A large bomb has struck a protest rally in the eastern city of Lahore, killing at least seven people and wounding 40, Pakistani police said on Monday.

The blast occurred when a man on a motorcycle rammed into the crowd of hundreds of pharmacists, who were protesting new amendments to a law governing drug sales, local police official Zaheer Abbas said.

A Taliban faction claimed the attack.

Two senior police officers, including a former provincial counterterrorism chief, were among those killed, Abbas added.

Live TV registered a loud bang and showed smoke and fire billowing up as people ran away, some of them carrying the wounded.

Police had cordoned off the area on Mall Road, one of the city's main arteries, amid fears of a second blast as rescuers raced to the scene, with images of the injured being carried away shown by local media.

The incident occurred as hundreds of chemists protested a new law near the Punjab provincial assembly building, Rana Sanaullah, the provincial law minister, told AFP.

"We fear many injured," he said.

Up to 400 people had attended the protest, according to an AFP reporter who was on the scene when the explosion occurred.

"Suddenly there was a bang and a huge blast," he said. "Everybody ran for safety."

Lahore, the country's cultural capital, suffered one of Pakistan's worst attacks during 2016, a Taliban suicide bomb in a park on Easter that left more than 70 dead, including many children.

Social media users were quick to suggest the blast was meant to derail plans to hold the highly-anticipated final of the Pakistan Super League in Lahore.

The second year of the Twenty20 tournament is currently being held in the United Arab Emirates out of security fears, but after a military crackdown on extremism officials were confident enough to plan for the final to take place in the cricket-mad city.