Pharmaceuticals Production
Pharmaceuticals Production
Business Model Description
Manufacture generic pharmaceutical products in solid, semi-solid, liquid and other dosage forms as well as powders, aerosols and drops to serve the national needs and increase the presence of domestic products in the market. Establish the quality control testing at the site of the production to ensure compliance with national requirements and standards; partner with local authorities to safeguard the products and make sure that quality medicine is accessible and available for all. Invest in research and development (R&D) for raw material efficiency.
Expected Impact
Enhance affordability and accessibility of pharmaceutical products and increase competitiveness of Iraq's healthcare industry while providing decent work opportunities and diversifying the economy.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Iraq: Central Provinces
- Iraq: Northwestern Iraq and Anbar
- Iraq: Kurdistan Region of Iraq
Sector Classification
Health Care
Development need
Iraq has the lowest human capital index (40%) in the region and suffers from stagnated labor market and brain outflow in the sector. In 2020, Iraq had a ratio of 0.9 physicians per 1,000 people, which was significantly below the global upper-middle-income average of 2.2(2019). Due to almost two decades of conflicts, around 170 health facilities remain damaged (1, 2, 3, 34).
Policy priority
The Ministry of Health of Iraq prioritizes ensuring good health for all. The National Health Policy for 2014-2023 aims to train competent and adequate number of skilled health workforce, scale up maternal, reproductive and child health care services, reducing the burden of (non-)communicable diseases, and increasing life expectancy (4).
Gender inequalities and marginalization issues
Rural regions suffer from underdeveloped medical field, necessitating the improved access to medical supplies and emergency services (5). The country also struggles to deliver healthcare services for internally displaced persons (IDPs) (6).
Investment opportunities introduction
Government of Iraq can explore the private investments into the construction and rehabilitation of health facilities through public-private partnerships (PPP), akin to the recent investment by the International Finance Corporation (IFC) to build a 161-bed hospital in the Kurdistan Region of Iraq (1).
Key bottlenecks introduction
Inefficient and weak regulation coupled with existing corruption to receive better health care prohibit the development and recovery of the sector (1, 7).
Biotechnology and Pharmaceuticals
Development need
Approximately 50% of the total disease burden in Iraq is attributed to non-communicable diseases. In 2019, 1 in 8 deaths were attributed to heart disease. Due to constant conflicts in the region, immunization levels remain low (DPT3 coverage is at 84% and MCV3 - at 81%). There is a growing illegal pharmaceutical drugs market and smuggling in the country (1, 8).
Policy priority
The National Health Policy 2014-2023 sets a goal to "ensure the availability of medicines, reagents and medical supplies and infrastructures" as well as "reduce the burden of disease, communicable, non-communicable, maternal and child mortality and increase life expectancy". The policy provisions the support to private sector investments in the health care sector (4).
Gender inequalities and marginalization issues
Low-income families are compelled to buy the most affordable drug alternatives, although of inferior quality. Poorer communities are also more likely to encounter illegal and counterfeit products (9).
Investment opportunities introduction
Medicines occupy 36% of the total public health care spending. In this light, National Investment Commission together with the State Company for Drugs Manufacturing and Medical Equipment announced opportunities to develop a pharmaceutical city on Yusofieah district, a factory for producing vaccines and serums, and the Babil plant for medical syringes (5, 10).
Key bottlenecks introduction
The pharmaceutical market is inefficiently regulated, necessitating a two-month quality control testing to approve an imported medicine to be released to the market. Moreover, there are reasons to believe that the regulators do not have sufficient capacity to test all medicines entering the country (7).
Biotechnology and Pharmaceuticals
Pipeline Opportunity
Pharmaceuticals Production
Manufacture generic pharmaceutical products in solid, semi-solid, liquid and other dosage forms as well as powders, aerosols and drops to serve the national needs and increase the presence of domestic products in the market. Establish the quality control testing at the site of the production to ensure compliance with national requirements and standards; partner with local authorities to safeguard the products and make sure that quality medicine is accessible and available for all. Invest in research and development (R&D) for raw material efficiency.
Business Case
Market Size and Environment
> USD 1 billion
In 2020, the legal pharmaceutical drugs market was worth between USD 3.5 and USD 4 billion with a growing participation of international companies. Additionally, the counterfeit pharmaceutical drugs industry was estimated to be worth of USD 1 billion p.a. in 2014 (14, 15).
According to the report of Assessment of Opportunities in Iraq in 2018, the potential growth in pharmaceuticals market was estimated by 10-12% of the compound annual growth rate (CAGR) for the period (2018-2022) (17).
Indicative Return
20% - 25%
In 2020, the State Company for Drugs Industry and Medical Appliances in Samarra, Iraq received IQD 59,1 billion (~ USD 45 million) in revenues and incurred IQD 45,7 billion (~ USD 35 million) in cost of goods sold, recording a gross profit margin of 22.7% (16).
