ISLAMABAD: The pharmaceutical industry has urged the government to introduce a package of fiscal and regulatory incentives, including allowing companies to retain a larger share of export earnings in foreign currency, as it seeks to increase pharmaceutical exports from around $457 million to $2 billion in the coming years.
Representatives of the pharmaceutical industry including PPMA 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 Chief Executive Officer of the Drug Regulatory Authority of Pakistan (DRAP) Dr Obaidullah Malik, where they discussed challenges facing the sector and measures needed to boost exports and investment.
Industry representatives said pharmaceutical exports grew by around 34 per cent during the last fiscal year, reaching approximately $457 million, and argued that the sector has the potential to become a major contributor to Pakistan’s foreign exchange earnings if provided with a supportive policy environment.
A key demand raised by the Pakistan Pharmaceutical Manufacturers Association (PPMA) is an increase in the foreign currency retention limit for pharmaceutical exporters from 15 per cent to 35 per cent.
The industry maintains that pharmaceutical companies incur substantial expenses abroad on product registration, regulatory approvals, marketing, promotion and brand development, making the current retention limit inadequate.
The association believes that allowing exporters to retain a larger share of their export proceeds in foreign currency will help Pakistani pharmaceutical companies expand their presence in international markets and compete more effectively with regional manufacturers.
The industry has also sought restoration of a 10 per cent tax credit on balancing, modernisation and replacement (BMR), expansion and upgrading of manufacturing facilities.
According to the PPMA, the incentive would encourage investment in modern production plants, improve productivity and help local manufacturers meet increasingly stringent international quality standards.
Another major demand relates to taxation of export income. The pharmaceutical industry has urged the government to restore exports under the final tax regime (FTR), arguing that the existing taxation mechanism has increased financial and compliance burdens on exporters and adversely affected competitiveness.
The industry has further requested exemption from withholding tax on payments made to foreign entities for overseas drug registration, marketing and promotional activities, maintaining that such costs are essential for expanding exports and entering new markets.
Industry leaders said the pharmaceutical sector possesses significant untapped export potential and could substantially increase foreign exchange earnings if policy bottlenecks are removed and export-oriented incentives are introduced.
They expressed hope that the government, SIFC and relevant regulatory authorities will consider the industry’s proposals as part of efforts to promote investment, industrial growth and export diversification.
