The pharmaceutical industry in Iran plays a very critical role, and has been able to meet some 96% of the needs of its 70-million market. With reportedly having the highest per capita medicine use in the world, the industry has been quite successful in managing the market.

While Iran has had a traditional of utilizing herbal medicine, modern pharmaceutical companies have been active in Iran for some 80 years.  Since the 1979 Islamic revolution, drugs have been produced and distributed by state-owned companies, and supplied to consumers at subsidized prices. Today, the pharmaceutical industry is greatly dependent on and heavily controlled by the government, who is the main purchaser of the healthcare services and goods by providing credits for health insurance organizations.. The share of private sector does not go beyond 30%, and the plans to privatize the industry have not yielded much success.   The domestic firms mainly produce generic drugs, which are copies of foreign products. New drug development is virtually absent owing to the limited R&D capabilities of the domestic companies.

Currently, there are about 64 pharmaceutical manufacturing companies active in Iran, some 21 of which control 70% of the market. Most of the pharmaceutical companies that have public sector ownership are listed on the Tehran Stock Exchange (TSE).  

The Ministry of Health and Medical Education is the main stakeholder of pharmaceutical affairs in the country. The Social Security Investment Co. (SSIC), Iran's largest holding company, which is affiliated to the Ministry of Welfare, presently owns and controls 22 pharmaceutical manufacturing companies and possesses a 40% share of total pharmaceutical production in Iran.

The privatization move in the country urged the Iranian Parliament to approve legislation in 2000 to allow imports of pharmaceutical products.  The measure highlighted the role of private sector, and paved the way for a stronger presence of foreign companies, who find Iran a very lucrative market.  96% of the market volume needs are met by domestic companies, while the 96% only make up 55% of sales value of the market, and the remaining 4% which is imported, accounts for 45% of the sales. Moreover, significant amounts of the raw materials of most of these companies are still being imported.   Apart from importing part of its pharmaceutical needs, Iran exports pharmaceuticals to some of its neighboring countries, as well as a few Central Asian and African countries.

In sum the current situation of pharmaceutical industry in the country may be briefed as follows:

• Intense price control by the Ministry of Health;
• Compulsory generic and branded generic production policy;
• Currency allocation by the government in reduced rate for the production and importation of medicine;
• Subsidization of many items by the government;
• Irrational use of drugs.
• Growing presence of big pharma for specialized medicine