Sunday, August 24, 2008

Iran Pharmaceutical Industry

Iran’s Ministry of Health has a mission to provide access to sufficient quantities of safe, effective and high quality medicines that are affordable for the entire population. After the 1979 revolution, Iran adopted a full generic-based National Drug Policy, with local production of essential drugs and vaccines as one of the main goals. Nevertheless the generic system for pharmaceuticals have been reviewed since a few years ago allowing the importation and production on branded products.
The Iranian pharmaceutical market is characterized by relatively strong domestic industry, which meets the bulk of local demand in volume terms however, the country still relies on imports for raw materials and many specialized drugs. Iran MOH strongly supports and encourages local production of pharmaceuticals vs importation. Iran pharma market is a price sensitive market, sometimes a market of everything or nothing for importers which is moving slowly towards more privatization. Currently a mixture of generic products, local branded generic and international brand product are available in the market.
Currently around 60 pharmaceutical companies produce more than 95 per cent (quantitatively) of medicines on the market. Although over 85 per cent of the population use an insurance system to reimburse their drug expenses, the government still has to subsidize some of the pharmaceutical production/importation in order to increase affordability of medicines. One major problem in this sector, is also over consumption/prescription of various drugs in Iran, especially antibiotics.
Multinationals are present through imports, although improved intellectual property and regulatory conditions may attract some investment in local facilities. Currently, several successful cases of under-license manufacturing exist. Some Pharma companies are currently either producing their products under their licence or in the negotiation process with local partners for bringing their products to the market via contract manufacturing. These companies sought Iranian partners to take advantage of low production costs, a sizable market, and incentives currently offered by the Iranian government. On the other hand, although some multinationals are planning on setting up local manufacturing plants, Iran's unsettled political climate will remain a major deterrent to such ventures.
A number of multinational companies have their own branch office in Iran, and some are acting only through their agents. Nevertheless even in case of doing business via agents/distributors ,reputable international pharma companies prefer to have at least their own scientific office and execute/manage the marketing activities of their products themselves, as the agents in Iran lack professional marketing power and expertise, and there is big risk of non-compliance to marketing principles of the company if marketing activities was delegated to the agent.
The regulatory environment of the country is rather strict on the import of drugs and pharmaceuticals towards companies that intend to enter into the market especially for the first time. In the case of new unregistered companies, upon request of the importer, representatives of the MOHME will visit/inspect the manufacturing facility to evaluate its competency according to GMP. Once a company is registered it is still subject to frequent inspections making sure it can sustain its competence. On the whole pharmaceutical projects in Iran move quite slowly; although realization of each project, will guarantee good sales for a couple of years.
In the case of the import of new medicine, if the drug is already in the Iran pharmaceutical index/formulary, the import is subject to registration of brand name and the approval of the Ministry’s accredited laboratories. Otherwise the importer of that medicine should first undertake the process of registering the drug into the list. This process is considered as one of the bottle-necks of entering Iranian pharmaceutical market and is subject to meeting many requirements and can take up to one year. Preference is given for registration of products for local production rather than importation.
Currently, approximately 1,300 pharmaceutical products are registered in Iran’s National Formulary List, which roughly 950 of them are produced locally (at a value of approximately USD 1.3 bln) and the remainder is imported (at a value of approximately USD 0.7 bln).

The current growth rate of the value of market is approximately 20% (on USD basis) , and 5% quantitatively per annum (see below tables) ; this growth rate is projected to maintain in the upcoming five years.

Iran's large and rapidly growing population will be instrumental in driving the expansion of the pharmaceutical market as a whole, as will be the likely increase in drug prices, which are presently among the lowest in the region.

• Past 16 years from 154 mln Rials to 14,787 mln Rials
• Average growth rate on USD basis: 20% per year

Iran MOH could be regarded as one most bureaucratic MOH in the world, which requires constant attention to its authorities in order to run the business. Creating and keeping a sound relationship with health authorities needs special attention in Iran market. Iran MOH is mainly dominated by pharmacists, and pharmacists in Iran posses more share of voice in pharmaceutical business compared to physicians.

A good reputation of the company and its personnel is one of the success factors for the business in Iran pharma market. Fierce reaction and putting the company in black-list could not be excluded by Iran health authorities in cases of miss-conducts or non-compliance of the company to regulations, or even shortage of the product caused in the country due to delays in shipment.

Promotion of non-registered products should be strictly limited in Iran, though most of the multinational companies promote their non-registered products one way or another in order to pave the way for its registration. Promotion of registered products in the frame of regulations of Iran MOH (which is mainly in line with the worldwide accepted ethics for promotion of pharmaceuticals) is allowed

Iran has rather good distributing system for pharmaceutical products consisting of 4 main distributors and a number of small ones, which covers all the pharmacy shops and clinics throughout the country on frequent basis. Distribution of products requiring cold chain of distribution is possible.

DP, Red Crescent and IPI are among the oldest importers in Iran and during the past 5 years or so a lot of other importers have started their activities in Iran. Shafayab, Noor, and Peykdarou emerged a number of years ago as emergency centres for importation of products which are facing shortage in the country.

Iranian importers, customers and health authorities are relatively spoiled by excessive services of some international companies; on top of that one should consider the fact that Iranian customers and HAs are strikingly non-organized in their operations, and do not make accurate order forecasts. This added to many different uncertainties and obstacles (eg recent sections on credit lines on Iranian banks) in business environment of Iran and long and bureaucratic governmental procedures make the order handling of pharmaceuticals quite difficult in this country. Therefore it is not strange that country is facing shortage of different products every now and then.