Dear Colleagues! This is Asrar Qureshi’s Blog Post #1291 for Pharma Veterans. Pharma Veterans Blogs are published by Asrar Qureshi on its dedicated site https://pharmaveterans.com. Please email to pharmaveterans2017@gmail.com for publishing your contributions here.
Preamble
This is Part 1 of a 3-part series about exit of multinational pharmaceutical companies from Pakistan market. It sets the historical context, documents the major multinational exits, and analyzes the structural reasons behind this trend.
Part 1 of a Three-Part Series
For more than five decades, multinational pharmaceutical companies (MNCs) were synonymous with innovation, quality, ethical promotion, and scientific advancement in Pakistan. They introduced many of the country’s first modern medicines, established world-class manufacturing facilities, trained generations of technical staff and medical representatives, sponsored continuing medical education for physicians, and brought international standards of quality assurance to the local pharmaceutical industry.
Today, that landscape looks very different.
One after another, some of the world’s most respected pharmaceutical companies have either closed their manufacturing operations, sold their local businesses to Pakistani companies, or shifted to an import-and-distribution model. During the past few years alone, Eli Lilly, Sanofi, Bayer, Pfizer, and Lundbeck have either exited or significantly scaled back their direct operations. These developments have triggered an important debate within Pakistan’s healthcare community.
Is Pakistan becoming an unattractive destination for research-based pharmaceutical companies? Or are these exits part of a broader global restructuring strategy?
The answer lies somewhere in between.
A Proud Beginning
Pakistan’s pharmaceutical industry has evolved remarkably since independence. During the 1960s and 1970s, government policies encouraged foreign investment in pharmaceutical manufacturing. International companies responded enthusiastically.
Companies such as Pfizer, Roche, Merck, Hoechst, Bayer, Eli Lilly, Glaxo, Wellcome, SK&F, Beecham, Wyeth, Bristol-Myers Squibb, Parke-Davis, Sandoz, Sanofi (through predecessor companies), Johnson & Johnson, and many others established manufacturing plants and marketing operations in Pakistan. Their investments introduced modern manufacturing practices, quality systems, clinical research capabilities, and professional sales organizations. For decades, multinational companies dominated many therapeutic categories, particularly cardiovascular medicine, antibiotics, vaccines, diabetes, oncology, psychiatry, and specialized hospital products.
The presence of these companies also helped develop local talent. Thousands of Pakistani professionals received world-class training in manufacturing, quality assurance, regulatory affairs, marketing, medical affairs, finance, and leadership. Many later became senior executives in local pharmaceutical companies, spreading international best practices throughout the industry.
The Rise of Local Champions
Beginning in the 1990s and accelerating over the last two decades, Pakistan’s domestic pharmaceutical industry matured rapidly.
Companies such as Getz Pharma, Sami, The Searle Company, AGP, Highnoon, CCL, Martin Dow, Hilton Pharma, PharmEvo, Barrett Hodgson, Ferozsons Laboratories, OBS Pakistan, and Lucky Core Industries invested heavily in manufacturing facilities, quality systems, research capabilities, and brand development. Today, Pakistani companies compete successfully across almost every therapeutic category. This transformation is a major success story.
However, it also changed the competitive dynamics. Research-based multinational companies increasingly found themselves operating in a market where innovative medicines represented only a small proportion of overall pharmaceutical sales, while branded generics became the dominant commercial model.
The Timeline of Major Exits
Although multinational companies have gradually reduced their presence over many years, the pace accelerated after 2022.
Merck KGaA (Germany) sold its Pakistan operations to Martin Dow in 2016, marking one of the earliest major restructurings by a global research-based company. Roche also transferred its manufacturing operations and product portfolio to Martin Dow while maintaining only a limited commercial presence through imports. Earlier, MSD, Johnson & Johnson’s pharmaceutical manufacturing operations, and several legacy multinational brands had similarly been transferred to local ownership.
The recent wave has been even more significant.
In November 2022, Eli Lilly Pakistan announced the closure of its local operations. The company, well known for its diabetes portfolio, including Humalog insulin, decided to discontinue its direct business model in Pakistan. In April 2023, Sanofi sold its majority shareholding in Pakistan to local investors, ending decades of direct multinational ownership. In July 2023, Bayer Pakistan completed the sale of its pharmaceutical manufacturing facility and local pharmaceutical brands to OBS Group, although Bayer retained selected businesses globally outside the transferred assets. In May 2024, Pfizer Pakistan sold its manufacturing facility in Karachi and transferred much of its local pharmaceutical portfolio to Lucky Core Industries. Pfizer continues serving Pakistan through imported products but no longer manufactures locally. In 2025, Lundbeck, the Danish neuroscience company, announced the closure of its Pakistan operations, adding another respected research-based company to the list of departures. Industry reports noted that the number of multinational pharmaceutical companies active in Pakistan has fallen dramatically compared with previous decades.
