Given the challenges of the COVID-19 pandemic, foreign direct investment (FDI) in Armenia’s pharma sector can play a catalytic role in stimulating the economy, contributing to a resilient and accessible health care system, reveals a new report produced by IFC in partnership with the UK’s Good Governance Fund. Attracting FDI will also help the country create jobs, improve market competitiveness, and boost exports.
Highlighting potential FDI opportunities in the pharmaceutical sector, the report, Foreign Direct Investment in Pharmaceuticals and Healthcare in Armenia, identifies two subsectors—contract research and contract manufacturing operations—that offer maximum potential. While contract research involves research services for pharmaceutical companies, contract manufacturing entails the production of drugs or drug components for global pharma companies. These subsectors do not expose potential FDI to large capital investment risks, are export oriented, and can potentially build on the existing experience of Armenian firms.
The study conducted by IFC’s Armenia Economic Growth project aims to provide the government with an assessment—along with recommendations—on the next steps to support sector-specific investment promotion and investment climate reforms.
“We see significant potential for the development of Armenia’s pharmaceutical sector. We will use IFC’s sector analysis to address key challenges that can open up opportunities for foreign investors to invest in the sector,” said Levon Ohanesyan, CEO of Enterprise Armenia Foundation.
According to the report, strengthening the regulatory base and aligning it to global standards can increase Armenia’s access to international markets. Further, a robust infrastructure, skilled workforce, and timely reforms in the health care system—along with efficient insurance and medical coverage—will help the nation become more competitive.
Ivana Fernandes Duarte, IFC’s Regional Manager for the South Caucasus, said: “While FDI can be a source of capital, it also brings in new technology, management and governance skills, and knowledge of global markets. The IFC study underlines the importance of an enabling business environment, along with key reforms and policy support. We are committed to continue advising the government and help strengthen the effectiveness of its investment promotion efforts both before and after investments.”
To ensure that investors choose Armenia over other investment locations, the report recommends, it is key to ensure potential investors have access to relevant information. Also, sector specific policies and investor targeting, which involves proactively reaching out to potential investors and presenting them with tailored business cases, will be crucial. Engaging senior pharmaceutical or health care professionals in the Armenian diaspora, too, can help offer industry insight, providing critical feedback on the country’s international competitiveness for FDI in the sector.
As the Armenian government plans to adopt the concept paper and sector strategy to boost the development of the pharmaceutical sector, IFC initiated a dialogue between Armenia’s public and private sectors, including producers of pharmaceuticals. This led to the establishment of a task force, which will work on the strategy. IFC will support the strategy development with recommendations on how to attract FDI.
With IFC’s advisory support, in 2019, Armenia established a professional institutional capacity for investment promotion through a national investment promotion agency, Enterprise Armenia.