Barekat Health & Pharmaceutical Group: Due to its inherent complexities , the pharmaceutical industry including the need for extensive research and development, production of new products, and improvement of drug quality, requires a high level of liquidity. Additionally, the supply chain in this industry, including the sourcing of raw materials, production, and distribution of medicines, necessitates substantial investments that pharmaceutical companies cannot manage alone. Banks and financial institutions play a key role in providing this capital and liquidity through banking facilities.
In Iran, the pharmaceutical industry is considered as one of the most important and strategic sectors of the national economy. This industry not only plays a key role in meeting the domestic pharmaceutical needs but also holds potential for exports and generating foreign exchange. Given the economic sanctions and external financial pressures, Iran’s pharmaceutical industry faces significant challenges in securing financial resources for its activities. Under these circumstances, banks and banking facilities play a decisive role in providing the necessary liquidity to this industry.
Banks, through the provision of banking facilities and short- and long-term loans, assist pharmaceutical companies in securing the liquidity required to purchase raw materials, expand production lines, and settle their debts. Additionally, banking facilities aimed at supporting research and development in the pharmaceutical sector are offered to knowledge-based pharmaceutical companies to encourage innovation and the development of new drugs.
One of the key institutions in this area is the National Development Fund, which, by allocating financial resources to banks and credit institutions, supports strategic industries, including the pharmaceutical sector. Moreover, development banks, such as the Industry and Mine Bank, play a significant role in providing facilities to pharmaceutical production units.
Banking facilities on improvement of drug production & export
The banking facilities provided by Iranian banks, especially in the current climate, have had a positive impact on the production and export sectors of pharmaceuticals. Pharmaceutical companies, particularly for the procurement of raw materials, which are mostly imported, require large financial resources. Access to loans and banking facilities enables them to meet their financial needs. Furthermore, banks support companies engaged in drug exports by offering export loans.
Despite the challenges posed by sanctions, Iran’s pharmaceutical industry has managed in recent years to continue exporting medicines to neighboring countries such as Iraq, Afghanistan, and Syria, as well as to certain African and Asian countries. Banking support and foreign exchange facilities have played a crucial role in maintaining and expanding these markets.
Challenges in accessing banking facilities for pharmaceutical industry
Despite the important role of banks in providing liquidity to the pharmaceutical sector, this industry faces several challenges in obtaining banking facilities, including:
Banking Sanctions: One of the biggest obstacles for Iran’s pharmaceutical industry in accessing facilities is international banking sanctions, which severely limit access to financial resources and foreign exchange facilities. This issue has particularly negatively impacted the import of pharmaceutical raw materials, increasing production costs.
High Interest Rates: Many pharmaceutical companies in Iran are struggling with high interest rates on banking facilities. This issue has made companies less inclined to apply for loans and banking facilities, as high interest rates place additional financial pressure on them.
Complex Bureaucracy: The process of obtaining banking facilities in Iran is accompanied by heavy and complicated bureaucracy. This results in delays in receiving loans and, in some cases, hinders companies from continuing their activities.
Banks role in providing liquidity to pharmaceutical industry
There are several notable strategies for enhancing the role of banks in providing liquidity to the pharmaceutical industry and overcoming existing challenges. One effective solution for supporting Iran’s pharmaceutical sector is to simplify the process of accessing banking facilities. This can be achieved by reducing bureaucracy and offering loans with lower interest rates.
Additionally, banks can provide special facilities and long-term loans to knowledge-based pharmaceutical companies, thus playing a role in fostering research, development, and innovation within the industry. Furthermore, the government and Iranian banks can support the pharmaceutical industry by expanding collaborations with allied countries such as China, Russia, and neighboring nations to secure the necessary financial and foreign exchange resources.
Another effective measure for supporting the pharmaceutical sector is the establishment of specialized funds with sufficient financial resources to provide low-interest facilities. These funds can be set up under the supervision of the Ministry of Health and the Central Bank to specifically finance pharmaceutical companies. In addition, knowledge-based companies involved in the production of innovative and biotechnology drugs require special support from banks. Offering long-term loans with preferential interest rates can strengthen these companies in research, development, and the production of new drugs.
Development & commercial banks in pharmaceutical industry
In Iran, development banks such as the Industry and Mine Bank and the National Development Fund play a direct role in financing strategic industries, including the pharmaceutical sector. These banks provide long-term, low-interest facilities to pharmaceutical companies, helping them finance research and development projects, production, and the necessary infrastructure to increase production capacity.
On the other hand, commercial banks like Bank Melli and Bank Saderat also support pharmaceutical companies by offering short-term facilities to manage daily liquidity, purchase raw materials, and settle debts. Commercial banks, particularly in providing foreign exchange facilities to exporting pharmaceutical companies, play a key role and can facilitate the import and export processes through international credit lines.
Accelerating banking processes and reducing administrative procedures for obtaining facilities can help pharmaceutical companies secure liquidity in a timely manner. Banks should provide quick loans and short-term credits to meet the immediate needs of these companies.
Financial Support of Banks in Pharmaceutical Industry
In recent years, banks and financial institutions in Iran have taken significant steps to support the pharmaceutical industry. For example, the National Development Fund has contributed to the growth of Iran’s pharmaceutical exports by allocating financial credits to large production companies. These financial resources have enabled companies to invest in the production of new drugs and expand their production capacity.
Furthermore, the Industry and Mine Bank has supported pharmaceutical manufacturers by offering long-term facilities, placing them on the path to growth and development. In the field of research and development, banks have played an important role by supporting knowledge-based companies in the pharmaceutical sector, contributing to the production of innovative drugs and enhancing Iran’s self-sufficiency in producing complex drugs, such as biotechnology medicines.
Banking Facilities on Pharmaceutical Supply Chain
The pharmaceutical supply chain involves various stages, from research and development to production, distribution, and sales. Each of these stages requires financial resources, and banking facilities can help streamline this process.
Especially in the production stage, pharmaceutical companies need capital to procure raw materials, production technologies, and laboratory equipment. Banking facilities help these companies meet these needs, ultimately leading to increased production and reduced drug costs.
In the distribution and sales sector, banks also facilitate the process of moving drugs from manufacturers to consumers by providing credit facilities to pharmacies and drug distribution networks. These facilities allow pharmacies to offer medications to patients in a timely manner and at lower costs.
Conclusion
The role of banks and banking facilities in providing liquidity to Iran’s pharmaceutical industry is crucial and vital. These supports not only help in the production and supply of medicines within the country but also enhance the global competitiveness of pharmaceutical companies.
However, the existing challenges in accessing banking facilities, especially under sanctions and economic fluctuations, require serious solutions and coordination between the government, banks, and the private sector. International collaborations, the establishment of support funds, and the reduction of banking barriers can significantly contribute to the sustainable growth and development of this strategic industry in Iran.
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