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. It says that attracting FDI will also help the country create jobs, improve market competitiveness, and boost exports.

The report 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.

Levon Ohanesyan, CEO of Enterprise Armenia Foundation, said there is a 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,” he said.

Ivana Fernandes Duarte, IFC’s Regional Manager for the South Caucasus, said that 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,” she said.

The report says to ensure that investors choose Armenia over other investment locations, 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.

According to the report, 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.  

For the full report, click here.