Novo to build $78M plant in Iran

Western sanctions have not prevented drugmakers from operating in Iran, and some European companies have sales operations there. Now Denmark-based Novo Nordisk ($NVO) has gone a step further, striking an agreement with Iran's government to build a plant to manufacture its insulin-injection devices in the country.

In a brief release on Tuesday, Novo said it has a Memorandum of Understanding with the Food and Drug Administration of the Islamic Republic of Iran to build a €70 million ($78.1 million) plant to produce its FlexPen prefilled devices. It said the project is expected to take 5 years to complete and when up and running will create 160 jobs. Novo says it already has about 130 people working in Iran.

The drugmaker said 5 million people in Iran have diabetes. "This investment will ensure availability of our modern insulins and will bring us a step closer to the people who rely on our products," Ole Moelskov Bech, corporate VP of Novo Nordisk Business Area Near East, said in a statement.

Bech told Reuters that Novo started on the project before the West and Iran completed work on the recently approved nuclear pact. "We have been working on this for a long time … and we have confidence that the Iranian society and economy is developing positively," he told the news service.

With the nuclear deal between the West and Iran now moving to the implementation phase that will eventually provide Iran with more oil money, the pace of pharma deals can been expected to pick up with Iran. A few companies have already taken steps to establish production in there. Germany-based Merck KGaA in 2013 said it was looking for a partner to produce its diabetes drug Glucophage and its high-blood-pressure treatment Concor in Iran.

India's Cipla reported last year 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 three years, an investment of about 225 crore rupees ($36.5 million), toward the project. It said it was getting a 75% ownership in the new operation. Cipla has been willing to strike deals in a number of countries, like Yemen, that Western drugmakers are not ready to bet on.

The plant in Iran is one in a series of production projects Novo has undertaken in the last few years as it has expanded globally. It opened a $100 million plant in Russia this year. But one of its biggest facilities will be in the U.S. Last month it announced it would spend $1.2 billion to build in North Carolina its first API plant outside of Denmark. When that plant is complete in 5 years, it will double Novo's employment at its Clayton, NC, site to 700.

- here's the release
- get more from Reuters

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