Cipla works with partner to build a manufacturing plant in Iran

Sri Lanka, Yemen, Iran. India's Cipla is aggressively moving into markets that Western drugmakers often take a very long time to evaluate. It is using partners it already has to put together manufacturing deals that provide it ownership in local production.

The drugmaker reported this week to the Bombay Stock Exchange that it had struck a deal with "its existing Iranian distributor for setting up a manufacturing facility in Iran." There were no details, but Cipla reported it will contribute machinery, equipment and technical know-how over the next three years, an investment it values at about 225 crore ($36.5 million). For that, it said it will get a 75% ownership in the new operation.

Cipla said that its proposed investment is subject to completion of certain conditions and getting all of the applicable regulatory approvals.

Western sanctions do allow drugs to be sold in Iran, and relations have eased some this year, but Iran remains a tricky market. Germany-based Merck KGaA said late last year it was looking for a partner to produce its diabetes drug Glucophage and its high-blood-pressure treatment Concor in Iran. France-based Sanofi ($SNY), which licenses some cancer meds in Iran and maintains a staff of 170 there, has indicated it intends to expand in the country.

Iran does have some domestic production. In June, the Fars News Agency (FNA) in Iran said that officials there had inaugurated the first phase of the Bayer Aflak plant near the western city of Azna in the Lorestan province, and that it would initially produce veterinary drugs, but that a second phase was being slated to make human products, including cancer drugs. A spokesperson for Bayer HealthCare made clear that the German company has no facilities in Iran and that Bayer Aflak is not related to Bayer HealthCare. According to FNA, government officials have said the country expects to produce up to a dozen biologic drugs in the next two to three years.

Iran is not the only emerging market on Cipla's list. In July, the drugmaker announced its intent to invest $21 million for a 51% stake in a pharma manufacturing and distribution operation in Yemen. The company declined at the time to identify the company or seller, but Cipla spokesperson Jaisingh Krishnan said its partner had one manufacturing facility which was expected to come online shortly and that would manufacture tablets and capsules. Earlier it said it would spend $14 million to buy a 60% stake in a company in Sri Lanka that would distribute its products there.

- access the filing here