Domestic Economy

A Promising Market

A Promising Market A Promising Market

The Syndicate of Iranian Pharmaceutical Industries is set to hold the 2nd International Exhibition on Pharmaceuticals and Related Industries (Iran-Pharma 2016) on September 14-16 in Tehran.

Hundreds of prominent companies from across the world, including Italy, Germany, France, England, Switzerland, Belgium, Japan, South Korea, China, Argentina, Spain, India and the Czech Republic, will come together in the first post-JCPOA major pharmaceutical exhibition in Iran.

Several workshops and the 1st exhibition on medical and pharmaceutical books and publications will be held alongside the event.

Considering that the pharmaceutical sectors in Iran’s neighboring countries are less developed, and in most cases completely dependent on imports, this regional market of half a billion potential consumers gives added importance to this international event.

With big names like Merck, Bosch, AWH, Azupharma, Dr. Muller, Harro Hofliger and M+W from Germany, Comas, Easypharma, Ronchi and Pharma Quality Group from Italy, Boccard and Kalix from France, Pharma Packaging Systems and MRC Systems from England, Argenol Laboratories and Telstar from Spain, Sejung from South Korea and Aseptic from Belgium, Iran-Pharma have the potential to be the game-changers in the regional market.

  Iranian Market and Opportunities

Like many other businesses in Iran, the pharmaceutical industry has suffered under years of sanctions, lack of investment, corruption, smuggling, and government price controls. However, the minuses pale in comparison to the sector’s significant potential for investment and growth in the post-sanctions era and under normal conditions.

Sanctions against Iran over its nuclear energy program were lifted in January as part of last year’s landmark deal between Tehran and world powers, known as the Joint Comprehensive Plan of Action (JCPOA).

According to a report by the Dubai-based Whispering Bell risk management firm, between 90% and 97% of Iran’s finished medicinal product requirements are produced locally, as well as around 50% of the raw materials needed as input. However, it is dependent on imports for certain specialized medicines and key raw materials.

The sector faces some hurdles due to the heavy involvement of state companies, with the government historically subsidizing drugs to ensure broader affordability and the avoidable effects of over-prescription and over-consumption. As a result, the government is hoping to implement an ambitious plan to dramatically increase self-sufficiency and efficiency in the sector over four years.  

A closer look at the potential of this market, however, will give pharmaceutical businesses an idea of investment opportunities. Infrastructure is the backbone of every industry. In Iran ten industrial units of the pharmaceutical sector are less than ten years old. Because of the government investment using subsidized foreign exchange, they are equipped with modern machinery and equipment and are able to produce quality products.

The country also has a highly educated workforce. Around 50 students graduate every year in PhD courses of various fields of pharmaceutics, excluding the 250 Pharm. D graduates. Furthermore, completing their overseas education, 250 other  graduates return to work in the home country.

Iran’s pharmaceutical market is a large growing market and with the economic restrictions removed it promises new horizons with better profitability. It should be mentioned that Iran’s medicine consumption per capita has soared from 186 units to 262 units during a ten-year period.

Geographically, Iran is located at the heart of three regions – Central Asia and the Caucasus, the East Mediterranean, and the Middle East. This unique geography  provides the opportunity to penetrate foreign markets. Having achieved 65% of the total nominal capacity of its pharmaceutical industries, Iran indeed has the potential to expand into neighboring markets.

Having considered the dynamics of the global pharmaceutical market and domestic needs, both the large-scale and sectorial policymaking establishments in Tehran  have come to the conclusion that investing in transfer of biotechnology is inevitable. Therefore, the next five-year economic development plan (2016-21) gives priority to projects such as production and development of high value medicine and self-sufficiency in financial resources to private companies and foreign investors.

The development plans are laws drafted by the government and ratified by parliament every five years, since 1991. The primary aim of the plans is to pave the way for the realization of the economic development targets enshrined in the 20-year Vision Plan (2005-25).

  Keeping Abreast  

With a stable rising trend and low economic fluctuations, pharmaceutical industries have always been among the most profitable industries in the world. Population growth rates and the increasing demand for healthcare services and pharmaceuticals across continents call for further growth in the industry and protection against the fluctuations caused by the economic cycles of boom and bust. Earnings of the pharmaceutical industry worldwide is now over $1 trillion and is expected to reach $1.6 trillion by 2018.

These and other prospects have made the industry an investment magnet. Several European countries, with low population growth and little natural resources, have decided to spend relatively large amounts of their GDP on research and development in pharmaceuticals. Every pharmaceutical product that enters the highly competitive markets of today is in fact a result of this trend.

On the other hand, changes in the populations’ average age and lifestyles have immensely contributed to greater change of patterns in the nature and ratio of diseases and the spread of illnesses normally demanding long, complicated and expensive treatments. Consequently, such factors call for more products and new r investments in R&D of pharmaceutical companies.

Although it may well be the forerunner in a regional market of around half a billion, Iran’s share of the global market is meager. Given the state of the pharmaceutical industry in the region, and the recent developments, this (small Iranian share) can and will change. Iran-Pharma 2016 may be the turning point.