Improved ways and means to allocate currency for the pharma sector were discussed at a meeting attended by the governor of the Central Bank of Iran and the health minister.
Mohammadreza Farzin, the CBI chief, referred to the provision of forex for pharmaceutical companies and said, “Given the importance of timely access to medicine and address the people's needs, banks are required to follow rules to ease the pharma and health companies’ access to foreign currency,” the news agency IBENA quoted him as saying.
Farzin issued instructions to expedite and improve forex allocation for medicine including petty cash for pharma companies to the tune of €100 million.
The Minister of Health Bahram Einollahi appreciated the CBI support as well as the provision of facilities and credit to the health and pharmaceutical sectors and called for curbing the bureaucratic process.
A memorandum of understanding has been signed to expedite and facilitate foreign exchange and credit services.
During the meeting, representatives of pharmaceutical manufacturers, raw material suppliers medicine importers expressed concern about issues related to their businesses.
The CBI boss discussed solutions to address the problems and issued instructions to the forex and credit departments of the central bank.
He noted that in May the regulator made available subsidized forex ($1=285,000 rials) worth $3.5 billion for medicine import in the current Iranian year (started March 21).
“Considering the need for medical equipment and medicine, $3.5 billion has been allocated for importing medicine, raw material and medical equipment this year.”
The senior banker noted that loans worth 300 trillion rials will be given to pharma companies in the current fiscal to help them meet needs for working capital and ease medicine and raw material import.
Export Incentives
In related news, the CBI has announced incentives for medicine exporters per which exporters will have access to more subsidized currency. "However, exporters must be fully committed to repatriate their earnings through official channels."
Subsidizing currency in its current format came into effect after the steep rise in forex rates in the spring of 2018 when the past government pegged the subsidized dollar at 42,000 rials and cut the list of goods eligible for subsidies to barely a few essential items, including food, medicine and some raw materials.
Former governments allocated billions in subsidies for importing food and medicine selling the greenback for 42,000 rials.
Subsidized currency is sourced largely from oil export for importing essential goods, pharmaceuticals and machinery. The past subsidy policy was designed to avoid price hikes in food and raw materials and protect consumers against inflation and price gouging almost always blamed on high forex rates.
The Raisi administration said it was ending the increasingly costly and “corruption-tainted subsidy policy”. The CBI, instead, started offering the dollar at 285,000 rials to help prevent huge jumps in consumer prices.
‘Plethora of Problems’
Mohammad Abdozadeh, the head of the Syndicate of Owners of Human Drug Industries, last week said, “The pharmaceutical sector is grappling with a plethora of problems, namely currency allocation, cash-flow and irrational drug pricing [by the government].”
He complained that forex allocation for medicine and medical equipment has plunged from $4.8 billion dollars last year to $3.2 billion this year, SanatSenf.ir, a website specializing in guilds reported.
"Today, the pharmaceutical industry is earnestly calling on the government to provide the necessary currency so that it can produce medication and prevent a shortage of drugs."
Over the months there have complaints in the local media about shortages and the rising prices of medicine. The focus has been mainly on medicine, mostly imports, for rare and special diseases that have become unaffordable for large sections of the society.
"Pharmaceutical companies have received zero foreign currency since February,” Abdozadeh complained. “If the trend continues in the coming months we will face escalating shortages of drugs."
