation: Direct investment in creating market-ready formulations and adapting new technologies.

● Technology Transfer: Easier facilitation of advanced biotech and complex pharmaceutical product development, potentially leading to significant import substitution and a stronger global market presence.

● Strengthened Partnerships: Enhanced public-private R&D collaborations, including with universities and academic research centres.

● Domestic Clinical Trials: Development of Contract Research Organisations (CROs) and WHO-accredited laboratories within Pakistan. This would reduce reliance on outsourcing clinical trials and bioequivalence studies to countries like India, Indonesia, and Malaysia.

● Global Compliance: Increased capacity to meet global regulatory standards, including Current Good Manufacturing Practice (cGMP) certifications and approvals from international bodies like the WHO, US-FDA, and EMA. Such accreditations, already secured by competitors in India and China, are vital for accessing high-value markets.

Despite challenges, the pharmaceutical sector has successfully expanded its exports over thepast year while continuing to meet domestic healthcare demands.

Industry proponents argue that with the proposed R&D policy adjustment, this positive trajectory can be significantly accelerated, unlocking substantial untapped potential for Pakistan's economy.