Novo Nordisk eyes the future, expands presence in Iran as sanctions lift
- As sanctions on Iran begin to lift as a result of the global Iran nuclear deal struck last year, Novo Nordisk is bulking up its presence in the country by more than doubling its existing workforce. Novo plans to add 160 employees to its Iran office, adding to the $76 million investment the Danish company made in a local factory back in September.
- Although essential drugs were excluded from the international sanctions tied to Iran's nuclear activity, restrictions on financial transactions made it difficult to do business before now.
- Novo will have competition as other drugmakers also hope to cash in from the opening up of Iran's market, which will provide access to roughly 80 million people. Takeda and India's Cipla have jumped in early along with Novo, according to Reuters.
Iran represents an enticing opportunity for Novo, which specializes in insulin and other diabetes drugs. The population is well educated and there is enough manufacturing infrastructure to facilitate technology transfer. These opportunities led India-based Cipla to set up a manufacturing plant in Iran in 2014. For its part, Novo has maintained a staff of 130 in its Iranian offices during the extended period of sanctions. This should help it get off the ground quickly now that financial and business restrictions are easing.
However, one factor may temper the enthusiasm of moving into the Iranian market. Iran has a well-developed generics market and, due to the extent of international sanctions, has been forced to be self-sufficient for some time. While this doesn't mean additional large pharma activity would not be welcome, it may impact sales.
Even as financial restrictions lift, political risk remains ever-present. Novo's success will depend on its relationship with the Iranian government. Ramping up business will also expose Novo to changing political dynamics between Iran and the Western world. The implementation of the nuclear deal will be ongoing and may face setbacks. Just five days ago, the U.S. imposed new sanctions on select entities related to Iran's ballistic missile testing.