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Iran to Become Pharma Powerhouse Post-Sanctions
Domestic Economy

Iran to Become Pharma Powerhouse Post-Sanctions

To import new technologies and knowhow, boost research and development, launch new products and develop world-class manufacturing plants, an ambitious project is underway to establish the first private Industrial Pharmaceutical City.
The city being developed on 176 hectares of land is located 65 km from Tehran. With an investment of over $2 billion, the industrial city will be a destination for incubators, research and development centers, a central lab, chemical and biotechnology medicines producers, application program interfaces, medical equipment, storage, and maintenance and distribution facilities.
It is expected to become the hub of about 100 innovative and high-technology based large-, medium- and small-sized companies, according to California-based consulting firm Front & Sullivan.
The aim is to attract foreign investors to produce bio drugs, medical devices, stents or laboratory diagnostic kits or pharmaceutical packaging material such as aluminum foils, PVC, special cardboard packing boxes, and tubes for ointment and creams.
All foreign investors will benefit from tax exemption and incentives to export products.
Key core competencies such as expertise, skilled labor, low cost of production, infrastructures and most importantly, a strategic geographical and political location have made Iran a potential export hub in the region.
"During the post-sanctions era, through partnerships with international companies, the country will utilize this opportunity to help itself successfully transition into non-oil economy," says Ali Mirmohammad, senior consultant and business development manager at Iran, Frost & Sullivan.
"International pharmaceutical companies can find lucrative opportunities either through joint ventures or direct investment," he says.
Despite Iran facing an embargo that has limited its international and trade relationships, many well-known companies like Novo Nordisk, Sanofi and Novartis have been active in this market, which indicates that the pharmaceutical industry in Iran is a profitable business.
In addition, Novo Nordisk and Novartis have officially announced plans to directly invest in the market.
“In the post-sanctions era, Iran’s pharmaceutical sector is one that could benefit significantly from foreign investment. Producing bio-similar products and APIs, renovation of obsolete physical structures, importing new technologies and high-tech machinery and adapting to high-level good manufacturing practices are the main opportunities that it could gain once sanctions are lifted,” he said.
While the pharmaceutical market in most of Iran’s neighboring countries depends on import, Iran is the largest manufacturer of generic drugs across the Middle East and North Africa.
With a total installed capacity of 50 billion units per annum, Iran is the hub of 120 local manufacturers of finished products, 55 producers of chemical APIs and more than 46 distributers.
Iran is not only a market of 79 million people, its strategic location in the Middle East and political relationships with Iraq, Afghanistan, Syria, Lebanon and Yemen as well as CIS countries also enable it to easily target many Muslim countries.
According to Iran Vision Plan 2025, the export of medicines is expected to increase from $180 million in 2015 to over $1.5 billion in the next 10 years.
Lack of local manufacturing plants in Azerbaijan, Armenia, Turkmenistan, Kyrgyzstan, Tajikistan, Iraq, Afghanistan, Syria, Lebanon and Yemen, in addition to East, West and Central countries in the African continent, is a good opportunity for Iran to target these markets through partnerships with international companies.
“To renovate the industry and convert it into an export hub, Iran aims to attract foreign investment into the pharma industry in order to bring its technology capabilities up-to-date, reconstruct its GMP structure and improve the quality of APIs, finished products and packaging”, Mirmohammad added.  
The average age of pharmaceutical companies in Iran is over 38 years old, which means Iran needs to renovate its facilities and equipment.
Although Iran’s pharmaceutical industry has the benefit of expertise and effective understanding of technologies, it suffers significantly from poor GMP structure. As far as international GMP is concerned, less than 5% of all manufacturing facilities in Iran comply with international standards.
Moreover, lack of appropriate GMP structure, along with using low quality APIs, has negatively impacted the quality of finished products. Lower R&D expenditure is another key restraint in this sector. Generally, less than 1% of total pharmaceutical turnover in Iran goes into R&D. Besides R&D, inadequate marketing, as well as inappropriate distribution systems are two other key restraints.
While intensive sanctions slowed down the pace of renovation and investments, in the post-sanction era, Iran looks forward to importing new technologies and high-tech machinery and equipment as well as knowhow from western countries to revive the industry.
In 2015, imports supplied about 33% of total pharmaceutical sales market in Iran, 80% of which were bio-similars, recombinants, plasma products, insulin, vaccines and oncology drugs.
In the past 10 years, Iran has gradually experienced progress in the biotechnology sector. However, due to low investments as a result of sanctions, the country still depends on imports for many strategic products.
To localize biotechnology products and balance the pharmaceutical trade over the next five years, the Iranian government plans to support the private sector to increase the share of local production from the current 67% to 75%.
According to the Strategic Plan for the Ministry of Industries, Mining and Trade, the total installed pharmaceutical capacity is expected to increase from 50 billion units to 60 billion units by the end of 2025. While the setting up of new generation of generic drugs is feasible, developing bio-similar finished products as well as APIs are two investment priorities.
The government aims to support the private sector’s investment in bio APIs, herbal medicines, anti-cancer drugs, recombinant, monoclonal antibodies, peptides, thalassemia drugs, insulin, vaccines, diagnostic kits and materials used in radiography, X-ray, computed tomography scan and MRI to reduce the country’s dependency on imports.

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