On May 26, 2026, the Association of Pharmaceutical Producers of Nepal (APPON) formally requested the government to halt the import of foreign medicines that are already being manufactured inside the country. Pointing to growing self-sufficiency in various medical categories, the association stated that local manufacturers need regulatory protection to survive competitive market pressures.
According to APPON, the domestic pharmaceutical sector is currently facing operational stress, with several manufacturing units facing closure due to competition from cheaper foreign imports.
Capacity Underutilization and Closures Highlight Sector Strain
The association revealed that while nearly 1,000 pharmaceutical licenses or industries exist in Nepal, the operational reality for domestic plants has grown increasingly difficult.
Industry Closures: Ten pharmaceutical industries have already ceased operations, and approximately 50 others are reported to be on the verge of closing.
Low Production Output: Most functional Nepali pharmaceutical plants are currently operating at only 30% to 40% of their total production capacity.
Financial Risk: Over Rs 40 billion has been invested in the domestic drug manufacturing sector, with 50% to 60% of that capital backed by commercial bank financing. Representatives stated that companies are currently struggling to meet debt obligations and payroll demands.
The Cost Disadvantage of Foreign Imports
Former APPON central chairman Narayan Bahadur Chhetri explained that local producers face structural disadvantages compared to major regional exporters, particularly India. Because Indian companies manufacture medicines on a massive scale, they enjoy lower per-unit production costs.
Conversely, manufacturers in Nepal face several domestic hurdles:
A significantly smaller domestic consumer market.
Low customs duties applied to finished imported medicines.
Higher tax rates levied on raw materials, packaging materials, and glass imports.
Chhetri suggested that government policy should pivot toward facilitating the seamless import of raw pharmaceutical ingredients rather than allowing finished medicines that are already effectively supplied by local labs. Currently, products from roughly 200 foreign companies hold a dominant presence in the market.
Unimplemented Regulatory Directives
APPON central chairman Biplav Adhikari pointed out that the government had previously made a decision in 2074 BS to restrict the import of 30 specific medicines that Nepal is fully capable of producing locally. However, that regulatory directive has yet to be fully enforced.
The association argues that the domestic market accounts for roughly Rs 7 billion in annual medicine consumption, yet local products cover only about half of that total. APPON executives maintain that domestic medicines strictly comply with international safety and quality standards, and have urged the state to offer support through lower bank interest rates, streamlined technology imports, and enhanced export facilities.