Consultations with the Iraqi firms and other private stakeholders, in September 2023, reveal that the Return on Investment (ROI) could be more than 50% based on the size of investments in pharmaceuticals production in Central Provinces (31).
Investment Timeframe
Medium Term (5–10 years)
The capital-intensive investment in pharmaceuticals production could generate return in five to ten years, given the projected demand increase for locally produced pharmaceuticals in the MENA region (31).
Ticket Size
> USD 10 million
Market Risks & Scale Obstacles
Business - Supply Chain Constraints
Market - High Level of Competition
Market - Highly Regulated
Impact Case
Sustainable Development Need
Noncommunicable diseases (NCD) are widespread in Iraq, amounting to 50% of total disease burden. Transmissible diseases pose a threat due to their ease of spreading and are exacerbated by the low level of immunization (DPT3 at 84% and MCV2 at 81%) due to conflicts and medicine shortage (1, 5).
In 2020, Iraq had a ratio of 0.9 physicians per 1,000 people, which was significantly below the global upper-middle-income average of 2.2 (2019) (1, 5, 34).
In 2019, the value of locally produced pharmaceuticals amounted to USD 331 million, making up only 11% of the total market value. Inadequate pricing of the medicine perpetuates smuggling and large counterfeit drug market. In 2020, 150 people were killed by a shipment of fake drugs in Iraq (22, 23).
Gender & Marginalisation
Iraq encounters a hurdle in providing healthcare services to internally displaced individuals (IDPs). There are about 1.2 million IDPs in Iraq, along with approximately 300,000 refugees, primarily originating from Syria. 71% of these IDPs are located within the Kurdistan Region of Iraq (6).
Rural and low-income communities suffer from poor quality medical products and services as the medical field in these regions is particularly underdeveloped (5, 9).
According to existing estimates, Iraq is among the 68 countries that account for 97% of maternal and child mortality. Iraq has a maternal mortality ratio of about 50 deaths per 100,000, caused by poor birth practices and lack of emergency obstetric care (5, 24).
Expected Development Outcome
Pharmaceutical production reduces reliance on imports, improves access to original medicine, decreases household medical expenses, ultimately enhancing the population's access to cost-effective medication.
Pharmaceutical production contributes to treatment of non-communicable and transmissible diseases and increases the availability of vaccines, hence, improving the general health of the population.
Pharmaceutical production creates new employment opportunities and income generation for the population, particularly the skilled workforce, who otherwise are motivated to move abroad in pursuit of better working and living conditions.
Gender & Marginalisation
Pharmaceutical production improves the accessibility of medicines to the remote communities, low-income families, and internally displaced population through price reduction and expanded location coverage.
Pharmaceutical production contributes to better health outcomes of mothers and their new-born children by providing the necessary immunization and pre-natal and post-natal treatment.
Primary SDGs addressed
3.4.1 Mortality rate attributed to cardiovascular disease, cancer, diabetes or chronic respiratory disease
3.8.2 Proportion of population with large household expenditures on health as a share of total household expenditure or income
In 2019, age-standardized death rate due to cardiovascular disease, cancer, diabetes, or chronic respiratory disease in adults aged 30–70 years amounted to 23.6% (19).
In 2017, the proportion of population with large household expenditures on health reached 19.57% (20).
The National Development Plan, 2018-2022 sets the objective of reducing communicable and non-communicable diseases, without target level (26).
N/A
9.b.1 Proportion of medium and high-tech industry value added in total value added
9.2.1 Manufacturing value added as a proportion of GDP and per capita
In 2021, Iraq had a 0.069 score in the share of medium and high‐tech activities in total manufacturing value added index (compared to world average of 0.303) (21).
In 2021, Iraq had a 0.055 score in the share of manufacturing value added in GDP index (compared to world average of 0.306) (21).
N/A
The National Development Plan, 2018-2022 sets the highest sector targeted growth rate to manufacturing (10.5%) (26).
Indicator 12.4.1: Number of parties to international multilateral environmental agreements on hazardous waste, and other chemicals that meet their commitments and obligations in transmitting information as required by each relevant agreement
Proxy: In 2015, the quantity of dangerous medical waste disposed by health facilities in Iraq was 6432.4 t/y (26).
N/A
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
If pharmaceutical production facilities do not integrate medical waste management on the site of production, there is a risk of soil contamination, possibly harming health of nearby communities.
Impact Risks
Dependency on imported raw materials and active pharmaceutical ingredients (APIs) may affect the drug affordability for the most vulnerable communities, failing to deliver the impact intended.
Given the high brain drain in Iraqi health sector, the need for highly skilled workforce may be resolved by hiring foreign labor, which might limit the positive economic impact on the country.
Impact Classification
What
Pharmaceutical production ensures availability of affordable medicine; supports import substitution and decrease in medical smuggling, benefitting the industry and generating high skilled jobs.
Risk
Dependency on imported raw materials and foreign workforce may affect the delivered impact of the business model.