It is important to distinguish between complete withdrawal and business restructuring. In most cases, companies did not simply abandon the market. Instead, manufacturing plants, brands, and employees were transferred to Pakistani companies, ensuring that many established medicines remained available to patients.
Why Are They Leaving?
There is no single explanation. Each company made its own strategic decision, but several common themes consistently emerge.
Pakistan Is a Small Global Market – For most multinational pharmaceutical companies, Pakistan contributes only a tiny fraction of global revenues. When global headquarters review manufacturing footprints, countries with relatively small sales volumes often become candidates for consolidation. From a multinational perspective, importing products from regional manufacturing hubs may appear more economical than maintaining local production facilities.
Drug Price Controls – Perhaps the most frequently cited challenge is Pakistan’s pharmaceutical pricing system. Unlike many consumer industries, pharmaceutical companies cannot freely adjust medicine prices in response to inflation or currency depreciation. Price revisions often require lengthy regulatory approval. Meanwhile, manufacturers face continuously rising costs for active pharmaceutical ingredients, packaging materials, energy, freight, and labor. When costs increase faster than permitted selling prices, profitability inevitably declines. Industry representatives have repeatedly identified pricing constraints as one of the most significant commercial challenges facing research-based pharmaceutical companies.
Currency Depreciation – Pakistan imports most active pharmaceutical ingredients, specialized chemicals, packaging materials, and sophisticated manufacturing equipment. The sharp depreciation of the Pakistani rupee over recent years dramatically increased production costs. Companies earning revenue in rupees but paying suppliers in foreign currencies experienced significant pressure on operating margins.
Restrictions on Foreign Exchange – Several multinational corporations also faced delays in repatriating dividends, royalties, and payments to overseas suppliers because of Pakistan’s foreign exchange constraints. While these restrictions were introduced to protect foreign currency reserves, they complicated financial planning for multinational businesses operating within global treasury systems.
Global Portfolio Rationalization – Not every exit reflects dissatisfaction with Pakistan alone. Across the pharmaceutical industry, companies have been simplifying global operations by concentrating manufacturing in fewer, larger facilities serving multiple countries. This strategy improves economies of scale and reduces fixed costs. Pakistan has therefore been affected by a global restructuring trend rather than an exclusively local phenomenon.
Stronger Local Competition – The success of Pakistani pharmaceutical companies has also altered the competitive landscape. Several local firms now operate manufacturing facilities that meet international standards, possess sophisticated marketing organizations, and maintain extensive nationwide distribution networks. Acquiring established multinational brands has become an efficient growth strategy for these companies. For multinational corporations, selling mature brands while focusing on high-value innovative therapies elsewhere can represent a rational business decision.
Is This Really an Exodus?
The word exodus makes dramatic headlines, but reality is more nuanced.
Many medicines formerly produced by multinational companies continue to be available because Pakistani companies acquired the brands, manufacturing facilities, and technical capabilities. Patients generally did not lose access overnight to established products. Nevertheless, ownership matters.
Research-based multinational companies typically serve as the first gateway for breakthrough therapies, global clinical trials, advanced biologics, and cutting-edge innovations. As their direct presence shrinks, Pakistan risks becoming a lower-priority launch market for future medicines.
That concern extends beyond commercial interests. It affects physicians, researchers, hospitals, and ultimately patients who depend on timely access to new treatments.
A healthy pharmaceutical ecosystem benefits from diversity. Strong local manufacturers are essential for affordability, self-reliance, and employment. At the same time, research-based multinational companies play a critical role in introducing breakthrough medicines, conducting clinical research, transferring technology, and strengthening scientific capabilities.
Pakistan should not view these objectives as mutually exclusive. The challenge is to build an environment where both can thrive.
Looking Ahead
The story of multinational pharmaceutical companies leaving Pakistan is not simply about corporate transactions. It reflects deeper questions about industrial policy, healthcare priorities, investment confidence, and the future direction of one of the country’s most strategic industries.
Part 1 Concluded.
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