Novo Nordisk new plant in Iran – How will the local production of insulin impact the pharma market?

With around 9% of the population suffering from diabetes, Iran represents a huge market for insulin. In fact, over the last few years the number of diabetic patients has been increasing at a compound annual growth rate (CAGR) of around 15%-16%, comments YS Shashidar, a partner and managing director of Frost & Sullivan, South Asia, Middle East & North Africa.

The comment was made after the Iran subsidiary of Danish diabetes care giant Novo Nordisk (NOV: N) this week announced the signing of a Memorandum of Understanding with the Iranian Food and Drug Administration committing Novo Nordisk to build a local manufacturing plant for FlexPen prefilled devices in Iran (The Pharma Letter September 22).  The proposed Novo Nordisk plant, which is likely to commence production around 2020, will target the local population first, to then target exports to cater to the regional demand, the F&S executive said.

Iran currently imports 65%-70% of insulin requirements

Presently, around 65%-70% of the insulin requirements are imported into Iran, so it makes absolute sense for manufacturers to explore setting local manufacturing facilities to cater to this huge market. Foreign entities should in fact explore tie ups with local manufacturing facilities and groups in order to gain access to the local distribution network. The government is also providing tax exemptions for setting up pharma units that can cater to the local demand as well as focus on export markets, as Iran is pushing to be a major player in the regional market.

Insulin currently represents only 2.7% of the total pharma expenditure in Iran. The price advantage of domestic production vis-a-vis imports of insulin is almost 2.5 times, and this is also another reason for foreign companies to explore setting up local manufacturing facilities.