This Working Paper investigates private corruption in Pakistan’s pharmaceutical sector as a possible factor harming development.
Pakistan’s pharmaceutical sector has not seen the growth and dynamism one would expect from industries with an upward growth trajectory. It has also not been competitive internationally, with limited exports. Further, the pharmaceutical industry in Pakistan has developed a top-heavy structure in terms of market share, where the top 100 firms, out of a total of around 750, cater to 97% of the market. It follows that approximately 650 firms survive on only 3% of the market.
Together, the poor competitiveness and the skewed industry structure suggest that there are factors preventing this sector from contributing to economic growth and public health. This paper investigates private corruption in the pharmaceutical sector – understood as the capture of rents – as a possible factor harming development.
The paper focuses on three issues in particular that have been highlighted through preliminary research on the pharmaceutical industry in Pakistan as restricting development. These are pricing, poor quality drugs and government procurement of medicines. For each of these issues the authors have examined the processes over time that have resulted in the creation of rents and that encourage rent-seeking. The study used key informant interviews and data from the government on testing and procurement for its analysis.