Contribution
Pharmaceutical production contributes to development of a competitive domestic market that can deliver accessible medicine, which would otherwise be driven by imports.
Impact Thesis
Enhance affordability and accessibility of pharmaceutical products and increase competitiveness of Iraq's healthcare industry while providing decent work opportunities and diversifying the economy.
Enabling Environment
Policy Environment
Vision 2030: is a comprehensive sustainable development roadmap and a long-term social and economic recovery plan. Establishes a goal of prevention, testing, and treatment especially on the primary health care level including preventing NCDs (25).
National Development Plan, 2018-2022: sets an objective of improving and updating the health care sector, particularly reducing the rates of transitional and non-transitory diseases, and improving health prevention system (26).
"National Health Policy 2014-2023: defines the principles, objectives and vision for increasing population health and nutrition status and reducing inequalities in health for all and ensures the provision of medicines, reagents and medical supplies (4). "
Financial Environment
Financial incentives: In 2020, the U.S. International Development Finance Corporation (DFC) signed a memorandum of understanding with the Government of Iraq to support private sector-led development projects, investing USD 1 billion, over four years, including in the health sector (30).
Fiscal incentives: The National Investment Commission (NIC) introduced a 10-year tax break and tax-free imports of medical equipment. Additionally, customs were reduced from 10% to 0.5% on imported medicines and medical appliances according to order no. 255 on July 24, 2019 (23).
Other incentives: In 2015, the Ministry of Health was to grant priority in public procurement to goods produced by local manufacturers (23). The NIC also created favourable incentives to hire foreign workers, receive visa and residency process as well as land lease allowances (29).
Regulatory Environment
The Decentralization Law 21, 2013: endorses decentralization in Iraq in 8 service ministries including Ministry of Health. The aim is to transform the centralized health care management system into a more decentralized one (4, 26).
Constitution, 2005: grants the right to health care to all citizens. The adoption of the Constitution resulted in a decrease in out-of-pocket health expenditure by 80 per cent in 2011 and made it at 39.73 per cent as of 2015 (27).
Public Health Law, Law No. 89 of 1981: stipulates to provide for the enjoyment of citizens' rights to full physical, mental and social fitness, governs the control of communicable diseases and preventative medicine (28).
Practicing Pharmacy Profession Law No. 40, 1970: sets the provisions for controlling the promotion and/or advertising of prescription medicine (23).
Marketplace Participants
Private Sector
Pioneer Co For Pharmaceutical Industries, Rasan Pharmaceutical, Wadi Alrafidain For Pharmaceutical Products, the State Company for Drugs Industry & Medical Appliance-Samarra, Hannoudi Pharmaceuticals, Aswar Al-Khaleej Pharmaceutical Industries Co, Hawkary Group, Ajanta Pharma.
Government
Republic of Iraq, Ministry of Health, Ministry of Industry, the State Company for Marketing Drugs and Medical Appliances (KIMADIA), KRG Ministry of Health, Directorate of Public Health and Directorate of Inspection.
Multilaterals
World Health Organization (WHO), United Nations Development Programme (UNDP), the United Nations Children's Fund (UNICEF), Arab Fund for Economic and Social Development.
Non-Profit
International Red Cross and Red Crescent Movement, Iraq Health Access Organisation, Médecins Sans Frontières, College of Education For Women, University of Kufa, Mustansiriya University.
Target Locations
Iraq: Central Provinces
Iraq: Northwestern Iraq and Anbar
Iraq: Kurdistan Region of Iraq
References
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- (2) World Health Organization. 2019. Monitoring Health and Health System Performance in the Eastern Mediterranean Region: Core Indicators and Indicators on the Health-Related Sustainable Development Goals 2019. https://rho.emro.who.int/sites/default/files/booklets/EMR-HIS-and-core-indicators-2019-final_0.pdf
- (3) World Health Organization. 2019. Iraq Humanitarian Emergency. http://applications.emro.who.int/docs/IRQ/IRQ-SitRep-Sep-Nov-2019-eng.pdf?ua=1
- (4) Ministry of Health. 2016. National Health Policy 2014-2023. https://extranet.who.int/countryplanningcycles/sites/default/files/planning_cycle_repository/iraq/iraqs_national_health_policy_2014-2023.pdf
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- (6) UNCHR. 2023. Iraq Refugee Crisis. https://www.unrefugees.org/emergencies/iraq/
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- (8) Iraq Business News. 2016. Smuggling Medicine 'More Lucrative than Arms and Oil'. https://www.iraq-businessnews.com/2016/09/16/smuggling-medicine-more-lucrative-than-arms-and-oil/
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- (15) Pharma Manufacturing. 2020. Global Dose: Focus on Iraq. https://www.pharmamanufacturing.com/sector/generic/article/11298003/global-dose-focus-on-iraq
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- (28) Public Health Law: https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&p_isn=57211&p_country=IRQ&p_count=235
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