The explosion on Monday went off in Lahore's busy Mall Road during a protest rally attended by hundreds of pharmacists in the eastern city.
Local police official Ali Raza told the Associated Press news agency that the blast occurred when a man on a motorcycle rammed into the crowd of protesters.
A Taliban faction claimed the attack, Al Jazeera reported.
Al Jazeera's Kamal Hyder, reporting from the blast site in Lahore, said the explosion went off near the provincial assembly building.
"The road has been sealed off; right now ambulances are evacuating the wounded, and also the police and security forces have gathered at large numbers around the assembly building," Hyder said.
Live TV registered a loud bang and showed smoke billowing up as people ran away, some of them carrying the wounded.
Lahore was the site of an Easter Day bombing that killed more than 70 people in a public park last year.