This study presents the market environment of the pharmaceutical sector in Iran, and highlights its challenges and future prospects. In order to study a country’
s medicine market systematically, various indicators can be applied, e.g. market behavior about specific dosage forms or quantity or quality trends [3
]. Most owners of the pharmaceutical industry were either dependent on the former regime or foreigners who left Iran after the revolution, so young domestic pharmacists began to manage the pharmaceutical system of the country. Iran-Iraq War (1980–1988) also prompted the need for strict monitoring of the market. The revolutionary government exerted fundamental changes in the food and drug organization in order to assess the need for pharmaceuticals in both general society and for the military forces. With the establishment of the planning office in the food and drug organization, some experts were ascribed to closely monitor the needs and prepare the production and the import scheme. In 1986, the government in office assumed private ownership and liberalization in the economic system, which resulted in magnificent growth in the market. In 1999, the government allowed domestic production companies usage of their free capacity to cross the borders of planning by the food and drug organization. In 2001, further liberalization in the pharmaceutical system and the lack of subsidized currency caused an increase in prices. This liberalization in the pharmaceutical system also augmented imports. Throughout the period, domestic production constituted a major share in the market [3
]. The major reasons for the growing demand are as follows [4
Iran’s demographic structure and population growth;
increased insurance coverage of the population;
increased level of income and gross domestic product (GDP) per capita;
incidence of new diseases and epidemiologic transition, e.g. types of cancer and multiple sclerosis;
intentionally lowered medicine price; and
medical sciences advances.
In the period under investigation, accessibility to health services and insurance coverage has grown remarkably, possibly as a result of GDP growth. The government has approached the medicine accessibility positively, and a number of medicines have been included in the medicine list. However, insurance coverage has not expanded simultaneously and proportionately. Health sector budget share in the GDP did not develop acceptably, causing a drastic increase in the public’s out-of-pocket payment. Insurance coverage expansion was through three major organizations: the Social Security Organization, Medical Services Insurance Organization, and Medical Insurance Services Organization of Armed Forces. The universal insurance coverage act obliges the population to register for an insurance service which contributes to the goal. Iranian pharmaceutical industries mostly manufacture traditional medicines, and deficiency in the investments needed for monoclonal antibodies and other biotechnology-derived products, as a consequence, helped the higher share of imported medicine. The Iranian pharmaceutical industry’s private sector has not yet developed as much as required. More than 70% of the domestic industries are owned by the government and its related bodies or the public organizations. As evidenced by the two existing biotechnology companies, both of which are privately-owned, privatization can lead to greater sustainable development in domestic industries [6, 7]. Currently, total pharmaceutical market value is about $3.2 billion, or as much as $4-4.5 billion according to some estimates on the real market size . The present difference between real and estimated value is attributed to the price suppression policies of the authorities . It should also be noted that national currency has experienced a drastic devaluation against USD. Iran experiences an average growth rate of 28.38%, which is significantly more than developing countries such as China and India which have around 11 to 15% growth [10, 11]. The results show that the domestic production sales value has grown, but not in concordance with that of the imported medicine sales value. The results also imply that the current pharmaceutical policies are in favor of imports, as the slope of the import and domestic production lines illustrate. The rise in Iranian pharmaceutical expenditure is expected to continue at a significant, even higher rate than expected from developing countries, based on factors mentioned above and the deliberate deficiencies of pharmaceutical policy [12, 13]. Medicines are regarded as both public and industry goods. Iranian patients are entitled to have access to high-quality, timely, and cost-effective medicine [14, 15]. The Iranian pharmaceutical market is predicted to maintain its growth for years to come. Currently, 20% of Iran’s total health expenditure, on average, goes on medicine (reimbursed by the insurance organizations, based on their reports to the supreme insurance council for last year). Antibiotics, antineoplastics and immunomudulating agents (medicines mostly used for organ transplantation rejection prohibition), antidiabetics, and alimentary tract medications gain the most value in the market (Figure 5). Regarding sales volume, analgesics, antibiotics, and second generation antidiabetics are the best sellers. Investigating the mostly used products among the two top categories it is obvious that pharmaceutical biotechnology derived medicines such as proteins and monoclonal antibodies take major positions (results not presented). Considering the items mentioned, it is concluded that new and high tech medicines are seizing a large share of the market; which should incite policy makers to change for the better. If the market continues its growth, a great financial load will be imposed on the health system. Iran contains nearly 1% of the world’s population, but only about 0.3% of the world market, so if the two are in an agreement, Iran should assume $7-8 billion in 2010, and $10-12 billion in 2020. Generic medicine use is an important component of the government’s health plan that was obligatory through the generic scheme shortly after the revolution. The policy assisted the country pass the constraints of the 1980s, but vitally restricted research and development in the domestic industry, while exerting severe price containment policies . Current issues of interest for the Iranian pharmaceutical market include a rise in imports and simultaneous fall in domestic production. Low rates of investment, capital asset substitution, scarce attention to modern technologies like pharmaceutical biotechnology, and a branded medicine market are possible reasons for this domestic medicine market shrinkage [17, 18]. The investment activity of pharmaceutical companies is dependant mainly on product demand, profits, technological developments, and capital availability. It is vital to notice the steady decrease in investment rate for capital equipment replacement. This is associated with the market shift towards imported medicines and the lack of well-designed, long-term policies to support the domestic pharmaceutical industry that would potentiate reasonable conditions to encourage domestic production . Meanwhile vast research projects have been conducted in the universities and research centers but few of them have been commercialized into medicines. Performing studies aligned with the needs of the biopharmaceutical industry could be seen as a choice. Policy makers and authorities could contribute the national production capabilities by establishing the basements to commercialize the researches, revising the policies, forming close relationships and cooperative committees with the biopharmaceutical industries and applying evidence based decision making procedures.