Iran, a new frontier for medical device companies?
The recent lifting of Iranian sanctions opens up a new market to medical device manufacturers, one of the largest markets in the Middle East. If you are considering a fresh look at the market, here are some things you need to consider before entering this market.
Geographically, Iran is huge - nearly almost 2.5 times the size of Texas, and 4.5 times larger than Germany. Iran has roughly the same population as Turkey and Germany, about 80 million people. Like Turkey, Iran it is NOT an Arab country. The primary language is Farsi, not Arabic. However, the population is 99% Muslim.
Iranian healthcare market is growing
The health status of Iranians has improved significantly over the last two decades. Iran has been able to extend public health preventive services through the establishment of an extensive Primary Healthcare Network. As a result, child and maternal mortality rates have fallen significantly, and life expectancy at birth has risen remarkably. According to the World Bank (2013), per capita spending on healthcare is USD$432 and 6.7% of GDP is spent on healthcare.
The department of Medical Equipment within the Ministry of Health & Medical Education (MOHME) is responsible for overseeing imports of medical devices into Iran. However, the actual importation and distribution of medical devices are mainly handled through private sector. Iran has some local production for basic medical devices which makes it very hard to penetrate the market for similar products. Foreign made devices are however still very much preferred and needed to fulfill demand.
According to Espicom, it’s estimated that the Iranian medical device market will total roughly USD$900 million in 2016. The growth of medical device sales in the Iranian market is projected to rise steadily in coming years. It’s worth noting that Iran subsidizes heavily its medical device industry to encourage exports to countries like Iraq, Afghanistan & Russia. Although imports dominate, there is a fairly robust local production of simple devices such as syringes, needles, catheters and orthopedic products.
Although US sanctions against Iran didn’t apply to most common medical devices, American companies have not tried very hard to penetrate the market for various political and financial reasons. There are more than 100 local distributors representing the international suppliers in the Iran market handling both promotion and aftersales service of the imported medical devices. International players represented in Iran include: 3M, Aesculap, BMG, Cordis, GE, J&J, Medtronic, Philips, Siemens, Stryker, S&N, Toshiba and Zimmer.
Doing business in Iran
As in most Middle Eastern countries also in Iran relationships are key, religion cannot be discounted, and patience is required. Here are some key things you should know about doing business in Iran.
#1 There is more to Iran than Tehran
Tehran is by far the largest city in Iran, with 16+ million people. When talking to distributors it is important to get a sense whether your partner only covers Tehran or also has capabilities to cover other parts of the country. Not only from a coverage point of view but also with transportation infrastructure. Delivering outside Tehran will significantly add costs and time.
#2 Getting your money
Although the bans are lifted, getting paid is still an issue for (US) manufacturers. Some banks refuse to work in US$, Euro is the preferred currency. Some US companies use their European subsidiaries to retrieve money from Iran. Some distributors offer payment via the UAE as a way to deal with this.
#3 Cash is king
When traveling, bring cash. Credit cards don’t work in Iran. But taking a lot of cash can also be a problem when entering the country so understand the regulations. Some distributors offer to fund your visit but do expect to get reimbursed once business is going. Cash is often preferred because the value of the Iranian currency has been unstable in recent years.
#4 Face to face meetings are important
There is no substitute for meeting someone face to face. It is important that you actively work on developing a relationship with your potential partners. A good place to start is the annual Iran MED and Iran LAB shows, the main annual exhibitions for medical devices & IVDs in Tehran.